Divorce can be a challenging time for all involved, and one of the most contentious issues in many divorce cases is alimony and spousal support. Alimony and spousal support are financial payments made from one spouse to another after a divorce, and understanding the complexities of these payments is essential for both parties involved. In this blog post, we’ll explore the types of alimony and spousal support, the factors considered in awarding them, and the tax implications involved.
Alimony and spousal support can be a complex and confusing aspect of divorce. The purpose of these payments is to provide financial support to a spouse who may have become financially dependent on their partner during the course of the marriage. The goal is to provide the dependent spouse with the means to maintain a reasonable standard of living after the divorce is final.
What is Alimony?
Alimony, also known as spousal maintenance, is a court-ordered payment from one spouse to the other after a divorce. The purpose of alimony is to provide financial support to a spouse who may have become financially dependent on their partner during the course of the marriage.
Types of Alimony
There are several types of alimony, including:
- Permanent Alimony: Permanent alimony is awarded when one spouse is unable to become self-sufficient due to age, illness, or disability. This type of alimony is usually awarded for life unless the receiving spouse remarries or passes away.
- Rehabilitative Alimony: Rehabilitative alimony is awarded when one spouse needs financial assistance to gain education or training that will enable them to become self-sufficient.
- Reimbursement Alimony: Reimbursement alimony is awarded when one spouse needs financial assistance to compensate for contributions they made to the marriage, such as supporting the other spouse through college.
Factors Considered in Awarding Alimony
When awarding alimony, several factors are considered, including:
- Length of the Marriage: The longer the marriage, the more likely it is that alimony will be awarded.
- Income: The income of both parties is taken into consideration when awarding alimony.
- Age and Health: The age and health of both parties are considered when awarding alimony.
What is Spousal Support?
Spousal support is similar to alimony, but it is usually awarded for a shorter period of time. The purpose of spousal support is to provide financial support to a spouse who may have become financially dependent on their partner during the course of the marriage.
Types of Spousal Support
There are two types of spousal support:
- Temporary Spousal Support: Temporary spousal support is awarded during the divorce process and is intended to provide financial support to the dependent spouse until the divorce is final.
- Rehabilitative Spousal Support: Rehabilitative spousal support is awarded for a specific period of time to allow the dependent spouse to become self-sufficient.
Factors Considered in Awarding Spousal Support
The factors considered in awarding spousal support are similar to those considered in awarding alimony. The length of the marriage, income, age, and health of both parties are all taken into consideration.
Differences between Alimony and Spousal Support
The main difference between alimony and spousal support is the duration of the payments. Alimony is typically awarded for a longer period of time and, in some cases, may be permanent. Spousal support, on the other hand, is usually awarded for a shorter period of time and is intended to provide temporary financial support.
Tax Implications of Alimony and Spousal Support
Until recently, alimony payments were tax-deductible for the paying spouse and taxable income for the receiving spouse. However, under the Tax Cuts and Jobs Act of 2017, this changed. As of January 1, 2019, alimony payments are no longer tax-deductible for the paying spouse, and the receiving spouse no longer has to pay taxes on the payments.
This change only applies to alimony payments made after January 1, 2019. For any alimony payments made before that date, the old tax rules still apply. It is essential to speak with a tax professional to understand the tax implications of alimony payments.
Modifying Alimony and Spousal Support Orders
Alimony and spousal support orders can be modified if there is a substantial change in circumstances. This may include a change in income, health, or employment status. It is important to speak with a family law attorney if you believe that your alimony or spousal support order should be modified.
Considering Whether to Keep the Same Financial Planner in a Divorce
Keeping the same financial planner in a divorce is a decision that many couples face. While it may be tempting to keep the same planner to maintain continuity, it may not always be the best option.
If the financial planner has a close relationship with one spouse, it may be difficult to remain impartial in the divorce process. Additionally, if the financial planner is not experienced in divorce planning, they may not be able to provide the necessary guidance for dividing assets and managing financial resources post-divorce.
It is essential to seek the advice of a family law attorney and a financial planner experienced in divorce planning to determine the best course of action for your specific situation. By working with professionals who understand the complexities of divorce, you can ensure that your financial interests are protected and that you are well-positioned for a successful financial future post-divorce.
Alimony and spousal support can be complex and confusing aspects of divorce. Understanding the types of alimony and spousal support, the factors considered in awarding them, and the tax implications involved is essential for both parties involved. If you need assistance with alimony or spousal support in your divorce case, it is important to speak with a qualified family law attorney. Learn more about how they can help you with your divorce case by contacting our family law firm today.