Did You Know This About Spousal Support/Alimony?
No matter what you call it, the very mention of this topic can cause tempers to flare and tears to flow freely from those who've been involved in a divorce proceeding where alimony or spousal support was involved.
But by getting educated on this critical subject, you can be better prepared to come to a spousal support agreement you both find fair and equitable regardless of whether you're the one paying it or receiving it.
For the record - I am using the terms alimony, spousal support and maintenance interchangeably as what it is called can vary depending on where you live.
The basic premise of alimony is to provide financial support to an ex-spouse so that they can ease the transition from married to divorced. Depending on what state you live in, alimony can take a number of forms including:
- Permanent - paid until such time when one spouse passes away. If the recipient is deceased or remarries, the support stops. If the payor pre-deceases the recipient, typically an insurance policy will kick in and the proceeds will go to the recipient spouse.
- Limited Duration - paid for a set number of years based on a variety of factors including, but not limited to, age of the parties, length of the marriage, education level of the parties, ability to earn income, etc. Factors can vary from state to state and case to case.
- Rehabilitative - alimony paid for a specific purposes to aid the recipient spouse in becoming self-sufficient. For example tuition to attend college or a training program. It is limited in scope and duration.
- Reimbursement - spousal support paid to "reimburse" one party for their efforts while the other party obtained an advanced degree, did a residency etc. It can be based on the actual financial contribution made by the supporting party or to acknowledge the lost earnings they would have enjoyed had they remained married and their spouse became a [fill in the blank] doctor, lawyer, etc.
3 Common Misconceptions About Spousal Support:
Having mediated countless alimony cases in my career, there are a few common themes that pop up time and time again. Being realistic about what alimony is and what it is not can go a long way towards coming to an agreement that both you and your ex can live with. Regardless of if you're the one paying or receiving.
1. Alimony is meant to penalize one spouse for leaving:
Yes divorce is a hotly contested and highly emotional issue. But using financial matters to extract your pound of flesh from your soon to be ex is not the way to go. Alimony is not a weapon and shouldn't be treated as such. I've seen too many times whereby someone stated they were entitled to an unrealistic amount of alimony because their ex cheated, lied or was downright mean. Sorry to say but it just doesn’t work that way.
2. Spousal Support is only paid by men to women:
With more women in the workforce and earning more than their male counterparts, women can pay alimony to men. Sure it's unusual (maybe 5% of our cases involved this scenario) but the question of who pays alimony is based on income, earning ability, education, etc. If you've got an advanced degree and your ex-husband does not and he stayed home with the kids while you advanced your career, then you may find yourself paying support.
3. Alimony is calculated by a special formula:
Do you know what the #1 search term that brings visitors to our website is? Alimony calculator. And you know what? In the states of NJ and IL where we practice, there is no such thing! I get that people want to know what they can expect or what they are going to have to pay but sadly, it does not work that way. No matter what the Internet tells you. Granted there are some states that are playing around with the idea of a calculator but for now, it's not the norm. Alimony is negotiated, not calculated.
Tips for Coming to a Fair Alimony Agreement
Because alimony isn't calculated, I suggest couples use a "reality-based approach" to come to an agreement on alimony. Included in this approach are 4 principles:
- Divorce does not create income, only expense - so if you were having trouble making ends meet before, when you're divorced and living apart it's going to get even harder. Additional housing expenses, the loss of the multi-car discount on car insurance, etc. all contribute to an increased cost of living for two households versus one.
- Just because you lived that way before, doesn't mean you're going to in the future - in some states alimony laws include a statement that alimony should allow the recipient party to "enjoy a post-marital lifestyle commensurate with that enjoyed during the marriage." In other words, whatever you spent while married, you can spend while divorced. Um... no. See rule #1 above. Sure everyone deserves a vacation but instead of going to Hawaii it might have to be to the Holiday Inn.
- You both have to be able to live - Even though your soon to be ex is a no good so-and-so, they still have the right to have a roof over their head and food on their table. Especially if you have kids together, having a major income disparity between the parties is going to hurt your children. If one of you can afford to live in a 4 bedroom, 2.5 bath house and one can only afford a room over a bowling alley, guess where the kids are going to want to spend their time? I'm not saying your incomes post-divorce should be even but they should allow you both live in a style that's roughly equivalent to each other. Even though it may be lower than that of the marriage.
- Do a budget! - Let’s say you wanted to get a loan to start a business from a bank. The first thing they'd do is ask you for a list of your projected revenues and expenses to see if you've given this some thought and if you're a good risk. Same goes for alimony. If you're going to be asking your ex for money, it's always best to explain not only how much you need but why you need it. Saying "because!" doesn't really work. Explaining that you did some apartment shopping and found that "3 bedroom apartments in the town we live in cost between $1000 and $1500 and here are the three places I looked at" can go a long way toward having someone agree to contribute towards your housing expenses.
With a lack of formulas, no real guidance on what an appropriate amount and duration of maintenance might be and two parties, who are already at odds with each other over this and perhaps other issues, be careful! I've seen too many couples throw away hundreds of thousands of dollars arguing over this in court.
By following my 4 tips above and mediating your divorce, you can come to an agreement that works for both of you and your children and save yourself a ton of time, money and heartache in the end.