A Client’s Guide to Understanding the Law of Alimony and How the Court Determines Alimony
To help your attorney guide you to a fair alimony result you must have a solid understanding of the law behind alimony and how a judge would make an alimony decision if you went to trial. While the vast majority of alimony cases will settle by agreement, we can’t get to an agreement without understanding the concepts below.
If you just need to get your mind around an alimony number range in your case, check our our Florida Alimony Calculator and get a sense of what is to come.
What is alimony?
At the most basic level, alimony is a simple concept. It is a monthly annuity or payment from one ex-spouse to the other ex-spouse. This monthly payment is often for a term of months (or years) or continues indefinitely (permanent).
In other cases, alimony is paid forward in a “lump sum” at or near the time of divorce.
The Purpose of Alimony
Alimony is intended for the recipient spouse and the recipient spouse only. It is meant to be a contribution to the recipient spouse after the divorce is over.
Alimony is not meant to help with childcare expenses, extracurricular activities, and other expenses related to children. That is the purpose of child support.
With that said, there are a few different variations of alimony that are meant to contribute to the recipient spouse in different ways. They are:
Bridge-the-Gap Alimony: Bridge-the-gap alimony may be awarded to help the recipient spouse make the transition from being married to being single. Bridge-the-gap alimony is made to help cover legitimate short-term needs. The length of bridge-the-gap alimony cannot be more than two years.
Consider a needy spouse who is moving out of the marital home and does not have extra furniture for a new place. Maybe the recipient spouse has a beater vehicle that is going to die soon. In this case, bridge-the-gap alimony could be awarded for specific term, perhaps months, to help set up the recipient spouse in a new residence, take care of first and last months’ rent, set up utilities, and maybe even get a new vehicle. The important concept is that bridge-the-gap alimony is awarded to help the recipient spouse take care of short-term needs that we can identify right now.
Bridge-the-gap alimony is non-modifiable. That means if a judge orders it, it will need to be paid and the paying spouse cannot go back to court to change it.
Rehabilitative Alimony: Rehabilitative alimony is a unique award with the sole purpose of assisting or helping the recipient spouse establish the ability to be self-supporting. This can be done either by helping to pay for the redevelopment of previous skills or credentials, or helping to pay for acquiring new education, training, or work experience that will help develop skills or credentials.
Similar to bridge-the-gap alimony, a court needs to identify a specific plan as to how the money for rehabilitative alimony is going to go to good use. However unlike bridge-the-gap alimony, an award for rehabilitative alimony can be modified or terminated based on either a substantial change in circumstance, early completion of the plan, or a recipient spouse just completely ignoring the plan.
So for example, consider a recipient spouse who was a nurse during the marriage and who had done quite well, but had left the workforce for a period of time in order to help raise the children. Now the recipient spouse would like to get back into the nursing profession, but all of her licensing credentials are expired. Not to mention, the nursing game has changed a bit, and to be competitive in the workforce the recipient spouse will need to get some additional training.
In this case, the recipient spouse may have a great claim for rehabilitative alimony. Specifically, the recipient spouse will need to present a plan that will show what training, licensing, and other costs are going to be required to get her up to speed. The plan may also show that the recipient spouse will be unable to work for some period of time while she goes to school. This plan will spell out in detail what the financial costs are going to be to get the recipient spouse from where she is now to being competitive in the workforce.
Now, consider the same example where the court decides to award rehabilitative alimony for a term of two years for the recipient spouse. But instead of going back to nursing school and getting the degrees as discussed by the plan, this recipient spouse does nothing and stays home. In that case the payer spouse would have the ability to go back to court to ask the judge to terminate the rehabilitative alimony because the recipient spouse hasn’t done anything. Note that in many cases the court will also order other forms of alimony like durational alimony along with rehabilitative alimony. We discuss durational alimony next.
Durational Alimony: Durational alimony’s sole purpose is to assist the recipient spouse economically for a period of time. It is a similar concept to permanent alimony, except permanent alimony continues indefinitely whereas durational alimony has a specific term of months or years associated with it.
Durational alimony is appropriate following a marriage of short or moderate duration (less than 17 years) or in a long-term marriage if permanent alimony doesn’t make sense. Durational alimony has a definite period time: it cannot continue longer than the length of the marriage. Durational alimony is subject to modification in amount based upon a substantial change in circumstances, but the duration can only be changed when there are exceptional unanticipated circumstances.
Unlike bridge-the-gap alimony and rehabilitative alimony, durational alimony is simply economic assistance to a spouse based on the spouse’s needs as they were established during the marriage. We will talk more about this analysis of establishing a spouse’s need (and the other spouse’s ability to pay) in more detail shortly. But first, let’s discuss permanent alimony.
