Overview of Spousal Support
Contrary to some people’s assumptions, spousal support is not ordered in every divorce case. There are different types of spousal support, including temporary and permanent arrangements, which may be awarded depending on the circumstances. Instead, one spouse must request a court order for support, or the parties must agree to a support arrangement. Unless the parties agree to a specific support amount, the court is tasked with determining the amount of support to award. Temporary spousal support may be ordered during the divorce process to provide financial stability until the case is finalized, and the final divorce judgment will include the final support arrangement.
What Is Spousal Support For?
The purpose of spousal support is to require a higher-earning spouse to provide income to a lower-earning or unemployed spouse. Spousal support is intended to allow both parties to maintain the same standard of living they enjoyed during their marriage, or at least allow both parties to enjoy a roughly equal standard of living.
Courts often consider the marital standard, including both spending and savings habits established during the marriage, when determining the appropriate amount of support. Otherwise, the higher-earning spouse would be able to continue enjoying the pre-divorce standard of living while the lower-earning spouse would not.
Spousal support also prevents a lower-earning spouse from becoming financially distressed or needing to rely on public assistance. It is designed to ensure the recipient has enough money to meet their basic needs and maintain their standard of living.
Factors in Calculating Spousal Support
Courts are required by statute and case law to consider a number of factors when determining how to calculate spousal support, including the spouses’ ages, physical health, emotional well-being, and financial conditions, the length of the marriage, the standard of living during the marriage, the separate property of each spouse, the presence of a child support obligation, and the ability of a lower-earning spouse to become self-sufficient (including any education or training that the spouse may need).
Courts calculate spousal support by considering a range of statutory and case law factors, and the process of calculating spousal support is often done on a case by case basis, with the judge’s discretion playing a significant role, especially in determining a reasonable amount and the duration of support.
Either spouse may request support, and the court may order spousal support to be paid by the payor spouse to the supported spouse. The marital standard of living, as well as the spouse’s ability to pay, are key considerations. Courts may award spousal maintenance, including temporary alimony or long-term spousal support, depending on the circumstances.
When evaluating the ability of a lower-earning spouse to become self-sufficient, the court may consider the spouse’s earning capacity, career sacrifices, and contributions to the other spouse’s career. Support may be modified or terminated if the supported spouse remarries or the recipient remarries. Property division, retirement benefits, and the presence of minor children are other factors that can influence the alimony amount.
The court may order spousal support or pay support as part of the final divorce judgment, and the obligation to pay alimony may end upon certain events. The court considers the financial situation of the other party and the other spouse when making support determinations.
Incomes and Earning Capacities
The respective incomes and earning capacities of the spouses are often one of the most important factors in determining spousal support, if not the most important factor. The court will evaluate each spouse’s earning capacity, including how each spouse’s career choices and any sacrifices made for the other spouse’s career have impacted their current and potential earnings.
A spouse’s earning capacity is generally determined by looking at the spouse’s education, work history, job skills, age, and health. An earning capacity is not necessarily linked to the wages or salary that a spouse actually earns. In some cases, a court may impute a higher earning capacity if it finds that a spouse is underemployed. Or a court may impute an earning capacity to an unemployed spouse after determining what that spouse’s income would be if he or she was employed. The court may also consider whether one spouse left the workforce or limited their own career opportunities to support the spouse’s career or the family.
Impact of Other Property
Finally, the court may take into account property division, as well as other funds or property that each spouse has, when determining spousal support. For example, a lower-earning spouse who has significant savings or inheritances may have their spousal support reduced if those funds could allow him or her to maintain a standard of living. Or a court may award a lower-earning spouse a greater share of the marital estate during equitable distribution in lieu of a spousal support award.
Tax Implications of Spousal Support
When navigating the divorce process, understanding the tax implications of spousal support is essential for both the paying spouse and the recipient spouse. The way spousal support payments are taxed can have a significant impact on each party’s financial resources and long-term planning, especially in cases involving long-term marriages or substantial support payments.
For divorces finalized before January 1, 2019, the general rule is that periodic spousal support payments are considered taxable income for the recipient spouse and are deductible for the person paying. This means the paying spouse can reduce their taxable income by the amount of support paid, while the recipient must report the payments as income. However, for divorces finalized on or after January 1, 2019, the tax treatment has changed: spousal support payments are no longer deductible by the paying spouse, nor are they considered taxable income for the recipient. This shift can affect how much support is awarded and how both parties plan for their financial futures.
The tax treatment of lump-sum alimony also differs from periodic support. Generally, lump sum alimony payments are not taxable to the recipient and not deductible by the payer, but it’s important to distinguish between a true alimony payment and a property settlement, as the IRS has specific rules for each. Mischaracterizing a payment can lead to unexpected tax consequences, so clarity in the divorce agreement is crucial.
In some cases, courts may award rehabilitative alimony to help the recipient spouse become self-supporting by acquiring new job skills or pursuing career opportunities. The tax implications of this type of support can vary, depending on how the payments are structured and the timing of the divorce judgment. For long-term marriages, where spousal support payments may continue for many years, understanding the tax impact is especially important to ensure that both parties have sufficient income to maintain a reasonable standard of living.
Several factors, such as the length of the marriage, the ability to pay, and the standard of living during the marriage, play a role in awarding spousal support and determining the amount and duration of payments. However, the tax consequences should always be considered as part of the overall financial strategy. Consulting with a qualified attorney or tax professional can help both parties structure their spousal support agreement in a way that minimizes tax liabilities and maximizes available financial support.
By taking the time to understand the tax implications of spousal support, both the paying spouse and the recipient spouse can make informed decisions that support their financial well-being during and after the divorce. This careful planning can help ensure a fair and equitable outcome for both parties as they move forward with their lives.
Contact a Lansdale Family Law Attorney for a Consultation About Spousal Support in Pennsylvania Today
If you are thinking about filing for divorce, or if you have already started the divorce process and are dealing with another matter such as child custody, child support, or division of assets, you need to speak with a qualified attorney. The Pennsylvania family law attorneys at Rubin, Glickman, Steinberg & Gifford, P.C. represent clients throughout Southeastern Pennsylvania, including Newtown, Doylestown, King of Prussia, and Norristown. We understand how challenging this time can be for you, which is why we will fight hard to protect your interests and the interests of your loved ones throughout the legal process. Call us at (215) 822-7575 or fill out our confidential contact form to schedule a consultation. We have an office conveniently located at 2605 N. Broad St., Colmar, PA 18915, as well as an office located in Newtown, PA.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Established in 1952 by Irwin S. Rubin, Rubin, Glickman, Steinberg & Gifford P.C. boasts over 65 years of experience serving clients throughout Pennsylvania. Renowned for its commitment to ethical representation, the firm has garnered prestigious accolades, including being named the “Best Law Firm” for its outstanding legal defense work by U.S. News & World Report. Their team of seasoned attorneys, recognized as Pennsylvania Super Lawyers and Rising Stars, brings unparalleled expertise to a wide range of legal matters, ensuring exceptional representation for individuals, families, businesses, and organizations.
