Negotiating alimony (otherwise known as spousal support or maintenance), as part of a divorce can be stressful, overwhelming, and fraught with emotion for both parties involved. Here are a few important points to keep in mind when it comes to alimony settlements, as well as tips to help you arrive at an alimony figure that makes sense—and enter negotiations well-informed. One of the most comprehensive sites to start with is MaritalLaws.com, which not only includes a state-by-state look at alimony laws, but also offers an alimony calculator that allows users to input such information as the payor and payee’s gross and net salary and the length of the marriage, in order to develop a ballpark alimony figure. The website NOLO delves into what alimony is, how it is impacted by taxes and more. In addition, NOLO’s sister site, DivorceNet, covers how best to evaluate a spouse’s resources and your needs. “The baseline for any support, whether it’s alimony or child support, is a calculation of the guideline amount that one is entitled to pursuant to statute, based on the income and financial resources of each party,” explains Knipmeyer. “However, for most individuals, a better gauge of the amount of support that will be required is the needs of that party.” Theoretically, legal guideline calculations of support would be adequate to meet the needs of the spouse. But in reality, that’s rarely the case, continues Knipmeyer. As a result, it’s important for you and your attorney (if you have one) to truly understand money needs and actively negotiate to meet those needs, rather than merely accepting guideline calculations. When you’re considering figures for alimony, it’s also important to understand what your financial picture looked like during the marriage, which constitutes the marital lifestyle, as well as what it looks like apart from the marriage. Understanding the gap between these two different scenarios should help you arrive at a figure for ongoing support. “Having an accurate budget of your day-to-day expenses can be invaluable when doing this,” says Sarah Jacobs, co-founder, and owner of Jacobs Berger, LLC. “It will relieve some of the stress for you just knowing that you have a clear picture of what was spent during the marriage and what you need in the future.” “I can’t tell you how many stay-at-parents, particularly moms, are afraid to seek divorce because their spouses have threatened to ’take everything.’ The reality is that this can’t really happen,” says Bradford. “The current statute in Illinois, which is similar in most states, provides that everyone has an obligation to attempt to become financially independent. Most moms will have to find employment eventually. But for families who have the means, alimony (or maintenance payments) can give moms more time to stay home with their kids.” “Every state may handle it differently at the state level,” adds Jacobs. “For example, in New Jersey, alimony is still tax deductible for state tax purposes.” Furthermore, just like there are various approaches to alimony negotiations, there are also various options for how you structure the final settlement. As the website NOLO explains, the range of choices includes receiving a single, lump-sum payment, periodic monthly payments, or even a property transfer. “People sometimes get stuck negotiating a fixed amount, but there are many other possibilities,” explains Wheeler. “For example, if the payor estimates that cash flow will be tight in the first two years after the divorce, but will improve later, the payments could be structured as a lower monthly payment for the first two years, and then increase for subsequent years.” “Or depending on your financial circumstances, you may want to consider paying a lump sum of alimony. This could be paid out in the very beginning, or it can happen later,” continues Wheeler. Those who don’t have enough cash or assets to pay alimony, but who have equity in a home, could also consider a cash-out refinance on the home to pay the lump-sum settlement. Alternatively, says Wheeler, you may be able to negotiate reduced alimony in exchange for a different allocation of the other marital assets. There are many good reasons why you might want to consider a lump-sum alimony payment up front, adds attorney Gabrielle Hartley. “For instance, if you’re divorcing someone who is likely to do his or her best to evade payment, or who earns inconsistent income, it may be in your best interest to take one payment up front,” explains Hartley. “Also, typically, alimony terminates when you cohabitate or remarry. However, if you either take a pre-payment or specifically state that alimony is non-modifiable, you can ensure payment regardless of your change in circumstances.” “Don’t consider one aspect in a vacuum,” explains Jacobs, of Jacobs Berger. “If a client of mine is only focusing on support, whether it’s alimony or child support, I try to gently guide them to look at the full financial picture, which may include equity in a home, retirement accounts, college savings, and more.” Having a seasoned family law attorney who has relationships with financial advisors and similar professionals can be helpful when creating this type of 360-degree view.
