How to Calculate Alimony

Understanding Alimony

Understand the purpose of alimony. Alimony is intended to mitigate any unfair effect of divorce on the lower-earning spouse. The theory underpinning spousal support is that the lower-earning spouse may have postponed or foregone a career in order to support the family. Alimony therefore attempts to compensate the spouse for this sacrifice. Alimony is also intended to help a spouse maintain a standard of living he or she became accustomed to during marriage. Alimony is not a reward for surviving a difficult marriage or a means to punish a spouse for bad behavior (such as an affair). Alimony is also not child support. The rationale behind child support is that a parent is financially responsible for his or her children even if the children do not live with that parent. Admittedly, an ex-spouse may financially benefit from child support if the children live with him or her. But the purpose is to allow your children to share in the lifestyle of the non-custodial parent, and child support amounts will be calculated with that end in mind. Alimony, by contrast, will be calculated to compensate the spouse for foregoing a career, to rehabilitate her to support herself going forward, and/or to facilitate the maintenance of a certain lifestyle.

Learn the different types of alimony. There are many different types of alimony that differ in purpose and duration. Common types of alimony include: Temporary support. A spouse may receive temporary alimony during a divorce, annulment, or legal separation. The ordered alimony is often calculated according to local rules and is less complex than a final order of alimony. It is only in force during the legal separation process and will be superseded by a final order of alimony. Transitional alimony. This type of support is mainly short term and applies when the recipient has the capacity to become self-sufficient but requires support while making the adjustment to the economic conditions outside of the marriage. This may include time necessary to obtain educational training. Other states consider support to help obtain an education as “rehabilitative support.” Compensatory alimony. Though less common, this type of support includes situations where one party made significant contributions to the other party’s overall earning potential. Compensatory spousal support may also be awarded when the dissolution of the marriage leads to one party receiving much more in value without any other property available to offset it for the other party. It is sometimes called “reimbursement” alimony. Long-term maintenance. Here, the court usually examines whether the recipient would be unable to reasonably maintain the long-term standard of living established in the marriage on his or her own. If transitional or rehabilitative support alone would not give the recipient the capacity to do so, maintenance support may be awarded. This form of support often receives different names in different states. In Tennessee, for example, this type is called alimony in futuro. It is called maintenance support in Oregon. Many states also allow the judge to award more than one type of support at the dissolution of a single marriage. This can lead to the recipient receiving more in the initial months or years after the divorce, and less or none in the long term.

Study your state laws. Alimony will be determined differently according to each state’s laws. Sometimes, states have a statute that lays out a formula used to determine alimony. More typically, state statutes will list factors that a judge will consider when calculating alimony. These factors include: The length of the marriage The income of each spouse (and future earning potential) The age and health of each spouse The standard of living during the marriage Whether one spouse made significant contributions to the education or career of the other during the marriage Whether one spouse’s career was affected by raising children The assets and debts of each party following the divorce Domestic violence The tax impact of alimony

Examining Your Own Situation

Contact a family law attorney. Because the laws regarding alimony vary widely between states, it’s important to consult with a family law attorney in your area. The attorney should be familiar with the laws and common judicial decisions made in your state. With this experience, your attorney may be better able to predict how factors unique to your marriage will affect the amount of the alimony award. You can find attorneys by contacting your state bar association or by asking for recommendations from friends and relatives. Make sure to ask any potential candidate for their experience in alimony cases. You can also ask for references. Your attorney will have to ask other clients whether they would be willing to speak with you before giving you any information, however. Many states will certify family law specialists. You can look for this certification on the attorney’s website. Alternately, you can seek specialists through your state bar association’s referral list. To become certified, attorneys must have practice family law for many years, pass a written exam, and be recommended by peers or judges.

