Next to issues surrounding children, “alimony,” otherwise known as “maintenance” or “spousal support,” is probably one of the most emotionally-charged and hotly contested issues in divorce. Very few people are excited about having to support their former spouse in some manner for any length of time. Yet, if you happen to be the spouse who took a dozen years or more out of a career to raise children, or you are disabled, or you are out of a job for whatever reason, “alimony” is more than a dry legal concept: it is a necessity of life.
If you find yourself in the position of having to negotiate alimony, the most important thing you can do, other than getting legal help, is to educate yourself about how alimony works. Alimony has legal, financial, and tax implications that you must understand before you start negotiating. Otherwise, you may find yourself in a real financial bind after your divorce when it turns out that you don’t have as much money to live on as you had planned.
Here are 10 questions you need to ask before negotiating your future support:
1. How Much Money Do You Need To Live On Every Month? The only way you are going to know how much money you need to survive each month is by making a budget. The good news is that most courts require people going through a divorce to prepare and present an income and expense sheet that is, in essence, a budget. So, just by doing what the court requires, you will be well on your way toward creating the budget you need.
When you are making your budget, be as complete and as accurate as you can! Make sure that you also include “hidden” expenses – the things that you may only pay once a year, like license plates, vacation expenses, and summer camp for the kids.
The more accurate your budget, the more you will know how much money per month you need to bring in after your divorce in order to survive.
2. Are You Thinking of Living With Someone or Getting Remarried Within the Next Few Years? In most states, alimony ends when you co-habitate (i.e. “live with” in a romantic sense) or marry someone else. So, if you are already in a serious relationship with someone other than your spouse, and you are planning on moving in together or getting married in the not-too-distant future, you might be better off forgetting about alimony and instead negotiating to get a bigger portion of the marital assets.
3. How Much Can Your Spouse Realistically Afford to Pay You? I know. You may be thinking: “Why do I care what my spouse can afford? That dirty S.O.B. deserves to pay!” However, with all due respect, what your spouse does or does not “deserve” is simply not a legal issue.
You can’t get blood from a turnip. You may need $5,000 per month to support yourself, but if your spouse only makes $4,000 per month before taxes, you are going to find yourself out of luck. You need to know how much your spouse earns and what his expenses are in order to know how much money you can realistically expect to receive from him.
4. How Secure is Your Job? Figuring out how much money you need to live on involves two factors: money in and money out. If you lose your job, the alimony check that used to allow you to cover your expenses may no longer be enough to do that. If you negotiated alimony that was “modifiable” (i.e. able to be changed) then you might potentially be able to re-negotiate a higher amount if your financial circumstances change for the worse.
5. How Secure is Your Spouse’s Job? This, of course, is the flip-side of question #4. If your spouse loses his job, and your alimony is modifiable, you may find yourself going down the financial rabbit hole with him. Again, if you know your spouse’s work history is spotty, you might be better off taking a bigger chunk of the marital assets than you would be to spin the wheel on the chance that he will stay gainfully employed long enough to support you for whatever length of time you need.
6. How Will Alimony Affect Your Income Taxes? Alimony is taxable income to you. It is tax deductible to the payor (your spouse). That means that you have to pay taxes on every penny you get in alimony. That also means that it would be very smart for you to talk to a C.P.A. or Divorce Financial Planner before you make any agreement about alimony so that you know what effect your spouse’s alimony payments are going to have on your overall income taxes.
7. Does the Law in Your State Provide a Mathematical Formula for Calculating Alimony? If so, What is It? More and more states are adopting alimony guidelines, or formulas for calculating the amount and/or duration of alimony. If your state has such guidelines, you need to know what they are and how they apply to your case. If your state does not have any guidelines, you need to know, from an experienced divorce professional in your area, what factors the court will consider when awarding alimony, and whether a judge would be likely to award alimony in your case.
8. Will Your Alimony Award be For a Fixed Period of Time, or Will It Be Reviewable? There are two aspects of alimony: the amount of money you receive and the length of time in which you receive it. What happens if, when the alimony payments end, you are still not back on your feet. Will you have the ability to go to court and ask the judge for an extension of your support? Can you negotiate for that? You need to know the answer to these questions before you start negotiating.
9. How Much Time Will it Take for You to Get Back on Your Feet? If you need to go back to school for two years and get another degree in order to be able to find a decent job, you can’t agree that your alimony will end in one year. You have to make sure that the length of time during which you are receiving alimony is realistically long enough for you to get back on your feet.
10. How are You Going to Secure Alimony? Your ex can’t make alimony payments if he is dead. What’s more, it is highly unlikely that he will leave any money to you (if he even has any money to leave) in his Will. So it is critical that you put a provision in your divorce judgment that requires your ex to maintain a life insurance policy on his life that names you as the beneficiary in an amount that is large enough to cover the alimony payments he is supposed to make to you.
Negotiating alimony is not simple. This is one area in which having the right legal and financial advice, and making sure you know what you are doing before you open your mouth, can make an enormous difference.
For more divorce advice and information from Karen Covy, go to http://karencovy.com
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