Ending a marriage doesn’t come cheap and divorce arrives with a laundry list of expenses. You have to pay court costs, charges for filing paperwork and responding to motions, and likely attorney’s fees.
Afterward, you may have to shell out to set up a new home base, changes in your filing status impact your tax situation, and if there are kids, you may wind up on the hook for child support.
And in some cases, the court may also order spousal support payments.
What Is Spousal Support?
Spousal support is court-ordered payments designed to ease the financial hardship of dependent spouses following a divorce. Many people commonly refer to it as alimony.
It usually factors into a divorce agreement when there’s a substantial gap between the earnings of spouses or in cases of financial need.
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How Does Spousal Support Work In California?
A number of factors go into determining spousal support. In some cases, payments are temporary. These are usually intended to help one party get back on their feet.
Under other circumstances, however, spousal support payments continue indefinitely.
When Spousal Support May Be Ordered
California is a community property state, which means they view all assets earned or acquired during the course of the marriage as belonging equally to both spouses.
Once you deal with the division of debts and property, then spousal support may come into play. This is most common when one spouse has additional needs, or there’s an imbalance in the settlement. If spousal support factors into your settlement, it will likely be one of your biggest post-divorce expenditures.
If each spouse can maintain a lifestyle similar to during the marriage, the issue may not come up at all.
The general idea is for each party to depart on a relatively equal footing. When a substantial gap in earning potential exists, health issues impact employment, or other elements arise, it may.
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Types Of Spousal Support In California
The specifics of spousal support vary greatly from one state to the next, though most states have multiple forms, and California is no different. Two kinds of spousal support exist in the Golden State. Depending on the circumstances, the court may award temporary or permanent support.
Temporary (Short Term) Support
As the name implies, temporary spousal support provides financial support for a limited duration. The “temporary” designation comes into play as these payments are designed to ensure stability to the lower-earning spouse during the divorce process.
Once the marriage is dissolved and permanent spousal support is either awarded or unnecessary, these payments generally stop.
Permanent (Long Term) Support
While temporary payments sustain one spouse during a divorce, permanent spousal support does the same on a long-term basis after the marriage officially ends.
The “permanent” label is something of a misnomer. Such awards rarely continue indefinitely. How long depends on a number of factors, like the level of need, the length of the marriage, and more. When it does continue indefinitely, it’s usually because of disability and inability to work.
If your marriage lasted longer than 10 years, things become more permanent. The court must order indefinite support until one party dies, one party marries, or the court rules otherwise. Only by reaching an out-of-court settlement can you avoid this.
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How Are Payments Calculated?
As the goal is for each party to maintain the lifestyle they had during the marriage, that’s the general target. When determining the amount, many things figure into the final number. And like many areas of divorce, how much weight each carries differs from case to case.
Among others, the court considers:
- The length of the marriage.
- Level of education.
- Job skills.
- The earning potential of both spouses.
- Health concerns.
- The standard of living while married.
- Child-care responsibilities.
- Level of need.
- Ability to pay.
This is not a comprehensive list by any means. Family Code §4320 lays this out in much more detail. Other scenarios may also figure into the decision. For example, if one party worked full-time to put the other through school. That often plays a role.
Regardless of how long a marriage lasted, California courts require parties seeking spousal support to show good-faith efforts to become self-sufficient. If you can’t become self-sufficient, you have to provide evidence to justify these claims.
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Can You Modify Spousal Support?
Just because the court orders spousal support, and just because the name says permanent, doesn’t mean you can’t alter or end the payments. Either spouse can request modification or termination due to changes in financial standing, like the loss of a job.
If the recipient remarries, support should end. Payments also end if one party dies. No one can compel you to continue payments to the estate of the deceased, nor can you collect payments from the deceased’s family.
Modifications to the original agreement can happen if two spouses agree on the terms. Both sides still must enter into a written contract that explicitly states the new details, and a judge must sign off to make it official.
If you can’t reach an agreement, going to court may become necessary. The party who wants to modify the arrangement must file a motion to show that his or her financial circumstances have significantly changed since the original order.
The court, of course, requires evidence to back up these claims and will issue a ruling based on what it sees. And even if you prove your claims either way, the court is often reluctant to change an order that’s already in place.
You may not want to hear that, but it’s an unpleasant reality of the situation. This is also a big reason why we so often counsel our clients to do their best to get things right the first time. Don’t just agree to an amount to be done with it, make sure you can live with the amount. It’s much more difficult to alter it when it’s already in place.
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Spousal Support and Taxes
At the end of 2017, The Tax Cuts and Jobs Act was signed into law and was the largest overhaul of the tax code in three decades. As far as spousal support is concerned, the tax plan abolished a deduction on alimony that’s been in place for more than 70 years.
That means that on court orders after December 31, 2018, the spouse who pays spousal support is no longer able to deduct that amount. At the same time, the spouse who receives payments no longer has to pay taxes on that money. Before, the positions were switched.
This was a huge deduction for the payer, since it’s an “above the line” deduction as opposed to an itemized deduction.
It also means the recipient does not have to claim the payments as income and pay taxes on that amount. For new spousal support orders, that is, ones in place before that date were grandfathered in.
The previous deduction often saved the payer a significant amount and left more money to divide between spouses. The loss of the deduction may be washed away by the reduction in the gross amount.
The tax code changes also impacted those looking to modify spousal support. After 2019, any changes became subject to the same regulations.
Arguments For The Change
Despite appearances, there were potential benefits to this provision. The House Ways and Means Committee calls the deduction a “divorce subsidy.” They noted, “A divorced couple can often achieve a better tax result for payments between them than a married couple can.”
Others took the stance that the government should treat spousal support like child support. Those payments aren’t tax-deductible for the paying spouse or taxable for the spouse on the receiving end. The new tax plan essentially aligns the two.
The Joint Committee on Taxation, a congressional committee that investigates and reports on tax matters, saw another possible upside. Their findings estimated that abolishing this deduction will result in $6.9 billion in new tax revenue over the first ten years.
Arguments Against The Change
There were, of course, many people critical of the new tax plan. Those who opposed the measure claimed that the higher earner will wind up paying less while the recipient also receives less.
Essentially, the fear was that the person who needs it most winds up getting less money and support.
Spousal support forms just one piece of the larger divorce puzzle, but it’s an important one to consider. How it all shakes out in a particular case depends on the specific couples and their unique finances.
Many factors go into determining whether or not a spouse qualifies for support payments. Since they carry such weight, as we said, it’s imperative to give them the proper amount of attention. In reality, it’s likely in your best interest to talk to a divorce attorney to ensure you wind up with the best deal possible.
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