6/7/2017

What Are The Types of Alimony?

When parties divorce, one party may have a financial obligation to support their spouse even after the divorce.  In New Jersey, there are various types of spousal support, more commonly known as alimony.  Unlike child support, which is designed to support the children after the divorce, alimony is designed to financially assist the other spouse.  The appropriateness and the type of alimony depends on the circumstances.  

The following are factors that are considered by the Court when a judge makes a decision as to spousal support:

1.   The actual need and ability of the parties to pay;

2.   The duration of the marriage or civil union;

3.   The age, physical and emotional health of the parties;

4.   The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living, with neither party having a greater entitlement to that standard of living than the other;

5.   The earning capacities, educational levels, vocational skills, and employability of the parties;

6.   The length of absence from the job market of the party seeking maintenance;

7.   The parental responsibilities for the children;

8.   The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;

9.   The history of the financial or non-financial contributions to the marriage or civil union by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities;

10.  The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;

11.   The income available to either party through investment of any assets held by that party;

12.   The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment;

13.   The nature, amount, and length of pendente lite support paid, if any; and

14.   Any other factors which the court may deem relevant.

Not all of these factors must be present or relevant in a case determining whether one party should pay spousal support to the other.  Certain factors may be more or less relevant than others.  These factors allow attorneys and judges to determine the amount and type of alimony that is appropriate in a particular case.  

Limited duration alimony is typically awarded in short term marriages, but can be awarded for marriages with a duration of less than 20 years. It can't last longer than the length of the marriage unless you can show “exceptional circumstances.”

Rehabilitative alimony provides the receiving spouse with support for a period of time that allows for training or education to become self-supporting. An award for rehabilitative alimony can be modified at any point in time by the court at the request of either party.  Reimbursement support is ordered to repay a spouse that provided support for the other to obtain an advanced degree. An award of reimbursement alimony cannot be modified for any reason. Although most spousal support terminates upon the remarriage of the recipient, both rehabilitative and reimbursement continue for the entire time ordered.

The last type of spousal support is open durational alimony, which was formerly called "permanent alimony" until the law changed in 2014.  This type of alimony can only be awarded for those marriages that have a length of 20 or more. Under open durational alimony, there is a presumption that alimony will terminate upon the payor spouse attaining full retirement age, which is defined as when the payor spouse is eligible to collect full social security retirement benefits.   

Typically, the method of payment of spousal support is done through direct pay (payor spouse to recipient spouse) or through a Probation account, which is set up at the time of your divorce.  When and how frequent payment is made varies in each case and is determined by the parties or the court.

However, parties can agree to alternative means of payment like lump-sum payment. This is exactly what it sounds like – support paid in one lump sum rather than payments over a period of time.  A court cannot order lump-sum alimony - this can only be negotiated and agreed upon by the spouses.  Unlike other forms of alimony, the spouse receiving the alimony is permitted to remarry without the risk of losing alimony.  This option may also be appealing if neither party wants to risk having the alimony modified or terminated in the future based upon any substantial financial change in circumstances.  In our blog "Modifying or Terminating Alimony After Your Divorce," we discussed  several reasons that may give rise to a modification or termination of alimony after a divorce.  A lump-sum payment can assist the spouses in truly cutting financial ties after the divorce process.   

There are many nuances, risks and advantages to each type of alimony.  If you are considering divorce, or determining whether your situation lends itself to alimony, we strongly encourage you to contact our seasoned family lawyers at Ruvolo Law Group to assist you in negotiating the types of spousal support and navigating all of your options.  Don’t make a costly mistake in your divorce.