Permanent Alimony: The final type of alimony is permanent alimony. Permanent alimony is to assist a party with their needs and necessities of life as they were established during the marriage for a party who can’t do that on their own following a divorce. We presume currently that permanent alimony is appropriate in marriages that are longer than 17 years. Permanent alimony can be awarded in marriages that are medium length (seven to 17 years) if the recipient spouse can prove by clear and convincing evidence that it is appropriate, or even in short marriages if there are exceptional circumstances.
So for example, consider a traditional American home where the husband went into the workforce and the wife stayed home during a 22-year marriage. The wife raised the children. The parties filed for divorce. This is the sort of divorce case where we presume permanent alimony. It’s truly the sort of case that permanent alimony was made for.
But consider the case where the wife stayed home, the husband worked, and the wife is raising the children but the marriage has only gone on for five years. The wife’s investment of time is not as long in this example as it was in the 22-year marriage. So in this case we don’t expect an award of permanent alimony. In fact there needs to be something exceptional for permanent alimony to be appropriate here. For example, if the wife had suffered a debilitating injury during childbirth, and was unable to work ever again. This might be a situation where permanent alimony is something a judge would consider.
And those are the main types of alimony that we will see. Soon we want to go over the analysis that the court must go through when determining alimony. Even if your case is one that will ultimately settle in mediation or otherwise, it’s impossible to truly value an alimony claim without understanding what would happen if a court were to do its analysis. That is how we value the case.
How the Judge Would Value Alimony | A Step-by-Step Guide
While the basic concept of alimony is simple, the process for determining an appropriate amount of alimony and duration in Florida is anything but.
But considering how valuable alimony can be for somebody requesting it, we need to take the time to understand the process. If we understand what the judge is going to look at, then we can help our attorneys gather the right facts to present to the judge. The first part of the process is a determination of the need of the recipient spouse and the other spouse’s ability to pay.
The Recipient Spouse’s “Need”
To get alimony, the recipient spouse is going to have to prove to the judge that he or she has a need. In determining need, the court is required to look at a variety of factors. So let’s begin:
Current Economic Need & Standard of Living: At the most basic level, the court is going to look at what the economic need is for the recipient spouse. In other words, now that the divorce is over, what does the recipient spouse need to provide for herself?
The nuance to this analysis is that the court is going to go back and look at the standard of living of the recipient spouse during the marriage. In other words, it may be true that the recipient spouse only needs a shack and some basic utilities in order to survive. It may be true that the recipient spouse can survive without basic cable, air-conditioning, etc. But when the court is determining the need of the recipient spouse, the court wants to look at what the standard of living was for the recipient spouse during the marriage. When possible (it’s not always possible), the court will try set up the recipient spouse in the same standard of living that was accomplished during the marriage.
So how do we figure out a dollar value to the standard of living during the marriage? In some cases, we’ll start with the financial affidavit that was filled out by the recipient spouse. But in cases with higher incomes and thus higher expenses, we often want to engage the help of a forensic accountant to really help figure out what the average standard of living was for the recipient spouse during marriage.
These forensic accountants will go through all expenses for the parties, tweeze out the expenses that were allocated to the each spouse and the expenses allocated to the children, and find out what’s left. For example, the marital home may have a mortgage every month of $3,000. But only a portion of that marital home was used by the recipient spouse.
The forensic accountant will tease out a fair portion. What remains is the expenses for the standard of living of the recipient spouse during the marriage. These accountants can go back at least a year, and sometimes even want to go back three years to get an average.
The duration of the marriage: Next, the judge is going to look at the duration of the marriage when determining the need of the recipient spouse and the amount of alimony to award. Shorter-term marriages suggest that the recipient spouse has given less of his or her total life to the marriage. Longer-term marriages suggest the opposite. And as discussed above, a longer-term marriage may suggest permanent alimony is appropriate, while a shorter-term marriage may suggest that something different is appropriate.
The age physical and emotional condition of each party: Next, the judge wants to look at the age and the physical and emotional condition of the recipient spouse and the paying spouse. Is the recipient spouse who is asking for money younger and in great physical condition, and could be ready to get back into the workforce? Or is the recipient spouse older, perhaps suffering from a disability, or something else that might prohibit them from being a strong functioning member in the workforce? The judge needs to analyze these factors based on competent evidence that’s provided to him or her.
