Alimony is awarded before the final divorce and as part of the final divorce decree if it is agreed upon or if it is Court ordered. Alimony can be modified post-divorce if there is a substantial and material change in financial circumstances or other relevant circumstances of the alimony payer or the alimony recipient.
The legal standard for temporary alimony is to provide for the immediate financial needs of the alimony recipient and where possible to equalize the standards of living enjoyed by the parties before the final divorce.
A former Family Court judge used to say a rough rule of thumb is that if there is a substantial disparity in the incomes of the higher earning party vs . the lower earning party with whom the parties' minor children primarily reside, then roughly ½ of the higher earning party's net income should go to the lower earning party and the parties' minor children.
Another option is to take the combined net incomes of both parties, subtract their fixed expenses (e.g., mortgage/rent, utilities, car expenses, private education expenses, and monthly debt service), and divide the difference/remaining amount by the number of family members. The children's share should go to the parent with whom they primarily reside.
Before the final divorce, divorcing parties should not have to liquidate assets to pay their living expenses.
The legal standard for post-divorce alimony is as follows:
- Does the alimony recipient have a reasonable financial need
- Can the alimony recipient meet his/her reasonable financial need using his/her income and the income producing capacity of his/her assets
- Can the alimony payer meet his/her own reasonable financial need while also meeting the alimony recipient's reasonable financial need – Stated differently, does the alimony payer have money left over after paying his/her own reasonable expenses
Often instead of post-divorce alimony being paid, post-divorce monthly property division payments are made (that are non-modifiable and non-taxable), or a lump sum cash payment is made (if sufficient cash is available), or disparate property division (more than 50% of the time of divorce equity/net worth) is awarded. The reason is because post-divorce alimony (like child support) is subject to modification based on a substantial and material change in financial or other relevant circumstances of the alimony payer or the alimony recipient, and often neither party wants to have financial uncertainty/insecurity post-divorce. Additionally, alimony is deductible to the alimony payer and taxable to the alimony recipient (unless the divorce decree states otherwise).
Alimony can be modified post-divorce based on substantial and material changes in financial or other relevant circumstances such as the following:
- Increase or decrease in income or expenses of alimony recipient or alimony payer
- Remarriage of alimony recipient
- Death of alimony recipient or alimony payer
The duration of post-divorce alimony depends on the type of alimony that is awarded.
The most common form of alimony is transitional alimony, which is to transition the lower earning party (alimony recipient) to a lower standard of living post-divorce. Transitional alimony is generally awarded for 2 to 4 years post-divorce.
Sometimes, alimony recipients decide to get further training or education to improve their post-divorce income capacities. When this happens, the alimony recipient's tuition, books, fees, and some of their living expenses are covered by rehabilitative alimony which enables them to get further training/education while working part-time or not working at all. Rehabilitative alimony is generally awarded for 4 to 6 years post-divorce.
Rarely, alimony recipients are displaced homemakers who never worked outside of the home and who are close to retirement age at time of divorce. The law is that alimony cannot be longer than the marriage, and rarely is alimony awarded for the remainder of the alimony recipient's life. Instead, often disparate property division is awarded, which means the alimony recipient receives more than 50% of the time of divorce equity/net worth. The alimony recipient can then manage his/her own future nest egg post-divorce.