Alimony

Updated on April 11, 2024
Article byWallstreetmojo Team
Edited byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

Alimony Meaning

Alimony is court-ordered financial support given to a spouse in case of divorce or separation and is given to the spouse with a lower level of income or no income at all. Both Husband and wife can ask for alimony as per law. Generally, a wife might have given up a career to raise children and can be financially disadvantaged.

Alimony

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As per law, a divorced spouse has the right to live an equal quality of life when married. However, alimony payments can be stopped if the ex-spouse passes away, remarries, or by court order. Refusal to pay or not paying on the dates specified could lead to civil or even criminal charges against the payer.

How Does Alimony Work?

Alimony is a periodic payment of a pre-determined sum of money paid to a former spouse after a separation or divorce. This is paid to the spouse with lower income to ensure that they continue to live within the same standard of living as they did during their marriage.

Divorce alimony helps ex-spouse with lower income to maintain financial stability in life and manage a similar lifestyle even after divorce. In many marriages, where the ex-spouse sacrificed a career to take care of the house or children, it becomes impossible to start a new career after a long period, resulting in financial instability.

Various factors come into consideration while calculating alimony, like the financial condition of both spouses, age, health, lifestyle, children, etc. It is decided for a specific period by the court, which helps the ex-spouse maintain her lifestyle even after divorce until they become self-sufficient, remarries, etc.

The payment period depends on the years the marriage lasted and current or future potential income for both spouses. Many factors come in, which might be different for every state; if the couple gets divorced after ten years, the spouse with lower earnings will likely receive alimony.

It is offered for a certain period per the court’s decision, or if a former spouse gets remarried, children are not required to live in their parents’ home, retirement, or death, or if courts agree that the recipient is not making efforts to be self-sufficient.

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Factors

Let us understand the factors that come into play while the court of law decides the alimony factor of a separation. If the factors and eligibility are in line with the laws, the alimony calculator is used to order the payer to pay a certain sum on regular intervals to their former spouse.

  • Length of your marriage as per state of the law: Generally, the marriage lasts for a more extended period and is considered for alimony payments to the spouse. Short-term marriages may not lead to support payments.
  • For some states, the marriage begins when the certificate is filed in the state and ends when the divorce case is filed. In contrast, in other lengths, the marriage is considered the date of physical separation, which could be before or after divorce is filed in court.
  • Living in a period before marriage is also considered while calculating the payment in some states.
  • In general, court-ordered alimony is mostly considered when the length of marriage exceeds ten years. In some states, the court may not set an end date if the marriage lasted more than ten years.
    • Dates of individual and spouse live together.
    • Date of marriage.
    • Date of divorce.
    • Date of the couple stopped living together.

Calculations

The alimony payments ensure both spouses lead a similar lifestyle as they did before the divorce or separation. Therefore, accurate calculations have to be made to ensure it does not end up being unfair on one of the spouses. Let us understand the factors that come into play for the calculations through the explanation below.

  • Income levels for both spouses are considered. Spouses with lower earning levels will receive alimony payments. A spouse’s future earning potential is also considered if the spouse gets a high-earning job after divorce, gets remarried, etc.
  • Age and health: Age comes into the picture when the spouse has not worked for a period of marriage. Health issues and medical expenses are also some of the critical factors.
    • It tends to increase with the spouse’s age, as the older individual will have fewer opportunities to develop new skills and get a new job.
    • Ill health or disability of a spouse can lead to permanent alimony.
    • Retirement age is also considered for the spouse.

Eligibility

It is critical to keep in mind that divorce alimony is only paid to one of the former spouses fulfilling certain criteria. These qualifying factors could be different for different jurisdictions. However, the following are the common traits in most cases with such settlements.