The financial resources of each party, including the non-marital and marital assets and the liabilities distributed to each: Next, as part of this analysis, the judge is going to look at the financial resources available to each party. Think of it this way: in marriages for parties who have spent every penny that they’ve earned and don’t have anything to show for it, you’re probably going to find that alimony is going to be higher dollar. There aren’t any assets, meaning that the parties have had higher expenses during the marriage. Conversely, in many cases you’ll see that the parties have stowed away a lot of money and aren’t sitting pretty in a good financial position. In these cases, alimony could potentially be lower if the parties have lived moderately and within their means during the marriage.
One small caveat: the law says that the judge can’t require that a recipient spouse to eat up his or her retirement funds in order to meet living expenses. In other words, if the financial resources are limited to 401(k)s or IRAs, and the value of those are sufficient or even insufficient to pay for retirement in the future, then the judge will not consider these financial resources.
Conversely, if one of the spouses has a substantial inheritance that came through during the marriage, and it’s enough money to both fill an appropriate retirement account and also to draw earnings from right away, then the judge may find that alimony is inappropriate as a result.
The contribution of each party to the marriage including services rendered in homemaking, childcare, education, and supporting the other party’s career:
Next, the court needs to look at how each party contributed to the marriage. Not just financially, but also in other roles such as being the homemaker, and raising the children. Also, if one party devoted time, energy, and resources to help the other party get a substantial education and build a career.
In a traditional conservative arrangement where one party worked throughout the marriage and the other party stayed at home and raised the kids, the court may find the need for that recipient spouse to be higher than in the more modern scenario of two income earners with the parties splitting the duties of child rearing.
The responsibility each party will have in regards to raising any minor children:
Likewise, the court will also look at how both parties anticipate dividing the child rearing responsibilities after the divorce is finalized.
In a more traditional scenario, a wife may watch the children the majority the time with the husband having visitation every other weekend and perhaps dinners during the week. For some families this is an appropriate timesharing schedule. But if this is the resulting timesharing schedule, the court will likely find the need for alimony for the wife to be higher. After all, the wife will presumably have less available time to devote to a career if the wife is a single parent watching the children the vast majority of overnights.
In a more modern example however, the court may anticipate that the parties will be splitting time with the children equally after the marriage is dissolved. In this example, the court may find the financial need for the recipient spouse to be less because the recipient spouse will have much more help with the child rearing.
The tax treatment of alimony and consequences to both parties including whether alimony payments are taxable or nontaxable:
The judge will need to look at the tax treatment of any alimony award. Whatever the number is that is ordered as alimony may not be the same number that is netted by the recipient spouse at the end of the day. That’s because the average alimony award is taxable income for the recipient spouse. That also means that the alimony amount paid by the paying spouse will be deducted from his gross income at tax time. Lower gross income means lower taxes for the paying spouse. Higher gross income due to receiving alimony means the receiving spouse must pay taxes.
The judge is required to look at what the tax effect is going to be on any alimony award. So for example, consider the case where a paying spouse may be paying to the recipient spouse $3,000 a month in alimony. After the court adjusts the tax effect, the net amount paid by the paying spouse may really only be $2,300 a month. And the net receiving amount may only be $2,400 a month for the recipient spouse. (We have a slight difference in the meaning of the alimony if the parties are in different tax brackets.)
All sources of income available to each party, including income available to either party through investments of any asset:
Remember that we’re talking about need here. If the recipient spouse has investments that are generating income, then that should be factored into what her needs really are. Or for example, if the recipient spouse is getting money from Social Security, or perhaps military pension, then this should also be factored into the need. Remember that the paying spouse is to only to assist or contribute to help the recipient spouse. To the extent that the recipient spouse is covering her own needs, alimony should not be appropriate.
The Paying Spouse’s Ability to Pay
We have spent quite a bit of time focusing on the need portion of the alimony analysis. But what about the paying spouse’s ability to pay?
The judge needs to apply all of the factors mentioned above to the paying spouse’s ability to pay. But even more than that, the ability to pay alimony focuses on the paying spouse’s discretionary income. The judge will need to look at the gross income for the paying spouse. Then the judge needs to deduct the fair share of taxes for the spouse as a single person. Next the judge needs to deduct an appropriate amount for health insurance and mandatory retirement savings. Finally, the judge needs to determine the reasonable expenses for the paying spouse as they been during the marriage.
Ultimately, the paying spouse needs to have the ability to pay alimony from discretionary funds. Now, that’s not to suggest that the payer spouse can sock 25% of his net income into a retirement account or buy a fancy boat in order to evade any alimony obligation. Far from it. However, clearly the paying spouse should reasonably expect to live in a decent home that’s consistent with what he had during the marriage, and have reasonable living expenses.
As for what is a reasonable alimony award, we know that the statute provides that the alimony award may not leave the paying spouse with significantly less net income than the net income of the recipient spouse unless it is an exceptional situation. The judge would be required to explain such an exceptional situation.
