First in a series of four articles

Alimony

Few things strike fear in the heart of high income earners as much as alimony. If you are a high income earner who has been married for a long time to a stay at home spouse who has little to no job skills, it is a reasonable fear to have. The good news is that the law is moving away from alimony and alimony can be used for a tax advantage.

Alimony is supposed to be temporary and rehabilitative, hence the term rehabilitative alimony. If temporary alimony cannot bring about rehabilitation, then the court can, in proper circumstances, order alimony on a long-term or indefinite basis. Transitional alimony is awarded when the court finds rehabilitation is not necessary but a spouse still needs some assistance. Indefinite alimony is called alimony in futuro. Alimony in futuro is granted less often these days. Alimony in futuro can be raised or lowered over time, if there is an unforeseen change of circumstances. Alimony in solido is a definite amount of money or property awarded instead of periodic payments, and it cannot be modified. If you do not get alimony at the time of divorce, you cannot get alimony later on.

Alimony is based upon the relative needs and incomes of the parties. The legislature set out criteria for the court to consider and you can find those at aboutdivorce.com.

If a person receiving alimony in futuro or rehabilitative alimony begins living with someone after the divorce, regardless of whether they have sex or not, those alimony payments could be lowered or stopped. Death of one of the persons paying or receiving alimony will terminate alimony in futuro and rehabilitative alimony unless the divorce settlement agreement provides otherwise.

One of the most difficult things I do as a lawyer is try to convince anyone that they want to pay alimony. If alimony is paid, subject to certain conditions; then, it can be deductible to the person paying it and taxable to the person receiving it. Taxes are being paid on it either way, so what is the big deal? The big deal is that the lower earning spouse pays taxes at a lower rate. This can be much better than paying a nondeductible amount, such as in property division.

Occasionally people are paying too much alimony. This may be because the higher income earner agreed to it because of guilt, or there was an unforeseen material change in circumstances that caused a significant drop of income. Under the law, if you are paying too much alimony because you felt guilty, then you are going to have to pay it. But, if an unforeseen change in circumstances occurred such as you having a heart attack, losing your position at the hospital, or your private practice falling off because your ex-spouse is going around telling lies about you – then the court may reduce your alimony payments. Convincing a court to reduce alimony payments is not easy.

If you and your ex-spouse agree to change the terms of court ordered alimony, you must change it with another order. If your spouse says, “You don’t have to pay alimony for the next year if you will take the children to Disneyland this summer,” you must get it in writing and entered in court for it to be binding.

Like most things you are afraid of, the more you know about it, the better you can deal with it. To get the best result a client needs good lawyer, just like a patient needs a good doctor.

For more information about divorce, visit aboutdivorce.com.

Larry Rice Nick Rice

Rice Divorce Team

275 Jefferson Avenue • Memphis, TN 38103 • 901.526.6701