Randy Perskin: Discussing Divorce

Alimony, also known as maintenance or spusal support, refers to an amount of money provided to the lower income spouse for living purposes. Maintenance, unlike child support which is determined through mathematical equations, is a discretionary matter to be determined by the judge.

Many factors are considered in determining the amount, if any, of alimony. The duration of the marriage, the spouses’ age as well as their physical, mental and emotional states, present and future earning capacity and type of property involved are factors in determining a maintenance award. Additionally, the court will view other sources of income which are available to each spouse (such as interest and dividends), the conduct of the parties, the contributions made as a homemaker and the effect of the custodial parent’s role of homemaker on earning capacity.

There are tax implications involved with alimony. Maintenance payments are taxable as regular income to the recipient and are deductible for the payor. Alternatively, child support is not considered taxable income nor is it a deductible expense. It is, therefor, worth considering whether addditional child support might be a better option than alimony. Keep in mind however that where spousal support will generally terminate with the death of a party or remarriage of the recipient, child support ends when a minor reaches his majority.

Spousal support must be set forth in writing either through a separation or prenuptial agreement or divorce decree. A written agreement expresses the desires of the parties whereas a divorce decree sets forth the decision of a judge. Additionally, payments must be made in cash, not as services or goods, and will not be awarded while the parties share the same residence.

Generally, maintenance payments are made on a weekly or monthly basis. A lump sum, or one time payment, can be considered. Think carefully about the tax consequences of receiving a one time lump sum alimony payment rather than a monthly payout. The opinion of an accountant in this regard will be beneficial.

There are different types of spousal support. Permanant maintenance is generally considered in divorce proceedings where the marriage had a  long duration. It will terminate upon the death of either spouse or the  remarriage of the recipient. Temporary alimony is provided where the parties have separated but not yet divorced and allows the recipient to maintain her lifestyle during the matrimonial proceedings. Rehabilatative alimony is provided for spouses who need help entering or returning to the workforce in order to become financially self sufficient. Payments may include education and training costs. Generally, rehabilitative maintenance has a specific time limit which can be set forth in the separation agreement or divorce decree. Reimbursement alimony is given to a spouse who has supported her partner during his education and provides for repayment of actiual expenses in this regard. Payments are reflective of the actual money spent in support rather than on the increased earning capacity resulting from the educational experience. Generally, alimony payments will termintae upon the death of either spouse. Insurance to protect this income subsequent to your ex partner’s death is a viable consideration.

Alimony is a separate issue from equitable distribution however the factors considered in determining both may  overlap. Before entering into a settlement agreement, it might behoove you to speak to a financial advisor or someone whose economic judgement you trust in order to determine what your needs are. In some cirtcumstances accepting lower alimony payments in order to retain control of your assets can be a beneficial result. However, if alimony income is necessary to cover living expenses, a reduction in the amount of maintenance would  not be a viable option.