Alimony: Who Should Pay It & How Much?
The key to calculating alimony is understanding the term "the standard of living of the marriage." It's one of the measures the law uses to determine if you are entitled to alimony payments and if so, how much.
The basic idea behind alimony in divorce is that when your marriage ends, you both should be able to go on living as you were before the divorce. If you make all or most of the money, you would probably have to share that income by paying alimony to your spouse. If you didn't, your standard of living would rise considerably above the one you enjoyed while married, and your spouse's would drop below it.
Alimony & Your Standard of Living
The standard of living of the marriage is really how you live and how much it costs to live that way. For some people, the standard of living involves big homes, expensive cars and lavish vacations. For others, it involves a modest house, a practical car and trips to the shore. It's different for every family, but it is basically defined by how much money you had to spend while you were married, and how you spent it.
A divorce mediator will work with you and ask questions to help you define your standard of living. This is crucial to calculating alimony. Once you can agree as to the standard of living and what it will cost you each month to live that way, other important questions come up.
If you are a non-wage earning spouse as many stay-at-home parents are, or if you earn less than your spouse, you need to ask whether you could support the standard of living you had while you were married. If not, how much would you need to support that lifestyle? If the answer is $4,000 per month, you may be entitled to that much in alimony payments.
Factors in Calculating Alimony
Two important factors come into play. The law obligates you to support yourself to the extent that you reasonably can, taking into account the need to care for children, your health, education, work experience, etc., and alimony payments are based not just on your need but also on your spouse's ability to pay what you need and meet his or her own needs.
Remember, the idea is to have both spouses maintain the standard of living of the marriage or share equally in the decline in the standard of living. In most divorces, neither spouse maintains the same standard of living they had before the divorce. It costs more to run two households than one. Unless there is an increase in income after the divorce, both spouses will be worse off than they were before.
Another important reason for determining the standard of living attained during the marriage is that in the years after the marriage, paying alimony should only be enforced so long as one spouse cannot maintain that standard on his or her own, and also because the standard of living of the marriage establishes a cap on how much alimony the paying spouse should ever have to contribute.
OVERWHELMED THE PROCESS OF CALCULATING ALIMONY?
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How Mediation Helps Reach Alimony Agreements
Alimony agreements are often the most difficult issues to resolve. People who can agree on everything else often bitterly resent having to pay alimony after the divorce. By looking at future goals and the needs of their spouses, people usually begin to see the fairness of alimony payments. It is hard to defend the position that one spouse should end up living better than during the marriage and one should be much worse off.
By addressing issues of anger, fear, depression and betrayal, the mediation process in divorce can help people reach settlements that meet their needs and often such divorce settlements have to include alimony.
The four types of alimony payments under New Jersey law:
Open duration alimony.
As the name implies, open duration alimony is intended to continue until there is a major change of circumstance or the spouse paying the alimony reaches full retirement age, and actually retires. Open duration alimony is awarded only in marriages of twenty years or more where there is little if any chance that a spouse would ever be able to maintain the standard of living of the marriage.
A typical open duration alimony case is one where one spouse has been a full time parent and homemaker for many years. This parent may have past work experience and even a college or post-graduate degree. But in the years that the spouse has been at home, the other spouse has built a career, a wage-earning capacity and a standard of living that the homemaking spouse would probably never be able to achieve.
New Jersey alimony law still imposes on the spouse seeking alimony payments an obligation to contribute to his or her own support to the extent reasonable under the circumstances.
Limited duration alimony.
This is alimony that is to be paid for a certain period of time. It is appropriate in shorter-term marriages and in marriages where there is a reasonable probability that the spouse being paid the alimony will become self-sufficient to the extent of being able to maintain the standard of living of the marriage.
Limited duration alimony is not paid for longer than the length of the marriage, and is usually somewhere between one third and two thirds the length of the marriage.
Rehabilitative alimony.
Like term alimony, rehabilitative alimony is paid for a period of time, but the amount of the alimony and the duration of time it is paid is tied to a specific plan for the spouse receiving the alimony payments to become financially self-sufficient. A plan for a spouse to go back to school to get a high school, college or post graduate degree would qualify a spouse for rehabilitative alimony. Vocational training, technical training or starting a business would qualify a spouse for this kind of alimony.
The idea is to pay alimony to a spouse who cannot maintain the standard of living of the marriage while he or she is preparing to become self-sufficient. This kind of alimony often takes into account the costs of the education or training program and the inability of the spouse to work or work full time while going to school.
Reimbursement alimony.
This type of alimony is designed to reimburse one spouse for time and support given to the other spouse who has obtained a valuable degree or certification. It usually applies where one spouse supports the family while the other goes to law, medical, business or some other professional school, with the anticipation of sharing in the benefits of the degree once it is earned.
Statutory Factors Considered by Judges When Calculating Alimony
The actual need and ability of the parties to pay alimony
The duration of the marriage
The age, physical and emotional health of the parties
The standard of living established during the marriage and the likelihood that each party can maintain a reasonably comparable standard of living
The earning capacities, educational levels, vocational skills, and employability of the parties
The length of absence from the job market of the party seeking maintenance
The parental responsibilities for the children
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
The history of the financial or non-financial contribution to the marriage by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities
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
The income available to either party through investment of any assets
The tax treatment and consequences to both parties of any alimony award, including designation of all or a portion of the alimony payment as a non-taxable payment
Any other factors which the court may deem relevant
When a share of a retirement benefit is treated as an asset for purposes of equitable distribution, the court shall not consider income generated thereafter by that share for purposes of determining alimony.
Contact Transitions Mediation Center to learn how it really can be your divorce and divorce mediation can help you come to a mutually beneficial alimony agreement and move forward with your life.