Determine the length of your marriage under state law. Generally speaking, the longer the marriage, the more likely a spouse is to be awarded spousal support. Short-term marriages may not lead to support payments, regardless of other factors. The length of your marriage is important to determining alimony, but the criteria used vary by state. In some states, a marriage legally begins when the marriage certificate is filed with the state and ends when a petition for dissolution is filed. In others, the length of the marriage is measured through the date of physical separation, which could be before or after the official dissolution. Many states will also consider a lengthy period of cohabitation that preceded a marriage in the alimony calculation. For example, if a couple lived together before getting married, the court would likely include this period of time in its calculation. As a general rule, the likelihood of court-ordered alimony increases when the length of the marriage exceeds ten years. In some states, as in California, a judge may not set an end date for alimony if the couple has been married over 10 years. A significant amount of alimony is less likely to be awarded for marriages lasting less than ten years. To determine the legal length of your marriage, give your attorney the following information: The dates that you and your spouse lived together as a couple The date you married The date you divorced The date you stopped living together

Gather information on the amount of income earned by each spouse. In addition to the length of the marriage, the court will also consider the ability of each spouse to independently support himself or herself when determining alimony. The greater the disparity between incomes, the larger the alimony payments could be. The court may also evaluate the potential income of each spouse. For example, if one spouse has a unique skillset or professional training but is not employed, the court would likely consider the potential income of this spouse rather than actual earnings. Similarly, if one spouse began a higher-paying job immediately after the divorce, the court may decide to base its alimony award on the higher income. How the court chooses to treat an income disparity in the alimony calculation will depend heavily on the precedents set by your state court system.

Factor in the age and health of each spouse. Your attorney will want to know the age of each spouse, as well as the state of their health. Age is a particularly important factor when one spouse did not work during the marriage. Compile a list of any health issues or medical expenses that should be included in consideration of alimony. Alimony awards tend to increase with the age of each spouse. This is because older individuals typically have fewer opportunities to re-train or develop new job skills. Younger individuals are more likely to attend a degree program or train for a new career, thus providing a higher income in the future. Younger workers also have a longer time horizon to earn an income. Spouses who have poor employment prospects because of health, disability, or age are more likely to be awarded long-term or permanent alimony. The court will also consider the number of years remaining before an individual is expected to retire. Younger individuals have a longer time period to plan and save for retirement than older individuals, and thus, alimony awards tend to increase with the age of each spouse.

Determine the “marital standard of living.” The marital standard of living is defined as the financial status of a married couple immediately prior to divorce. The amount of alimony awarded should allow each spouse to maintain the same quality of life as under the marital standard of living. Many different expenses are considered part of the marital standard of living, including housing costs, as well as costs for clothing, food, insurance, child care, and other expenses. The amount of alimony awarded should allow each spouse to maintain the same quality of life as under the marital standard of living.

Consider whether either spouse made significant contributions to the other’s career or education during the marriage. This consideration often, but not always, applies to female spouses. For example, if one spouse stayed home with children while the other worked, this allowed the other spouse to invest in his/her career and increase his/her earning power. Such a condition might be taken into consideration in an alimony decision. Alternately, a situation could have arisen where one spouse worked while the other spouse increased his/her education level. The working spouse allowed the other to increase his/her earning potential, perhaps at the working spouse’s expense, and this might be factored into an alimony decision.

Determine the net worth of each spouse. The court will consider the financial situation of each spouse after the divorce is finalized, but before any alimony is awarded. Factor in the net worth of each spouse when trying to anticipate the amount of alimony that may be determined. A significant earning disparity is likely to lead to maintenance support, or spousal support that helps to maintain the standard of living established during the marriage. If the court feels that each spouse is capable of being self-supporting, then alimony payments are less likely to be awarded.

Analyze which party was at fault in the dissolution of the marriage. At current, twenty-nine states factor fault into the calculation of spousal support. While many divorces simply state irreconcilable differences, others do assign responsibility for dissolving the marriage to one (or both) spouses. If “marital misconduct” (such as adultery) was cited as a factor in the divorce, the spouse guilty of this misconduct is less likely to be awarded support. Fault works in the opposite direction as well. If the supporting party has a documented history of physical or emotional violence against the recipient, then the supported party is likely to receive a judgment for a larger alimony settlement.

Collecting Alimony

Separate or divorce. To get alimony, you first need to separate from your spouse. You may begin to receive temporary alimony provided there is some physical separation, either because you are going through a divorce, have a restraining order, or for some other reason.

