As a Howard County divorce attorney, guys often tell me that they do not want to pay alimony. I get the whole “I don’t want to pay alimony because she will never want to work” thing. But that’s really not what alimony is about anymore.
Alimony can be a divorcing husband’s best friend. How, you say?
Over the next four blog posts, I will explain the four primary streams of payments that occur during and after a divorce and how they overlap:
2. Child Support
3. Payments on the Family Home Mortgage
4. A Monetary Award
Let’s take a look at each in greater detail, and you will begin to see that when you are creating a strategy of a divorce settlement (usually through a Separation and Property Settlement Agreement), all of these are important to discuss both individually and collectively to help you make your best deal.
Alimony can be for a defined period of time. It can be made non-modifiable, so that it is what it is. It can be creatively structured in multiple phases for different amounts for different durations of time. In other words, through an agreement, it is creative and flexible.
However, if you go to Court, it will either be defined for a certain period of time (called rehabilitative alimony), or it will be indefinite (which is not the same as permanent, something the Court cannot order). The biggest drawback to alimony ordered by a court is that it is ALWAYS modifiable, and therefore, you never get to breathe that sigh of relief over an end date (unless the recipient re-marries, in which case the alimony goes away forever).
Financially, alimony is taxable to the recipient, and alimony is tax deductible to the one paying it. By itself, that might not mean too much to you. But consider this. Paying alimony increases her taxable income and decreases your taxable income–for child support purposes. So, paying alimony reduces your child support. It’s not dollar for dollar, but it’s a significant savings.
As I will discuss in this ongoing series of articles, because here is deductibility for paying on the family home mortgage(s), you can creatively craft a situation where your taxable income can be effectively reduced to keep more dollars in your pocket at the end off the year.