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The Nuts And Bolts About Alimony & Child Support That Could Save You Thousands

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If there is one area of contention that bogs down a divorce it is this one along with custody issues. This is what woman want more than anything else. They feel that they are entitled to a certain lifestyle. This is a very subjective area and the attorneys know it. It is the hot button for most cases.

If you use what you are about to learn you could end up paying a lot less money in alimony and what you do pay could save you thousands in taxes too. On the other hand if you end up doing whatever your attorney decides or says to do you could be left out in the cold.

Spousal Support (also called alimony) will be a factor if there is a large disparity in income levels between the two of you. The one with the highest income may end up paying alimony.

Be sure to check with your state concerning this issue because some states do not believe in it such as Texas. Visit the state bar association and their family law section. Assuming that alimony (spousal support) is allowed in your state let’s take a closer look at it.

Most of the time it is the husband who pays it. However there are times when the wife will pay it if she earned more money than her husband. Each state has there own criteria for alimony for determining the need and duration and the ability for the payor to pay it.

Here are some general criteria. Check your state’s family law website for their “view” on this.

1.) The length of time of your marriage.
2.) Your ability to pay it. Your skill level and training. Now I know what you are thinking, “I’ll quit my high paying job and become a janitor so that my income will decline and I won’t have to pay squat!” Nice try and I like the way you are thinking but that dog doesn’t hunt as they say in the Deep South.
A judge has seen it all and will say fine but you have the ability and the skills to earn a lot more and he/she will look at your prior years tax returns to see what you have been earning and use those figures.
3.) The age, mental and physical condition of each of you.
4.) Other income from dividends, interest, a trust, passive income, royalties, patents, trademarks, etc.
5.) How much of the earning power of the custodial parent be affected.
6.) Whether or not your spouse contributed to your education during the marriage so that you could further your career.
7.) Her contribution as a homemaker.
8.) The judge may look at any other economic factors of either party to determine the amount and duration of alimony.
9.) The lifestyle she is accustomed to. In other words her expenses and then some (nails, tennis lessons, horses, fancy lunches, maid service, spa, nannies etc.)
10.) Your expenses.
11.) The ability of the party seeking alimony to be self-supporting, how long that will take, and what training will be required.
12.) The wasteful spending of the marital property by either one of you (the spender is penalized)
13.) Any gifts of marital property before the divorce filing (the giver is penalized)
14.) Cohabitation of the recipient spouse, as it affects his or her needs.

There are different types of alimony and you must be aware of them so that you are better prepared. Remember, you have to treat your divorce like a business transaction and the only way you can do that is to have all of the facts and background information pertaining to it. Your attorney will not take the time to explain this to you in detail.

Keep in mind that the “devil is in the details.” You have to get this right the first time because if you screw it up your toast. Trying to change it later will be expensive and sometimes only if she agrees to do it. Does the phrase, “When hell freezes over” mean anything to you? There is no way she will take a pay cut…NO WAY!

Here are four common methods of paying alimony (spousal support):

1.) Temporary: Alimony will be paid for a specified period of time. Usually for a couple of years depending upon the circumstances.
2.) Permanent: As the name depicts it is for the rest of your life and stops upon either one of your deaths or if your ex remarries or cohabitates (subject to state guidelines). Consult with your bar association concerning cohabitation laws if applicable.

This form of alimony is a life sentence for a non-capital crime and a form of slavery that binds the man to the ex spouse for life. While there may be just reasons to order permanent alimony (when there is a disability, or when the marriage was so long term that the woman is no longer able to compete in the work force), it is oftentimes ordered as the standard, especially for marriages that fall into the ‘gray’ area (10-15years of marriage).
3.) Bridge the gap (rehabilitative): This is similar to temporary alimony. You pay your ex to get some training or to go to school so that they may get a job and become self-supporting. This is a very popular type of alimony and is most often used for a younger person.
4.) Lump sum: Rather than paying alimony for a period of time you may pay it once. There are some significant tax consequences concerning this method. You will not be able to deduct it as you normally would on your tax return and your ex will not have to pay income taxes on it. Consult with your CDFA(TM) to have a detailed analysis done prior to agreeing to anything.

Your attorney should know about this and may tell you about it but don’t leave any thing to chance.

ALL alimony scenarios listed above must be analyzed so that you do not end up losing a very valuable tax deduction. When structured properly, alimony will be tax deductible for you and taxable income for her. Do it right and you get Uncle Sam to give you a tax break.

Scott Martin is a Certified Divorce Financial Analyst(TM) and expert on the financial aspects of a divorce and coaches men to receive the maximum income and assets from their divorce. Free Report: Divorce Tips For Men That Women & Their Attorneys Don’t Want Published


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