  • Standard of living: The spouse has the right to live an equal standard of living after marriage. That is why the standard of living is always considered. Cost of house, food, clothing, other expenses, and child care is considered in calculations.
  • Contributions towards marriage: It is often considered whether the spouse has made significant contributions to the marriage. For example, a spouse who stays home, takes care of children and sacrifices a career will receive higher alimony.
  • Net-worth of each spouse: After the divorce is finalized, the court will consider the financial situation of both spouses. If the court finds out that each spouse is self-sufficient, then alimony is less likely to be considered.
  • Reason for divorce/separation:
    • Many times the reason for divorce or separation is considered. If marital misconduct, e.g., adultery comes into picture, then the court might deny it.
    • In the same manner, in case of emotional or physical violence from a spouse can lead to higher alimony payments.

Examples

Let us understand the concept of alimony calculator and other intricate details with the help of a couple of examples. These examples will give us a practical overview of the concept.

Example #1

A couple have been separated for the last six months and finally filed for divorce in the seventh month.

 The husband earns $6000 per month, while the wife left her job to take care of her new born and therefore, has no income and stays home and takes care of the children and house. As per state law, she is allowed $2000 for child support. However, the wife informed the court that her total needs per lifestyle and child care are $3000, and it might get difficult to maintain her lifestyle without the sum being increased to the above-mentioned amount. Therefore, the court ordered to increase the alimony to $3,000 until she found a job. Once she finds a job, the payments shall be reduced $2,000 as initially stated.

Example #2

Former Prime Minister of Italy Silvio Berlusconi and his wife parted ways in 2009. At the time, the court order the former too pay €3 million to his ex-wife monthly to support her and the three children they had together. However, in 2013, it was reduced to €1.4 million.

Berlusconi is the fifth richest man in Italy with a fortune of $7 billion, according to Forbes magazine. However, it is also to be taken into consideration that his former wife, Ms. Lario herself has a fortune of €16 million. Berlusconi and his team of lawyers decided to contest in the court that she did not need the alimony payments as she had enough to sustain herself and the kids.

In 2017, a court ruling directed Ms. Lario to repay €60 million to Berlusconi as it was unfair on him and she did not need the money for sustenance in the first place.

How Long Does It Last?

The alimony payments cease to exist under a few circumstances. It is vital to understand them to fully understand the concept. Let us discuss the scenarios through the points below.

  • Death of either parties.
  • The payments stop if the former spouse receiving payments starts living with another partner.
  • If the payee remarries.
  • In special cases, a court order can stop alimony as well. For instance, if the payer loses their job or it is found that the payee has enough to sustain themselves through new arrangements in their life, etc.

Reasons

Even though we have discussed this aspect in bits through the article, it is important to reiterate the reasons of divorce alimony in detail for the concept to be understood in depth.

  • Maintain the standard of living after divorce: As per law, the spouse has the right to maintain the same standard of living after separation or divorce. If in case of a lower-income level for the spouse, they have the right to ask for alimony due to a sudden change in income level for maintaining the same standard of living.
  • Age and health: In case of older age or health issues spouse gets alimony because of fewer opportunities for a fresh start with a new career, and in case of health or disability, incapable of generating income.
  • Childcare and expenses: In case children are involved. Expenses to maintain lifestyle and education for children are an essential factor for the spouse for which they get alimony.

Benefits

Let us discuss the benefits of using the alimony calculator to accurately decide the amount and how it is helpful for the spouse with lesser income through the points below.

  • Financial Support: Spouses with lower income or no income get financial support from ex-spouse as per law, which helps them to manage regular daily expenses even after divorce.
  • Maintaining Lifestyle: In many cases, there is a sudden change in lifestyle for a spouse due to divorce. It helps the spouse to maintain an equal lifestyle even after marriage.
  • Age and Health: In case of the old age of the spouse or any health issue, alimony payment turns out to be necessary, as the ex-spouse cannot get a new job and has to bear medical expenses.

Disadvantages

The disadvantages of alimony payments are as discussed below.

  • State Laws Factors for Alimony: In many cases, it is considered that marriage lasts longer periods, and marriages with a shorter period are denied payments.
  • Financial Burden: For the spouse with higher earnings, it becomes a legal obligation to pay the spouse every month, even after separation or divorce.

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