Options for Alimony
Alimony may be paid in one lump sum or on a temporary or permanent basis. The court typically will consider the circumstances of each partner when deciding on how much and how long assistance is needed.
Which Option to Choose?
Rehabilitative alimony is granted for a specified time period. It provides the recipient with the funds to obtain the job skills and education needed for him or her to become self-sufficient. This type of spousal support is also available to the stay-at-home parent who takes care of the children. Although the court order or agreement specifies a duration for rehabilitative support payments, this alimony can be reviewed at the end of the set period. The court or divorcing parties must include a review provision in the agreement. The paying spouse has the right to stipulate in the agreement that there be no review. However, the court can override the payor's wishes and continue the support due to hardships such as the illness or incapacity.
Lump-sum spousal support is often granted in lieu of a property settlement. This is a fixed amount paid regardless of the recipient's situation, i.e., remarriage, cohabitation, or lack of financial need. Lump-sum alimony could also be paid to the estate of the deceased recipient. The amount awarded is equal to the total of future monthly payments.
Permanent spousal support continues until the recipient remarries or either payor or payee dies. Some states will terminate or suspend permanent support if the recipient cohabitates with another partner. In this case, the court would consider whether the third party was providing support for the recipient and whether the living situation was similar to a remarriage.
Permanent alimony payments may be adjusted due to changes in circumstances such as the recipient getting a better-paying job, receiving a major income source (inheritance, winning the lottery), or incurring medical expenses not covered by insurance.
Payments are also subject to change if the paying spouse either suffers a loss or reduction in income or retires. It is never a good idea for the payor to deliberately try to become a pauper. The court will review the situation to determine whether the financial downturn was in good faith and may deny a reduction in alimony request.
The dutiful spouse who works full time to put her partner through school and is dumped shortly after is a candidate for reimbursement alimony. As the name implies, this support reimburses one spouse for expenses incurred in helping the other complete an education or training program. Whether the recipient needs the money is irrelevant; reimbursement alimony is payback for providing support during the payor's time in school.
A court may also award the recipient a substantial amount of marital property as compensation. However, in reimbursement cases, the couple usually has not accumulated much property so a financial award is given instead. Reimbursement alimony can be paid in one lump sum or over a period of time.
Separation vs. Divorce
Temporary alimony can be paid when a couple separates but the divorce is not final. The parties execute a written marital separation agreement stipulating how much and when payment will be made. The agreement does not have to filed in court; if it is, the judge can decide whether the amount of temporary alimony is fair or if either party was coerced into signing the contract.
As with other forms of alimony, temporary spousal support can be adjusted. If the support agreement was not filed in court, the couple may set up a new payment plan themselves. A judge must order changes to agreements filed in court.
Alimony takes a bite out of the payor's wallet but also provides him or her with a tax deduction. For the recipient, spousal support is considered income and is therefore taxed as such. When considering accepting a lump-sum alimony, beware that you could owe a significant amount of taxes on such a large payout. contact us to determine your best option.