What’s the Deal with Alimony and Who Pays It?

To be frank, alimony is a tricky business and can lead to a lot of stress for both parties. Which is why it’s so important to understand what your rights are regarding alimony. Unlike child support which often ends once children become adults, alimony can go on and on. So, it’s pretty important that you fight for an arrangement that works for you. 

Please note that not all divorces will require alimony payments after their completion, but we’ll dive a bit deeper into which scenarios it might come into play.

What is alimony?

Alimony (sometimes called “maintenance”) is a type of support payment made to a separated or former spouse in an attempt to ensure they can maintain their pre-divorce lifestyle. Alimony payments are determined under a divorce decree and state law comes into play here. One party’s need and the other party’s ability to pay helps determine the alimony amounts. 

How do you decide who receives alimony? And how much do they get?

Because alimony criteria varies on a state to state basis, there is no one clear answer for which spouse will get alimony and how much they’ll get. That being said, most often, alimony is granted to the spouse who has limited means to benefit from the earning power of the other spouse that they acquired during marriage. This is often because one spouse did not work outside the home for many years either to manage the home or raise children, which both parties in the marriage agreed to. Because their household responsibilities limit their ability to build a career or to pick a career back up at the level they would need to maintain their lifestyle, alimony payments from their ex-spouse may be legally required. 

When considering the appropriateness of alimony, the court evaluates a prospective recipient’s current sources of income, including earnings from property and earnings from separate property (like a trust fund). 

Alimony is typically awarded if a spouse meets any of the following criteria:

• Need. This is one of the more important factors in determining alimony. If the recipient-spouse needs financial assistance to pay for food, shelter, clothing, utilities, and other necessities, they may qualify for alimony. Especially if children are involved. 
• Ability to pay. Can the payor spouse afford to pay what is needed and still be able to support themselves in a similar lifestyle to the one they led pre-divorce? Both spouses need to be taken care of. 
• Prior lifestyle. As mentioned, maintaining a reasonably similar lifestyle to the one you led before divorce is important to the court. For example, if a CEO earns $5 million per year, they’ll have a challenging time convincing a judge their spouse should only get $40,000 a year, even if that is enough to cover their basic living expenses.
• Length of marriage. Short marriages don’t always qualify for alimony, but longer ones often do. Overtime, spouses may make career sacrifices to support their spouse’s career goals or family’s needs and those events that may have occurred over decades can make a supporting case for alimony.
• Age and health status. Courts do tend to look at the age and health of each spouse while determining alimony, including if one spouse is disabled or retired. If both spouses are young and healthy, able-bodied, and college educated with career potential, then it might be that neither spouse qualifies for alimony. But a 50 something homemaker with health problems may struggle more to bounce back financially post-divorce. 
• Contribution to education and career. If someone supports a spouse through medical school, pays for higher education expenses, or makes sacrifices in order to help them get a leg up career or education wise, then the supporting spouse may have a claim to alimony. Especially if the spouse they supported went on to work a higher paying job and agreed they should stay home to care for their children and household. 

What types of alimony exist?

Yep. It’s about to get even more complicated. There are four classifications of alimony: rehabilitative, permanent, modifiable, or nonmodifiable.

Rehabilitative. This is a temporary financial award intended to only assist a spouse financially until they can become self-sufficient. This type of alimony can help support a former spouse while they pursue a college degree or begin building their career again. Not all states allow for rehabilitative alimony.

Permanent. Unlike rehabilitative alimony, permanent alimony is, well, permanent. This is a more common ruling when the spouses are older or if one sacrificed their career for the sake of the marriage or family. This type of alimony may also come into play if the recipient spouse is disabled or has health issues. 

Modifiable. This type of alimony award is subject to change over time and may be increased, decreased, or terminated altogether if a change in circumstances warrants a modification to the alimony agreement. For example, the payor spouse may lose their job or the recipient spouse may win the lottery (wouldn’t that be nice?). With a modifiable agreement, either spouse will be allowed to go back to court later to request a modification. 

Nonmodifiable. A less common form of alimony, non modifiable alimony is often avoided because it doesn’t take unpredictable turns of events into consideration. It’s pretty difficult to predict if someone will start a lucrative business, get remarried, or win the lottery, so this type of alimony is unlikely to occur as the recipient spouse would continue to receive it even if their circumstances change for the better or the payee’s circumstances change for the worse. 

Do relocation or remarriage affect alimony?

The relocation of either spouse won’t affect alimony, but remarriage can. In regards to relocation, if your divorce judgment occurred in a different state than where you live now, you can typically file that same judgment in the second state and enforce it there. However, if the recipient-spouse is the one to relocate and gets a roommate or shares a room with someone else, typically a romantic partner, then the payor spouse may be able to pursue an alimony reduction if the recipient now has lower rent and living expenses to account for each month. 

There is a very good chance remarriage will affect your alimony agreement, especially if the recipient-spouse is the one to remarry. In most cases, remarriage of the recipient-spouse will cause a termination of the payor’s alimony obligation — unless you had one of those rare nonmodifiable alimony agreements in place. Usually your written alimony agreement will outline the conditions that may terminate alimony. 

When can alimony be terminated?

Alimony payments are terminated automatically by the passing of either spouse or if certain termination agreements settled by the former couple during their divorce proceedings occur. 

What if alimony payments aren’t made?

This is where things get messy and very frustrating. Just because a court orders alimony payments, that doesn’t guarantee the payor spouse will actually make their alimony payments on time or at all. If the payor spouse doesn’t make their alimony payments, there are ways to attempt to enforce alimony orders. This can include contempt of court proceedings, garnishment of wages, and the placement of liens on property.

What are the tax ramifications of alimony?

The Federal Tax law indicates that alimony is neither tax-deductible to the payor spouse or taxable income to the recipient spouse.  There are many states, such as California, that do not adhere to the Federal tax laws and do consider alimony tax-deductible to the party that pays it and taxable income to the recipient spouse. You must make sure to follow all present tax rules relating to alimony. Double check with your attorney or accountant to make sure you’re making payments correctly or are following any rules or regulations that can affect how alimony is taxed. 

Getting divorced? Your Divorce Guidebook: One Step at a Time breaks down everything you need to know about alimony, child support, and more!