EP 111: Guide to Spousal Support (aka Alimony or Maintenance) – Updated for 2017!

spousal-support-check-alimony

Spousal support (also called alimony or maintenance) is often a contentious issue in divorce.

What is spousal support? It involves one person paying their ex-spouse money for living expenses. The reason it exists is because one spouse may not work, or they work much less than the other spouse. During the marriage, they were dependent on their spouse for financial support, and they may not have career options available to them after the divorce. Spousal support ensures that both spouses still have enough financial resources to live after the divorce. It may only last for a few years, or it can last a lifetime.

Want to listen to this episode on your mobile device? Just use one of the following links:  iTunes | Google Play Music | RSS Feed or click on the episode player above.

Spousal support was discussed in Episode 12, so listen to it as well. This issue can be very contentious because the spouse who is making payments often resents the fact that they must pay their ex-spouse money. However, the other spouse needs that money to live a normal post-divorce life. There are usually a lot of emotions on both sides of this issue.

Spousal support varies widely, depending on your state. Some states have very generous spousal support laws, whereas others are more restrictive. A few states have a straightforward way that spousal support is calculated for all cases.

However, in many states, it is up for negotiation and open to interpretation in court.

Almost all states consider these factors:

  • The length of the marriage
  • Both spouses’ incomes
  • Your standard of living
  • Whether one spouse gave up a career to raise children
  • The earning capacity of the spouses

After divorce, can you change spousal support?

Sometimes life happens, and your circumstances change. The spouse paying support may lose their job, become disabled, or retire. If these circumstances change, it can be grounds to change spousal support. Spousal support can be terminated if the spouse receiving support remarries or (in some states) moves in with someone else. Spousal support can even change if there is a change in child custody (separate from changing child support).

Even though it is possible to change spousal support, it will not be easy. You will be starting another legal battle, which can get very expensive. If you want to pursue that option, you should have a compelling reason for justifying a change. You will have no guarantee the outcome, even if you have a strong case. If you are the person paying spousal support, you should accept that it may not be possible to change it. If you are receiving spousal support, make sure you are getting enough to live on, and budget accordingly.

Spousal support is taxable income for the person receiving it, so you need to pay income tax, as you would with any other income. For the person paying spousal support, it is tax-deductible, which means it is a tax benefit. However, the person who is paying child support pays the taxes on it, not the person receiving it.

Spousal support is complicated, and it will vary depending on your state and your individual circumstances. It can be difficult to predict what will happen if it goes before a judge. Whether you are paying or receiving spousal support, you need to plan for the long term. How will it affect your budget? If you are receiving support that will decrease in a few years, you will need to plan for those decreases far in advance.

Spousal support is an important topic, so check your local laws, ask your attorney what to expect, and make sure that you are making the right decision for you.

Thank you for listening to the Divorce and Your Money Show. Visit us at www.divorceandyourmoney.com for 1-on-1 coaching. If you enjoyed the show, please take a moment to leave a review on iTunes, as it will help other people discover this free advice.

Shawn Leamon, MBA, CDFA

Dallas, Texas

Shawn C. H. Leamon is Managing Partner of LaGrande Global, a firm that helps successful families manage large financial transitions like divorce, inheritance and selling a business.

He earned his Bachelor of Arts from Dartmouth College, double majoring in Economics and Philosophy, and his Masters in Business Administration at Spain’s IE Business School.

Before founding LaGrande Global, Shawn helped manage $1.1 billion in client assets at Bernstein Global Wealth Management. He also worked as a credit research analyst at J.P. Morgan. He is a Certified Divorce Financial Analyst, and he has been an advisor to numerous high-stakes divorce cases.

Shawn is the author of two well-received finance books: Managing Private Wealth: Principles, and Divorce and Your Money: The No-Nonsense Guide, both published in 2016.

In his spare time, Shawn is an ultra-endurance athlete and has competed in events as long as 24 hours. He is an Eagle Scout and a member of the Alumni Board of Greenhill School.