Thinking of getting divorced?
One of the least understood parts of divorce is spousal support. You can either be the paying spouse or receiving spouse of alimony and it can have serious financial implications.
Problem is, most people don’t understand how spousal support works until they’re already in the midst of divorce and it’s often too late to prepare properly.
In this guide we cover:
- What is spousal support?
- Common Types of Alimony
- How to Calculate How Much You Pay
- Tax Considerations and Other Issues
- Alimony Myths Debunked
What is spousal support and alimony?
Spousal support is also called alimony and is a financial payment made by one spouse to the other after divorce.
The intention of spousal support is to allow the lower-earning spouse to maintain the same standard of living they did when they were married. However, not every divorce involves spousal support.
Local family law can help you understand whether you’re a likely candidate for spousal support. Experienced Little Rock Family Law Attorneys can guide you through these important decisions and give you expert advice specific to your situation and local laws.
Did you know?
Alimony is actually only a factor in 10% of divorces today. The days of big pay outs in spousal support are over. The number of divorce cases with alimony awards has steadily declined since the 1960s, when alimony was included in 25% of divorces.
Courts consider many factors when deciding alimony
Courts use a wide range of factors to determine whether spousal support is appropriate in your divorce and, if so, how much should be paid. These factors include:
- Length of the marriage
- The difference in income and income potential between spouses
- The standard of living established during the marriage
- Age and health of each spouse
- Contributions to the marriage (including homemaking)
- Education and job skills of each spouse
Fact that most people don’t realize
The longer you are married, the more likely you will be ordered to pay (or be granted) spousal support. If you were married for less than five years, alimony awards are pretty rare unless there is a huge difference in income or the lower-earning spouse has some other factor (age, health, limited skills) that justifies spousal support.
Look at it this way:
If you were married for 20+ years and one spouse stayed home to raise kids while the other worked, it’s highly likely that a stay-at-home spouse is going to require support to get back on their feet.
Types of Alimony to Know About
There are several different types of alimony depending on the situation of the couple:
Temporary Alimony
As the name implies, this is spousal support paid during the divorce process but before the divorce is final.
Temporary alimony is intended to simply help the lower-earning spouse cover expenses while the divorce is pending. Temporary alimony is no longer awarded once the divorce is final.
Rehabilitative Alimony
This is the most common type of alimony today.
Rehabilitative alimony is a specific dollar amount paid for a set period of time. The intent is to give the spouse receiving spousal support time to get back on their feet and become financially independent on their own. This time period may be used to gain job training, reenter the workforce, or otherwise develop skills and capacity to earn income. Because of this, this form of spousal support has an end-date built in at the start.
Permanent Alimony
Permanent alimony is on the decline these days.
Permanent alimony is typically only awarded in longer-term marriages where one spouse cannot reasonably be expected to become self-supporting due to age, disability or other factor. Even “permanent” alimony usually terminates upon remarriage of the receiving spouse or death of either spouse.
Lump-Sum Alimony
In some cases, divorcing couples agree to a one-time lump-sum alimony payment in lieu of monthly payments.
This can be a good option if both spouses want a clean break with no financial ties to the other going forward.
Determining the Payment Amounts
So how much will you really pay?
State guidelines vary, but most courts will look at the difference in income between spouses. Using the earlier example, let’s say you make $100,000 a year and your spouse makes $30,000 a year. That’s a $70,000 annual difference in gross income between you two.
But here’s the thing:
Figuring out the final dollar amount isn’t as simple as comparing gross incomes. Taxes, child support obligations, each spouse’s living expenses and needs, and division of property all play a role in the final payment calculation. Slight variations in how income is calculated can result in large differences in monthly payments.
Myths about Spousal Support
Let’s bust some common myths…
Myth #1: Only Men Pay Alimony
Men paying alimony is so 20th century.
Gender is no longer the primary factor in determining who pays alimony. In fact, 45% of divorce attorneys have reported an increase in female alimony payments since 2014. If the wife makes significantly more money than the husband, the court can award spousal support in the husband’s favor.
Myth #2: Alimony Payments Last Forever
If permanent alimony exists, doesn’t that mean you pay for life?
No. Permanent alimony is extremely rare these days. Spousal support is designed to be temporary and help the receiving spouse get to a point of financial independence. The objective is to get both parties on solid financial ground and then call it quits.
Myth #3: You Can’t Change Alimony
Once it’s ordered you’re stuck.
Nope. Spousal support is not set in stone. If circumstances change significantly after divorce – loss of job or disability, remarriage of receiving spouse, cohabitation of recipient with new partner – you can ask the court to modify the amount of spousal support. The courts understand life happens and incomes and financial situations change.
Protect Your Rights in Divorce
On the issue of spousal support, being prepared matters.
Documenting your income and expenses, knowing your spouse’s finances, understanding your state’s alimony laws and tax implications are critical. If you can’t prepare in advance you are disadvantaged from the start and put at the mercy of your spouse and their attorney.
So what you need to do is to start getting your financial documents in order now. Bank statements, tax returns, pay stubs, credit card statements, etc. Alimony is calculated based on the flow of funds in and out of your household. The better organized you are the more likely you are to come out with a favorable alimony payment in divorce.
Fact that people don’t know
Keep in mind that every divorce is different. The facts in your case matter. The spousal support in your friend’s divorce may not be the same in yours.
Tax Implications and Other Factors
Tax laws around spousal support changed significantly a few years back.
For alimony agreements entered after 2018, spousal support payments are no longer tax deductible for the paying spouse. Nor does the recipient need to claim them as income. This is a big difference from prior law that changes the way alimony is calculated and negotiated.
Spousal support is also subject to modification if a significant change in circumstances occurs.
Reasons to modify alimony may include a substantial change in either spouse’s income or financial situation, job loss or disability, remarriage or cohabitation of the recipient, or other major changes. However, you can’t just stop paying or ask for more because you want to. You must file a motion with the court and have the order modified by the court before any changes are made.
Final Words on Alimony
Spousal support is one of the most important financial decisions you’ll make during your divorce.
The more you know about it up front the more you can protect your rights and make informed decisions that will impact your financial future. Knowledge is power when it comes to spousal support and alimony.
So let’s review:
- Spousal support is not guaranteed in every divorce
- Courts consider a number of factors in alimony
- There are different types of alimony
- Payments can be modified if circumstances change significantly
By arming yourself with information on spousal support up front you’ll be in a much stronger position to make good decisions during divorce. Remember, knowledge is power and with spousal support the more you know the better off you will be.