It's a fact of life that not all marriages last forever, and most divorces don't end amicably either. Going through the process of divorce can be stressful for both parties. We're here to make it a little easier by providing necessary information to a divorcing couple, as each party will inevitably come across matters involving different types of alimony.
What Is Alimony?
The word “alimony” was derived from the Latin word alimonia which means nourishment or sustenance. To put it succinctly, alimony is a legal obligation for a “supporting spouse” to provide financial support to a “dependent spouse” before, during, or after a divorce or a marital separation for a determined length of time.
This spousal financial support is either paid on a continuing basis or as a lump-sum payment, depending on what was mutually agreed upon by both parties outside of a court or on the court's decision, if both parties could not agree on the terms.
Besides monetary support, alimony may also include a transfer of title or possession of personal property or a security interest in or possession of real property.
Alimony should not be misconstrued as child support. It is a financial remedy which addresses the needs of the spouse with the lower income exclusively.
What Qualifies a Recipient Spouse for Alimony?
As a general rule, a supporting spouse has a higher income between the couple while the dependent spouse is substantially reliant on the higher-earning spouse for maintenance and support. This is to enable the dependent spouse to maintain the same standard of living he or she experienced during the marriage while he or she is still in the process of finding a means to become self-sufficient.
Alimony is typically granted to a dependent spouse who was married to the supporting spouse for a considerable number of years. The length of marriage needs to meet the minimum requirement of 5 years in order for a spouse to qualify for alimony.
There are sixteen statutory factors that the court needs to consider in terms of support determination:
Another important consideration in determining the types of alimony to be awarded will be if either spouse committed adultery during the marriage as well as the circumstances that surround the act. Adultery may be taken into account if the spouse's affair caused financial harm to the other spouse. If the dependent spouse commits adultery prior to the issuance of a final order or the formal signing of a marital settlement agreement, he or she will not be awarded alimony.
Additionally, the court may also decide not to award alimony if the paying spouse's net income will become significantly less than the recipient's.
What Qualifies as Alimony?
To be considered as spousal support or alimony, the following conditions need to be met:
What Are the Different Types of Alimony?
In order to come up with an amicable settlement or to gain a better understanding of how a court or judge decides on matters pertaining to alimony, it is important for any divorcing couple to know the different types of alimony.
Unlike other types of alimony, lump-sum alimony is a onetime, total payment made by a supporting spouse to a dependent spouse. For a supporting spouse who can afford to pay a lump sum, it would be the best way to settle and move on, as he or she will no longer be obligated to pay the dependent spouse for any other type of alimony. However, both parties need to agree mutually on the total lump sum. Some states allow a onetime payment for as long as the sum covers the total amount of future monthly payments.
This type of alimony has a maximum, 2-year duration and is non-modifiable. It is typically given after the divorce has been finalized as a stop-gap remedy to pay for the recipient's short-term needs (i.e. living expenses) while he or she is the middle of completing a skills program to improve job prospects or while in the midst of selling a property.
Separation alimony is typically awarded to a recipient spouse if he or she is incapable of being self-sufficient during the separation. Should the couple decide to reconcile, the alimony may be terminated. Should the divorce become final, the alimony may be changed to another type.
Also known as alimony “pendente lite,” this type of alimony is usually awarded by a court to a dependent spouse as temporary financial support while the divorce is still pending. Once the divorce is finalized, temporary alimony is automatically terminated.
As the name suggests, rehabilitative alimony is short-term financial support given to a dependent spouse who still needs time to find and establish a means to support himself or herself independently. This type of alimony has a specific purpose — to provide for the recipient's needs as he or she acquires the skills and training necessary for employment.
Although rehabilitative alimony is temporary, the length of time for receiving financial support is determined on a case-to-case basis. A recipient is given ample time to train, look for a job, and be gainfully employed until he or she becomes self-sufficient. However, rehabilitative alimony requires a recipient to submit a training or educational program which outlines the cost and time needed to complete the plan. The recipient will also be reviewed on his or her progress from time to time.
Rehabilitative alimony can be modified by the court if the recipient spouse fails to fulfill the terms of his or her rehabilitative plan or if he or she completes it ahead of schedule.
When other types of alimony are inadequate in providing for a recipient's needs, the court may decide to award durational alimony. The maximum term for durational alimony is based on the length of the marriage. This type of alimony is given to provide economic assistance in cases where permanent periodic alimony is not suitable. In exceptional circumstances, durational alimony may only be modified in terms of amount but not duration.
If a spouse had to work to get the other spouse through college or to assist in paying for a work-related training program which led to a better-paying and higher-earning job, then that may entitle the financing spouse to reimbursement alimony. This type of alimony usually lasts up until the cost of schooling has been fully paid (or at least half of the cost has been paid back).
In cases where the recipient is unable to work or become self-supporting (possibly due to a handicap or the inability to gain skills or employment all throughout the marriage), the court may grant permanent alimony. Payments for this type of alimony are continuous and indefinite and will only terminate when the supporting spouse dies or when the recipient remarries.
For marriages which lasted for at least 17 years, a judge may grant permanent alimony if such an award is deemed appropriate. A marriage fewer than 7 years can only avail of permanent alimony under exceptional circumstances. Permanent alimony can be modified in the event that a substantial change in financial circumstances occurs for either spouse.
There are several types of alimony that may be granted by a court, depending on the determination made after a spousal support analysis. As enumerated in G.S. 50-16.3A (b): “The court shall exercise its discretion in determining the amount, duration, and manner of payment of alimony. The duration of the award may be for a specified or for an indefinite term.”
However, regardless of which type of alimony will be determined as appropriate, the recipient spouse will be responsible for paying taxes on the alimony received while the supporting spouse will be entitled to tax deductions for alimony payments made. A lump-sum payment will be regarded by the IRS as property distribution, thus there will be no tax consequences for either party.
Additionally, divorcing couples should also take note of the types of alimony that are modifiable by the court when exceptional circumstances occur, as it may impact either spouse financially.