Alimony: Reimbursement Support
Reimbursement support is one way in which a spouse (the paying spouse) who received the other spouse’s (the receiving spouse’s) monetary support during marriage repays that support after the parties divorce. The benefit rendered could be in the form of educational costs, money spent toward establishing or operating a business for the supported spouse, and similar types of support. To be eligible for reimbursement support, the benefits should have been received during the marriage, and the receiving spouse should have provided most of the family support during the marriage period in question. Reimbursement support is not the same as basic alimony. Alimony, also called “spousal support,” is intended to allow the spouse who receives the alimony to live in a lifestyle similar to what he or she enjoyed during marriage. Reimbursement support may be provided for employment opportunities that the receiving spouse forfeited in order to care for the family while the paying spouse advanced his or her education or career. The sacrifice in the form of foregoing personal or professional goals in order to support the marriage is taken as the key factor for determining the reimbursement amount. Reimbursement support usually is based on the amount of money spent by the receiving spouse during the marriage, not on the enhanced future earning capacity of the paying spouse. The divorce court has discretion to grant reimbursement support and to quantify it. Either party may petition to modify the reimbursement support amount as time passes. Remarriage does not terminate the reimbursement support obligation. It is tax deductible for the payer, and is taxable as income to the receiving spouse. The paying spouse’s death terminates the reimbursement obligation, so it is wise to assure that the paying spouse carries life insurance payable to the receiving spouse. Courts consider the paying spouse’s ability to pay and the receiving spouse’s financial situation when awarding reimbursement support. Other factors may include the parties’ ages, health, retirement benefits, wastage of marital assets, and grounds for separation.
Alimony: Temporary Support
Temporary alimony is the same as temporary spousal support, and both provide sustenance to the dependent party through the course of a divorce case. During the proceedings, the dependent spouse and the parties’ children may require financial support, and courts may grant temporary support for that purpose. Dependant spouses can seek temporary support during legal separation as well. There usually is not a precise formula for calculating temporary support. Courts should evaluate the independent spouse’s ability to pay and the reasonableness of the temporary support claim before awarding temporary support. Courts usually consider the dependent spouse’s needs along with the parties’ ordinary standard of living in determining an award. Limited-term support sometimes is called “rehabilitative maintenance,” as it is designed to maintain a supported spouse’s financial stability for the time it takes him or her to be rehabilitated. This sort of maintenance often is awarded during times in marriage where one spouse has deferred career and/or education for the family’s welfare. Temporary spousal support can be defined for a specific period of time, and a specific date usually is identified for the court’s approval. Spousal support can be terminated by the occurrence of an event such as remarriage, death of another spouse, court order, and financial windfall. For federal income tax purposes, temporary support is tax deductible to the paying spouse and is ordinary income to the receiving spouse. In many states, support also can be made payable in a single lump sum. Some states use a statutory formula for calculating support awards based on parties’ financial status during the marriage. Temporary support is awarded to the supported party to minimize financial hardship and unfairness, usually when the supported spouse is not as strong financially as is the supporting spouse. In that way, the legal system strives to provide equal treatment for both the spouses involved in divorce or separation proceedings. Temporary support helps protect the supported spouse’s assets and credit during the proceedings. Some states grant support for up to three years for supported spouses with more than ten years of marriage, but this can differ with circumstances and the case. The parties also can waive alimony, provided that it is understood that support generally is not sufficient to cover the supported spouse’s expenses or outstanding debts.
Lump-Sum Spousal Support
Spousal support can be one of the most difficult issues to resolve in divorce. Spousal support, which is also referred to as alimony, involves an obligation by one spouse to make financial payments to the other spouse. Permanent spousal support involves the payment of support after a divorce is granted and until a further court ruling modifies or terminates the obligation. Permanent spousal support may be ordered in situations involving long-term marriages or in situations where one party cannot earn a living due to a disability or injury. Such spousal support can be paid in lump sum or on monthly basis. Courts consider certain factors when ordering the payment of spousal support, including the length of the marriage, the age of the parties, their relative incomes, the tax implications of the support award, any economic advantage or disadvantage due to marital breakdown, and arrangements with regards to child support and custody. Several states allow lump sum support, including: Alaska, Florida, Kansas, Louisiana, Maine, Michigan, Nevada, New Mexico, North Carolina, Ohio, Oregon, South Carolina, Virginia, West Virginia, and Wyoming. Lump Sum Payments Once the court has determined who is to pay spousal support, the next issue that arises is the method of payment and duration of spousal support. Spousal support generally is payable on a monthly basis until terminated by court order or remarriage. However, an agreement allowing for a single lump sum payment may be reached depending on the circumstances of the case, the parties’ desire to have such an arrangement, and the paying spouse’s financial ability to make a single payment. There are advantages of lump sum spousal support, including the parties’ peace of mind and closure. Once the lump sum amount is paid, the payor spouse may obtain a release from the recipient spouse from further obligations of spousal support. In this way, the payor spouse avoids or considerably reduces the risk of later claims by the recipient spouse to vary the spousal support arrangements earlier agreed upon. Additionally, the recipient spouse has a lump sum amount available which he or she can immediately use and/or invest for financial stability. The recipient spouse would not have to rely upon someone sending him/her a check every week or every two weeks or every month. However, there are also certain disadvantages to lump sum spousal support, including the tax implications of receiving a large support payment that is referred to as “alimony.” Another disadvantage is the lack of a guaranteed income in the future and the possibility that the lump sum payment is less than the total payout possible under a monthly support schedule. Conclusion In light of all of the different factors that can impact the award of spousal support, including the varying requirements under state laws, the advice and counsel of an experienced family law attorney can help explain your rights and obligations with respect to such awards.