Alimony

Some Suggestions

 

You Have Control

The tax consequences of alimony are under your control. The terminal events of alimony (death of either party, remarriage of recipient) are under your control. You can define them, for the most part, as you wish. Absent an agreement, the law defines when alimony will end, and the Internal Revenue Code defines its tax consequences…it is deductible by the payer and includable in the income of the recipient unless the payment is deemed to be a subterfuge for a property settlement or the payment of child support. This is a fertile area for creative planning. Ask your accountant or lawyer to elaborate.

Self Sufficiency Favored

Courts treat spouses who are trying to be self-sufficient with more regard than those who remain unemployed, despite having the ability and time to be self-supporting to some extent.

Be Realistic

Make your expense list accurate and make an honest projection of the expenses you anticipate incurring after the divorce is final---taking into account the lifestyle to which you have become accustomed during the marriage.

Crave Independence

Make yourself as independent of the payor as you can.

Become employed

Retrain yourself to enhance your earning capacity.

Know What You Spend!

Stay aware of your income and expenses…..know what you have. Discipline your financial life by having a budget. Look seriously at what you really need to support a lifestyle that suits you—not necessarily the “lifestyle to which I have been accustomed”.

Accountants

Consider using an expert witness to (a) testify with regard to the payer’s income (More needed if the payer is self-employed or has illegal or hidden income…i.e., in a position to use accounting deceit or sophistication to mask income as something else.

Vocational Experts

If your spouse is deliberately minimizing or reducing their income, consider testimony from a vocational expert who can translate a person’s academic and work history into a wage earning capacity which may be used where appropriate. 

Income? All Sources

The Court will consider income derived from all sources, even including the future income which can be derived from assets which are divided at the time of a divorce. For example,   Husband’s monthly pension payments will be considered as income in determining alimony, even though Wife may have been awarded a share of pension as part of monetary award.

Accounts receivable?

Accounts receivable of a spouse’s corporation will be included as income in determining alimony and child support, even though they formed part of the basis for valuing the corporation incident to making a monetary award.

Earnings Withholding

Have alimony paid by an earnings withholding order which will require the employer of the paying spouse to take money out of a paycheck and send it as directed in the order, usually directly to the receiving spouse. This is a real comfort to spouses who are convinced (many times with justification) that the paying spouse will not pay, or will be persistently and deliberately late. 

 

Exchanges of Information

In a Settlement Agreement, request periodic exchanges of financial information during the time alimony is to be paid, so you can inexpensively determine whether any adjustment of the alimony payments has become warranted

 

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