Alimony

Purpose:

The purpose of alimony is to provide continued maintenance of one party by the other party when the relative economic circumstances and other statutory factors (chapter 208 section 34) make it appropriate. A purpose of alimony is also to maintain a standard of living for a party which is comparable to that which he or she enjoyed when the parties were together.

Statute:

In awarding alimony, a court is primarily concerned with the need of the receiving spouse and ability to pay of the payor. The factors considered by a court in determining alimony are the same as those for determining the division of property.

Unlike child support, there is no specific mathematical formula for determining alimony. It is determined on a case-by-case basis based on the factors enumerated in chapter 208 section 34.

Alimony payments are tax deductible by the paying spouse and considered income to the receiving spouse.

Duration of alimony: If there is going to be an award of alimony or agreement that there should be alimony, how long should the alimony continue?

Alimony can be for a specified or unspecified period of time. However, whether a specific time period is set forth or not, alimony will typically end upon the receiving spouse's remarriage, death or death of the payor spouse. These should not be assumed however. If the parties agree that it should not end upon the remarriage of the receiving spouse for instance, the agreement should specifically state so.

The duration of alimony will often depend on the various 208 section 34 factors. A major factor in the analysis is the length of the marriage and the relative incomes and potential incomes of the parties. In a long term marriage, where one party has been a stay at home parent while the other spouse has worked, assuming the stay at home parent has a lower income and less income potential, the likelihood is that he or she will receive long term alimony. On the other hand, if two parties have been married for a short period of time and have equivalent incomes, alimony is likely to not be a factor or appropriate.

If a specific time period is set forth in the parties' agreement, alimony will terminate at that time period unless the receiving spouse can succeed in a Complaint for Modification to extend the alimony. On the other hand alimony for an unspecified time will continue until the payor spouse brings a Complaint for Modification and convinces a court to terminate or modify the alimony. In other words, if there is a specified period of time, the burden is on the receiving spouse to change the duration of alimony. If the alimony is for an unspecified time period, the burden is on the paying spouse to alter the time period.

Merger vs. survival: When an agreement is prepared and presented to the court, the agreement is typically incorporated into the judgment of the court. All issues pertaining to the division of property are incorporated and survive as an independent contract. This means that once the property is divided in a divorce it cannot be undone or reviewed later. It is final. Thus all agreements pertaining to property, even though they are incorporated into the judgment of the court retain their independent legal significance as a contract.

On the other hand, all issues pertaining to children automatically are incorporated and merge into the judgment of the court. This means the agreement does not retain independent legal significance as to child issues and the court always has the jurisdiction to modify said agreements in the future upon a showing of a material change of circumstance.

Alimony does not automatically merge or survive. Thus, the divorcing couple must inform the court about whether the alimony provision will merge or survive. So for instance, if the parties agree to waive all rights to seek future alimony from the other, this agreement can merge or survive. If it survives, the couple is, except under very extreme and limited circumstances, shutting the door on seeking future alimony. If the issue of future alimony is merged, alimony can be revisited upon a showing of a material change of circumstance.

Tax considerations: Unlike child support, alimony is includable as income by the receiving spouse and deductible by the payor.

There are numerous tax considerations that must be considered when the parties are considering alimony. It is often advisable that parties check with an accountant. In order to be considered alimony by the IRS, payments must meet the following criteria:

1. Payment must be in cash;
2. Payment is received by or on behalf of a spouse under a divorce or separation instrument;
3. The divorce or separation instrument does not designate the payment as a payment which is not includable as income to the payee and deductible by the payor;
4. The parties are not members of the same household at the time payments is made; and
5. There is no requirement to continue to make payments after the payee spouse dies. See Internal Revenue Code section 71.