Negotiate spousal support. You have the option of negotiating with your spouse for alimony. Negotiating a spousal partner agreement may provide more flexibly than you could get from a court order. You should look at the factors that a judge will consider in your state, since alimony agreements must nevertheless be approved by a judge. Negotiated alimony agreements are also part of collaborative divorce. In collaborative divorce, the parties commit to resolving disputes outside the court system through negotiation and mediation. The parties meet with their attorneys, a financial advisor, and possibly a mental health professional (if needed). If you are interested in collaborative divorce, you should seek a collaborative family law attorney. When meeting with attorneys, ask if they practice collaborative family law.

Consider the tax implications. Before seeking alimony, you should meet with a tax professional to discuss the tax implications of receiving alimony. If you receive alimony, it will count as general income. However, the paying spouse will not withhold taxes, so you will need to plan to make tax payments. The spouse paying maintenance typically can deduct payments on a federal tax return, however there are complicated hurdles you must clear before being able to claim the deduction. You should certainly meet with an accountant or tax professional. You should read IRS publication 504 for more information on what you must do to assure that your alimony payments are tax deductible. Whether or not payments are deductible on your state taxes will be determined by state law, which varies.

Get a court order for spousal support. If you’ve been awarded alimony, be sure to obtain a court order for spousal support. If you don’t, you’ll have no legal recourse should your ex-spouse stop making payments. This is another reason working with an attorney is important--you’ll need one to file your spousal support agreement and get a court order from the judge.

Arrange for alimony payments to be automatically deducted from your ex’s paycheck. If it is allowed in your state, ask the court to issue an order to your ex’s employer to deduct alimony payments from his or her paycheck. The employer will send that money to the court, which will then send you a check in that amount. Arranging for automatic payments eliminates the uncertainty of whether or when your ex will make payments. In some states, such as California, this is called a "wage assignment" and it occurs in every child support or alimony case unless you and your ex request otherwise. In many states, this is also known as "wage garnishment." The process of garnishing your ex's wages varies, but in many cases, you need only contact your court or the sheriff's office.

Contact your ex if payments stop. In some cases, your ex may temporarily stop making payments due to uncontrollable circumstances, such as losing a job or a medical emergency. If you want to, you can negotiate an agreement with your ex to reduce or suspend the alimony payments until a future date. If you do not come to an agreement, your ex is still responsible to pay the full amount of support unless s/he seeks temporary relief from the court. In some states, if your ex stops paying alimony, you can ask the court to hold your ex in contempt (or issue an “earnings assignment order” to garnish wages). This may provide incentives for your ex to pay what is owed, such as threatening the possibility of jail time.

Place a lien on your ex’s assets. If your ex is significantly delinquent with his/her alimony, you may be able to place a lien on your ex’s assets. A lien is an assertion of your legal right to property if a person owes you money. Property with a lien notice cannot be sold or refinanced by its owner until the lien is lifted. A lien remains in force until the owner of the property fulfills his/her obligation to the lien holder. If your ex fails to make alimony payments, you can request permission from the court to take the asset as payment, or force your ex to sell the property and pay what you are owed with the proceeds. A “Qualified Domestic Relations Order” (QRDO) may also be issued. This order will entitle you to part of your ex-spouse’s retirement plans, such as 401Ks, 403Bs, and other ERISA plans (not IRAs). In many cases, unpaid alimony can be taken from your ex’s retirement account.

Sue in court. If nothing else has worked, you can file a lawsuit against your ex in small claims court (if the amount owed is beneath a state-determined limit) or in higher court (if the amount exceeds the small claims limit). This is an unusual procedure, and should be a means of last resort.

Understand when the alimony ends. If the alimony is not for a finite amount of time, it could be paid indefinitely. However, alimony payments will cease when: You reach the date set by the judge for cessation of alimony payments The spouse receiving alimony remarries or enters into a domestic partnership Your children no longer need a full-time parent at home A judge decides that the partner receiving alimony has not made a sufficient effort to become at least partially self-supporting A significant life event (e.g., retirement) occurs and the judge decides to modify alimony payments One party dies