Alimony is financial support paid to the spouse who is economically disadvantaged. There are three types of alimony: (1) periodic alimony, (2) lump-sum alimony, and (3) rehabilitative alimony.
Periodic Alimony:
Periodic alimony is where the court orders the husband to pay a specified amount, such as $2,000 per month, to the wife until her death or remarriage.
- Duration: The duration is indefinite.
- Modification: Periodic alimony automatically ends if the recipient dies or remarries. It may also end if the recipient cohabits with someone of the opposite sex. The amount can be modified based on unexpected circumstances.
- Tax Consequences: The payer can deduct periodic alimony, while the recipient must include it as taxable income.
Lump-Sum Alimony:
Lump-sum alimony is ideal for situations where the couple wishes to sever ties completely. The court may order a payment, for example, of $50,000, to be paid in $10,000 monthly installments for 5 months.
- Duration: Lump-sum alimony is paid for a specified period and can either be paid in installments or as a one-time payment.
- Modification: Lump-sum alimony cannot be changed, as it is treated like a contractual obligation.
- Tax Consequences: The tax treatment of lump-sum alimony depends on whether the payment is designated as alimony or included in a settlement agreement. If identified as alimony, it can be deducted by the payer.
Rehabilitative Alimony:
Rehabilitative alimony is typically the most favored form of alimony. This type of support is meant to help the recipient regain financial stability. The court may order, for example, that the husband pay the wife $1,000 per month for 36 months.
- Duration: The duration is limited to a specific period.
- Modification: This alimony type ends if the recipient dies, remarries, or cohabits with another person. It may also be modified if it is shown that reasonable efforts at rehabilitation have been unsuccessful.
- Tax Consequences: Rehabilitative alimony is deductible for the payer and taxable for the recipient.
- Purpose: The goal is to help the disadvantaged spouse rebuild their earning capacity to become financially independent. This is particularly helpful for individuals who sacrificed their careers during the marriage.
Factors for Determining Alimony:
When determining alimony, the court will consider the following factors:
- The financial resources and earning potential of the spouse seeking support, including property division and child support.
- The couple’s standard of living during the marriage.
- The time required for the disadvantaged spouse to secure a job or complete necessary education/training.
- The age and health of both parties, including both physical and mental health.
- The balance between the recipient’s needs and the other spouse’s ability to pay.
- The physical condition of each party, including any disabilities or chronic health issues.
Considerations for Awarding Alimony:
The court primarily considers the following:
- The needs of the economically disadvantaged spouse.
- The ability of the other spouse to pay.
Fault may sometimes be a factor in awarding alimony but is generally not considered when dividing property unless there has been a dissipation of marital assets.
Wage assignments may be used to ensure timely payment of alimony.
Modification:
Changes to alimony can occur only with proof of significant and continuing changes in circumstances, such as death, remarriage, cohabitation with someone of the opposite sex, or even retirement if reasonable.
Alimony Pendente Lite:
Alimony pendente lite is a temporary form of support provided during divorce proceedings to help the disadvantaged spouse cover the costs of litigation. This alimony ends once the divorce is finalized and is unaffected by cohabitation.
Changes to Alimony Pendente Lite:
If the couple’s combined monthly income exceeds $30,000, specific rules apply. The court uses a formula that takes into account the income difference and the presence of minor children. Additionally, the length of the marriage will be considered when determining the duration of alimony pendente lite.
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