Preparing for divorce and want to know about alimony?
It's fair to say that there is one question on the lips of every marriage that is facing divorce…
"Will I have to pay alimony? Or will I be receiving alimony?"
With nearly half of all marriages in the USA ending in divorce or separation, alimony is a question that is likely to impact a lot of people.
Let's talk about this…
Contrary to popular belief, alimony is NOT a standard clause in every divorce. In fact, it's actually the opposite. Recent figures state that only around 10% of divorces result in alimony payments.
This is in stark contrast to divorce settlements in the 1960s, when around 25% of cases involved an alimony order. The world has changed rapidly, but if you're walking into divorce proceedings armed with dated information, then you're in for a big surprise.
So, let's take a look at exactly what you need to know…
Alimony, also known as spousal support, is money paid by one spouse to the other after divorce. But there's something else you need to know that most people aren't aware of…
It's not a punishment or a reward.
Alimony's sole purpose is to mitigate the unjust economic effects of divorce on a spouse. If one of you sacrificed your career to raise the children and support the other partner's career progression, then alimony could be used to level the financial playing field between you.
For example, if one of you was the stay-at-home parent for 15 years, allowing the other spouse to advance in their career, the working spouse will have earning potential after the divorce, but the other spouse will have a massive gap on their CV. This is where alimony would help to make up that gap.
Don't assume that you will be granted alimony (or be liable to pay it) – it is totally at the discretion of the courts.
Let me just give you something to think about here…
The days of the ex-wife getting lifetime payments from her ex-husband are quickly becoming a thing of the past. According to recent surveys, 56% of divorce lawyers have seen an increase in the number of women paying child support in the past three years, while 47% have seen more women being ordered to pay alimony.
Why is this happening?
Women have now overtaken men in university attendance and are now getting more graduate and professional degrees. This means that more women are becoming the higher income earners and therefore liable to pay support to their ex-spouses.
If there is a gender neutral law concerning alimony, then this means that either spouse could request spousal support payments and either spouse could be liable to pay those payments. The courts will make their decisions based on financial need and earning capacity as opposed to gender.
When a court has to make a decision on whether to grant alimony or not, there are specific factors that directly impact your finances and future. If you are represented by a skilled family divorce lawyer in American Fork, UT, these issues can make all the difference in your case:
Let's take a closer look at each one.
Courts use the length of the marriage as an indication of financial dependence between spouses and the need for support after divorce.
Courts will look at how much each spouse earns or can potentially earn. If one person makes $150,000 and the other only brings in $30,000 per year, that significant difference in earnings will most likely result in alimony consideration.
The other factor is earning capacity, which looks at the future potential for the lower-earning spouse to become self-sufficient. A spouse who has a medical degree but not currently employed has a higher earning potential than a non-professional.
Courts generally want to see both parties maintain a similar standard of living to what they had during the marriage, if possible. If you lived in a $500,000 home and had two luxury cars, the alimony amount will likely be higher.
The court tries to ensure that divorce doesn't leave one spouse impoverished while the other lives a life of luxury.
Courts recognize financial and non-financial contributions to a marriage, including:
If one spouse was working while the other got a law degree, the court may recognize that as a contribution warranting compensation through alimony.
There are a few different types of alimony and it is important to be aware of what they are:
Whether you will be paying or receiving alimony payments in the future, there are a few things that you can do to protect your own financial interests:
Here's the thing, a big change in the tax treatment of alimony occurred in 2019.
For agreements executed after December 31, 2018:
This is a major change from the previous tax rules and will have a significant impact on the financial outcome of a divorce.
Alimony isn't as scary or as common as you might think. In fact, with only around 10% of divorces involving spousal support, most people won't have to worry about it at all.
But if you are in a marriage with a big income gap, a long duration, or major career sacrifices, then alimony can become a very important issue in your divorce.
The most important thing you can do is to understand your options and know your rights before making any decisions.
Don't let the fear of alimony payments stop you from making rational decisions about your divorce.
Empowered with the correct information, you can take charge of your alimony situation and move forward with confidence.
The thing about alimony is that it doesn't need to be a mysterious or scary part of the divorce process. It is simply a financial settlement that the courts use to correct for unfair financial circumstances in divorce.
The world has moved on significantly since the days when 25% of divorce settlements involved alimony, but the principle is the same – the courts will try to ensure that both spouses can move forward with their lives after divorce without financial hardship.
Whether you are the high earner and concerned about making alimony payments or the lower earner and worried about how you will support yourself, you will benefit from a better understanding of these issues.
So, remember the first piece of advice for today's article – knowledge is power, especially when it comes to divorce.
