Module Notes
Spousal support, commonly known as alimony or spousal maintenance, is a legal obligation that one spouse may have to provide financial support to the other spouse following divorce.
Purpose of Spousal Support
The primary purpose of spousal support is to:
- Address disparities in earning capacity
- Ensure financial stability for both spouses post-divorce
- Provide financial support to a spouse who may have sacrificed career opportunities or earning potential to support the family unit during the marriage
- Facilitate a smoother and more equitable transition for both spouses
Note, a very small number of jurisdictions utilize a spousal support calculator to determine this support. Beware of online spousal support calculators that imply an easy and/or widely accepted spousal support calculation. Most official calculators are provided by the court system or social service organizations in your state.
Spousal Support Considerations
- Duration of the marriage
- Financial needs and resources of each spouse
- Standard of living established during the marriage
- Earning Capacity and Potential for Future Earnings
- Age, health, and employability of each spouse
- Types of Spousal Support
Here are the most typical types of support scenarios:
- Immediate Spousal Support: to address the immediate financial needs of the recipient spouse during the divorce process
- Rehabilitative Spousal Support: to support the recipient spouse in obtaining employment or acquiring education, training, or skills necessary to become financially independent
- Temporary or Term Limited Spousal Support: to address the financial needs of the recipient spouse for set period of time
- Permanent or Long-Term Spousal Support (Indefinite): to support spouses who are unable to achieve self-support
- Reservation of Spousal Support: an open window of time in which recipient spouse could seek support if a need arises
- Direct Payment of Expenses: payment of direct expenses paid for the recipient's benefit in lieu of a support payment
Calculation of Amount and Duration
Whenever you are thinking about spousal support, you have to decide on three elements.
- How much?
- For how long?
- And, what modifications or changes may be needed during the term of support.
Key Concepts/Considerations
- If there isn’t enough income to meet both parties’ reasonable needs, then sometimes you calculate an amount of support that will share deficits
- Some parties work out an adjustable spousal support agreement most commonly with decreasing amounts over time as the recipient’s income increases
- When parties have different types of income (like variable income), the support calculation may be more difficult as well
- Some jurisdictions have rules or guidelines on duration
- Spousal support is a non-taxable transfer of funds (unless prior to December 31, 2018)
- It is possible to negotiate a locked in non-modifiable support agreement
Modification and Termination
The following occurrences can cause termination or modification of spousal support:
- Death of Either Party
- Remarriage of Recipient
- Cohabitation of Recipient
- Change in Financial Circumstances or Employment
- Retirement
By understanding the eligibility criteria, types, calculation methods, duration, modification processes, tax implications, and legal considerations of spousal support, individuals can more confidently navigate divorce negotiations and make informed decisions.
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