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Alimony--A Different Perspective

March 11, 2023

Research into how the legal obligation for alimony originated shows a historical basis of the concept dating back to the Egyptians, Greeks and Hebrews as a "practice to avoid feuds with the divorced wife's relatives."  Funnily enough, a specific "price" was set--as if one could value one wife equal to another wife, similar to a Kelly Blue Book value setting the standard price for an automobile.  Alimony is intended to provide "support for one spouse, not punishment for the other" according to my resource.  I find this funny as well, since so often in my practice I hear, "he doesn't think I deserve alimony."  Thankfully, the law protects dependent spouses in this circumstance, but they'll incur legal expenses to hire an attorney who can navigate the family court system on their behalf.

Before the Tax Cuts and Jobs Act changed the tax treatment of alimony, it was easier to convince high income earners to agree to alimony settlements because of tax benefits.  Similarly, I often see  settlements where alimony ends when the receiving party moves in with a domestic partner or remarries.  I also see alimony payments set to last for years into the future, and usually set at a rate far less than half the family's income at the time of divorce, and always with deference to the payor's current child support obligations (even when that child support is scheduled to decrease as children age out) and to the payor's "ability to pay" which takes into account any debt they've run up during the period of separation, their current living expenses (even when THEY'VE moved in with a domestic partner) and their current income (even when they've lost their job, be it willingly or not).

So here it is, folks--the dirty little secret that no one thinks about when considering becoming a stay-at-home spouse.  Giving up your career leaves you financially vulnerable if things go differently than planned.  The ONLY way to mitigate that risk is with a postnuptial agreement regarding spousal support before you leave the workforce, according to my favorite family law attorney.

Personally, I lived this nightmare in my own divorce.  I was in the middle of earning my Masters' Degree and I was making more money than my ex when we decided to relocate for a job offer that would advance his career.  We were living in DC at the time, and news stories about the DC Sniper reported a shooting a mile away from our home, and having recently experienced 9/11 in DC as well, we decided not to live in that chaotic environment while bringing our daughter into the world.  We moved to a new city, I left my job, my support network of friends and family, my graduate education and life went on.  18 years and three children later, we separated.  I found myself completely financially dependent on my spouse with no current job skills and no job prospects.  It was over a year before he agreed to a settlement and we had a signed agreement for spousal support and for child support, and with no agreement in place, he'd long since stopped sending money to help me pay bills and to support myself and my children.  That was a terrible time in my life and in my children's lives, so I'm speaking from experience.

Now, I suffered a tremendous financial loss when I left the workforce--doing what I do, I once calculated the present value of the earnings I missed out on as a stay-at-home spouse.  For fun, I checked out the present market value of a stay-at-home spouse if the services provided were actually hired out--cue the news reports about the costs of daycare, home and laundry cleaning services, child transportation and a private meal preparation service.  So not only did I lose out on the missed wages, but I also provided those services at no charge.  Since I was able to manage the home and our children's educations and activities, my ex was able to travel as required by his job and to advance his education and career free of any time commitments for his children.  We've all heard about the Mommy Track in the workforce, and the correlated wage gap between men and women.  It's clear that our decision for me to stay home with our children was an investment in his wages at the time of our divorce and beyond.

I think we as a society should change our approach to considering alimony as compensation for a spouse's contributions to the family's economic circumstances instead of compensation for their support. From that perspective, I think the dependent spouse should receive an amount to equalize their income with their partner's until they're earning enough to match what they receive in alimony.  This could easily be enforced with a requirement for both partners to share their tax documents throughout the alimony duration.  The person receiving alimony should not be penalized for moving in with a domestic partner or for getting married again, if we truly recognize their individual right to be compensated for their labor.  One situation has nothing to do with the other.

However, since there's no sign in sight that our society will change its valuation of the role of stay-at-home parent, I'll come back to reality and close with this point:  I recommend that everyone who's awarded alimony take it as a lump sum payment from available assets.  It does neither party any good to have a financial obligation extending out into the future, tying them to a former spouse or to have an income stream at risk of going away if they're lucky enough to find another life partner.  I always prefer my clients receive assets that are liquid and I frequently recommend assets in lieu of alimony to enable them to find financial stability faster.  There are financial products and strategies to ensure this lump sum is employed to effectively work as intended--whether it's to invest in furthering the dependent spouse's education, start a business, qualify for a mortgage or simply to serve as an income stream.  The divorcing couple's children's well-being depends on their parents' financial well-being, and all parents should consider that important fact during divorce negotiations.  The goal is for everyone, children included, to be okay after the divorce.  

I can analyze your marital assets and help you develop a distribution plan that allows you to find financial stability faster after your divorce.  Schedule a consult with me here at no charge.

#smartdivorcedecisions #divorcedonedifferently #divorcemediation #divorceassetdivision #divorcefinancialplanning

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.