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An Overview of Alimony

Posted by attorney Donald Criscuolo

Unless the case involves a hotly contested child custody dispute, the issue most likely to cause acrimony is the issue of alimony. Alimony is spousal support paid after the divorce is final. It is generally a monthly payment of cash from one party to the other. Unlike child support, which is relatively uniform because it is based upon a formula, alimony is not. Instead, our laws set forth guidelines intended to help the judge establish the type of alimony and the amount of alimony. The factors include:

  • The length of the marriage
  • The physical and mental health of the parties
  • The need of one party for alimony and the ability of the other party to pay alimony
  • The financial resources of each party including non-marital assets
  • The standard of living established by the parties during the course of the marriage

Even though these guidelines exist, there is a vast difference in the treatment of this issue based upon your judge and your lawyer. If this issue is present in your case, you should ensure that you engage the services of an experienced family law attorney--one who regularly appears in court and one who has the experience to best understand how your particular judge deals with this issue. Care must also be taken when considering how to incorporate alimony into a settlement agreement and the special tax treatment accorded alimony. Under many circumstances, the receipt of alimony is taxable. Therefore, if a spouse receives a monthly payment of $1,500.00, that is the equivalent of having a job earning $18,000.00 per year. Taxes must be paid on that "income" as if it were earned through regular employment. If the recipient was relying on the full $1,500.00 per month to meet essential living expenses, he or she will be disappointed to learn that taxes are due. An inexperienced family lawyer may not fully understand these tax consequences, resulting in unanticipated negative consequences. While alimony is taxable to the party who receives it, it is deductible to the party who pays it. Therefore, when considering a settlement, this tax deduction should be taken into account to assess the true "cost" of the payment. When negotiating a monthly amount, this tax "discount" should be taken into account to assure that all efforts are made to amicably resolve your marriage. If not, a trial that could have been avoided may now become necessary. To make matters even more complex, if the parties so desire, they are allowed to specifically agree that the alimony will not be taxable and, therefore, will not be deductible. The consequences of such an agreement must be made clear to each party.

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