Spousal Maintenance

Two types of Spousal Maintenance

  1. Temporary: For a finite period of time to provide financial support for one of the parties to gain re-training or re-education to gain employment that will allow them to be self supportive
  2. Permanent: Paid permanently until the recipient spouse remarries, one of the parties dies, or the court re-exams the question of spousal support and makes a reallocation based on a substantial change in circumstance

It is difficult to predict what a court will do in regards to spousal support but they do tend to favor temporary or permanent support but may make a permanent award for a longer duration of marriage with a large discrepancy in earnings. Spousal support is not like child support that is set up based on a formula

Spousal support is based on a number of factors or criteria
(So it will be done on a case by case basis)

  • Length of the marriage
  • Earnings of each party
  • Opportunities foregone by either party to stay home and raise a family
  • Lifestyles of the parties during the marriage
  • Value of the property allocation of made during the relationship
  • Heath of the parties
  • Age of the parties

Steps to determine what the “right” amount is for spousal maintenance

  • Create a budget of what your reasonable future expenses will be based on the standard of living during the marriage
  • Calculate what your monthly ongoing income will be factoring in deductions for taxes, retirement savings, and child support payments
  • Each party must act in good faith and attempt to be gainfully employed appropriate to the level of their educational level and work history.

Tax implications of Spousal Maintenance

  • Spousal maintenance is tax deductable to the person who is paying it and taxable to the person receiving it
  • We can use the IRS regulations to create money for the parties by moving money from a higher tax bracket to a lower tax bracket which creates less tax liability
  • We may rely on financial experts to create a solution with the best tax benefit for both parties
  • Unlike spousal maintenance child support payments are not taxable or deductable to either party