Getting Remarried and Acting as If In a Marriage
In spite of all the above, the courts will terminate alimony as a matter of law if the recipient spouse gets remarried; this is a pretty easy rule of law.
But what if the recipient spouse decides to shack up with a new boyfriend or girlfriend, co-mingle expenses, and otherwise act as if they’re married…but not actually go to the courthouse and make it official?
In these cases, the court still has the ability to terminate alimony. This is called cohabitation, and the idea is if it walks like a duck, talks like a duck, smells like a duck, then it is a duck. If everything suggests that the former spouse is acting like she’s married, then she should be treated as such even if he or she is not officially remarried.
But I don’t want to go in front of a judge: can I just settle this alimony thing?
We spend quite a bit of time talking about the legal analysis for how a judge would decide alimony, but sometimes that is not the best way to analyze alimony.
We like to look into the legal world because it gives us a place to begin. The legal world gives us “best days” and “worst days” in court, and to an extent we know resolution should be between these ranges.
But sometimes we can strip away the formulas and calculations and try to get to the heart of what the planning goals are for each client. And this can enable us to be more creative and reach different resolutions.
Consider a Wife who has been staying home for the last ten years to raise the children. The parties have been married for 15 years. The Husband is making good money in sales while the Wife has been out of work.
At first glance, we take a look at the law and see a case where alimony can run for 7-15 years. The Husband naturally is interested in a shorter term of years, and wants to minimize the amount. The amount should be enough to cover the needs and neccesities of life for the Wife. The Wife at first glance wants to maximize the length and amount.
And with these higher year cases, the range is so big that we run the risk of the parties stalemating in negoitations and litigation being the only way out.
But in this example, let’s say we flesh it out a little more and figure out what the parties really want to reach their long term goals.
In this example, the Wife had a successful career before she stayed home with the children. She was a nurse, and was good at her craft. It turns out that with some schooling the Wife looks like she can not only get back into the work force but be self sufficient. And the Wife wants to be self sufficient.
The Husband is in sales, but he sells a product that technology is eradicating. He is making a good buck now, but there is concern that it won’t continue for ever. Plus, the Husband has long term goals of travelling less over time, even if it means switching careers and moving into a different role.
So it appears we have two people who have the same goal: To get the Wife self sufficient in the workforce. The Wife does not want to rely on a man for 15 years when it looks like his earning income may not continue. The Husand wants to get off the wheel and have more quality of life.
Perhaps here the parties work out a plan that pays a healthy amount of support for 2-3 years while the Wife goes to school. Perhaps the Husband allocates money for schooling and health insurance as well during the short period of time to help the Wife get back into a higher earning potential.
If the parties can get the Wife to a higher level of self sufficiency then there no longer is a need for alimony. The parties can build in a clause to return to mediation if the Wife runs into problems getting employment. Likewise, with the agreement built in this manner, if the Husband loses employment or changes employment in the meantime, it will not be seen as an act in bad faith.
In every case, the process starts with you and your attorney gathering up your financial disclosure, and having the other spouse gather up their financial disclosure. The financial disclosure process continues for some time until both parties have completed everything. In some cases, this requires going to banks, other financial institutions, or employers to get missing financial documents.
Once all financial documents are gathered and exchanged, the attorneys sit down with their clients to apply the facts of the case to the law above to determine the appropriate settlement ranges. This should always be done before getting into a settlement negotiation. Otherwise, parties that come in ill prepared take positions that are unreasonable. And it’s almost impossible to get two parties to a settlement if one of the parties is an unreasonable posture.
For an example in a recent case, we represented the breadwinner spouse. After analyzing all the documents, it became clear that the right range of settlement alimony in this particular case was for our client to pay somewhere between $1,750 and $2,750. We had determined in advance of settlement that our client would not resolve the case for anything less than $2,750. Our client fully anticipated and expected that the final resolution would be inside that range. Of course efforts would be made to try to resolve the case at the lower end of the range. But nonetheless we knew what was a valid range of settlement.
Unfortunately, spouse came to mediation ill prepared. Through the recipient spouse’s attorney, the spouse asked for an alimony amount of $7,000. It was easily clear to see that this amount per month would be against Florida law and in effect would be better than the recipient spouse’s best day in court.
Of course, we attempted to educate the recipient spouse during the settlement negotiations. But once the recipient spouse had made an offer that was that high, even if unreasonable, it was clear that there was no chance that we would settle the case that day. It was just too much asking that person to come down from the preconceived belief that the right amount of alimony was somewhere in the neighborhood of $7,000, and to get her mind into the appropriate alimony ranges. As a result, the case did not settle.
- No comments