How Does Alimony Work? A Guide on Calculating Spousal Support

Every marriage is for happy-ever-after, at least until the divorce. According to the U.S. Census Bureau, in the United States in 2018 there were 7.7 new divorces filed for every 1,000 women age 15 and older. The 2018 statistics for Colorado are a bit more promising, with only 3.3 divorced per 1,000 residents filing for divorce.

Whenever someone is considering divorce, one of the first questions is how does alimony work? There are various factors that come into play when determining who pays, how much they pay, and for how long.  Here is a guide to help you understand all aspects of spousal support.

What is the Difference Between Alimony and Spousal Support?

Alimony and spousal support are two terms you hear when considering divorce. Many people think they have different meanings, but the terms are interchangeable.

Whether called alimony, spousal support, or spousal maintenance, it means money paid by one spouse to the other. This can be during the divorce, after the divorce, or both. The purpose of spousal support is to equalize the economic impact of divorce.

This is accomplished by providing income to the spouse with the lower income. The goal is to allow both parties to maintain the same standard of living they had during the marriage.

How Does Alimony Work?

Spousal support is intended to help the recipient obtain training or become self-supporting. In most cases it is a temporary relief for a specified period of time.

This period allows the spouse to gain the education and employment they need to provide their own support.  The goal is for each spouse to maintain the same standard of living they had prior to the divorce.

Alimony was established at a time when men were the sole wage-earner of a family and the woman stayed home to care for the home and children. If a divorce were to take place, the woman had no income and suffered a substantial change in lifestyle. Alimony provided the income necessary to maintain her lifestyle.

More women entered the workforce in the ’60s and ’70s, but their income was far below that of men. That has changed because more women are college-educated and have the ability to hold higher-income positions. Many women now earn a higher income than their spouses and are pay spousal support to their ex-husbands.

The ruling of the U.S. Supreme Court in Obergefell v. Hodges legalizing same-sex marriages nationwide means that the courts will soon see divorces of same-sex partners. Spousal support may be calculated and awarded to the lesser earning partner in those marriages.

How is Spousal Support is Calculated?

One of the first questions every divorcing person has for their attorney is how is spousal support calculated? The Uniform Marriage and Divorce Act were established as a model for states to follow. 

The purpose of the law was to have uniform standards throughout the United States. It recommends that the following factors be used in determining alimony:

  • The length of time the parties have been married
  • How much money each person has earned throughout the marriage
  • Whether either party has made a change in work status to lower their income during the divorce proceedings to avoid paying support
  • The standard of living during the marriage
  • The ability of the payer to support the receiver and still provide for their own support
  • The length of time the recipient will need to obtain training or education to become self-supporting
  • The age and physical condition of each party as well as any emotional factors.

Types of Support Orders

There are two types of orders, temporary and permanent. A temporary support order is for a specific period of time. They are often awarded during a divorce based on the fact that separated couples have stopped sharing income.

Temporary support may also come under the titles of rehabilitative support or reimbursement support. Rehabilitative is the most common and is awarded to allow the lower-wage earner to obtain job skills or career training needed to become self-supporting.

Reimbursement support may be awarded when one spouse paid for the other to attend college or job training during the marriage. That education resulted in that spouse earning a higher wage.

During the marriage, both parties benefited from the training, but after the divorce, the recipient has an unfair advantage. The court may order the recipient to reimburse the other spouse for that education through maintenance payments.

Permanent support is rare and has no ending date. It remains in place for the lifetime of the recipient or payer.  This is more likely to be awarded in a long-term marriage where both parties are elderly and the wife never worked outside the home. It also may be awarded when one spouse is unable to become financially independent due to illness or disability.

Modifiable or Non-Modifiable

This terminology on the spousal support order may have a positive or negative impact on the order for the payer and the recipient.

If the order states can be modified, that means either party can file a motion to have the court modify the amount or duration based on a material change in circumstances. If the support order is non-modifiable, that means that there are no changes allowed. This can have a negative impact if the ability to earn changes for either the recipient or payer. 

SUB HEADER:  What Happens to Support When One Spouse Dies?

Most support orders contain a provision that support ends if the recipient remarries, co-habitats with another person they are in a relationship with or dies.  Death of the payer does not always mean support ends.

It is sometimes ordered that a payer maintain life insurance that lists the recipient as the beneficiary to provide for any unpaid support. The ex-spouse may also be listed in the divorce judgment as being entitled to a widow’s pension after the payer’s death.

How Are Duration and Amount Determined?

When going through a divorce, parties have the option to agree to a support amount as part of their settlement. If they are unable to agree and one spouse is requesting support than the amount will be determined based on that state’s formula. In Colorado the law regarding maintenance uses a calculation combining the length of marriage and income.

Duration

Spousal support may be awarded after three years of marriage. The formula is 31% of the duration of the marriage at 36 months and then increases by 1.17% for each month thereafter. Using that formula, a five year (60-month) marriage would result in an award of 21 months of spousal support. (60 months x 35% = 21 months).

Amount

The amount of support is based on each party’s ability to earn. The term “ability to earn” prevents one spouse from reducing hours or taking a lesser paying job during the period of the divorce in an attempt to reduce their support obligation.  It also prevents a spouse who has the potential to earn a high income from taking a lower-paying job in an attempt to increase the amount they receive.

An example would be a payer who has worked 50-60 hours per week for the duration of the marriage suddenly reducing their hours to a 40-hour work-week, resulting in a lower weekly income. The court would look at their potential to earn based on the hours worked in prior years, and some courts will look at income from the past 3-5 years to determine a person’s overall earning ability.

Another example would be if the recipient was a teacher earning $75,000 per year, but decided they would rather work as a receptionist at $30,000 per year. That recipient has the potential to earn a higher wage and has made a choice not to. Spousal support may be awarded based on their ability to earn a higher wage, thereby lowering the amount they receive.

When getting divorced there are a number of factors that must be used in making the calculations. A maintenance alimony calculator is the best way to determine what you will be paying or receiving after the divorce is finalized.

Uniform Spousal Support Order

The Uniform Spousal Support Order is a form that specifies the amount of spousal support awarded and length of time support is to be paid.  When signed by the judge it becomes a court order.

The order will state the beginning and ending date for spousal support. It will list those factors in which support may end, including the marriage of the recipient, if the recipient co-habitats with a partner, or if the recipient dies. It will also specify whether or not the order is modifiable.

Termination upon payer’s death is not automatic. The payer is sometimes ordered to maintain a life insurance policy listing the recipient as a beneficiary for the duration of the support period. It is also possible for the recipient to make a claim against the deceased party’s estate for the balance of the support.  

Taxes on Support

The 2017 Tax Cuts and Jobs Act (TCJA) enacted by congress in 2017 permanently eliminates the deduction for the payer’s alimony payments on divorces finalized after December 31, 2018. It also states that alimony recipients are not required to pay tax on their alimony payments.  The new law also applies to support modifications done after December 31, 2018

Be Prepared

If you are contemplating divorce or have been served with a complaint for divorce, you are going to be filled with many questions beyond the popular how does alimony work? We invite you to check out our other blogs or give us a call with any questions you may have.

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