Myth 1: You’re Entitled to It
In Michigan, parents are obligated by law to financially support their children and, at times, are required to do so by paying child support. The same is not true for former spouses. There is no requirement that because your spouse financially supported you during your marriage that he has to continue doing so after your divorce. Spousal support can be agreed upon by divorcing spouses, or imposed upon spouses by a family law judge after consideration of certain factors.
There are 14 factors that divorce courts are supposed to consider when determining whether to award spousal support, and, if so, how much and for how long. These factors include the length of the marriage, and each party’s age, health, financial need, ability to pay, ability to work and fault in causing the divorce.
In our experience, each court treats spousal support differently. Some judges are more inclined to award spousal support than others. The current trend is moving away from long-term or permanent awards of spousal support to shorter, transitional awards of spousal support, even when couples have been married for decades. With marriages that have lasted less than 10 years, the road to obtaining any amount of spousal support is a rough one. People seeking spousal support often have to discount the amount they are seeking or look to other resources from the marriage to provide for their financial futures.
Myth 2: You Should Fight Tooth & Nail to Get a Lot of Alimony
Spousal support can be an important tool in securing your financial future after a divorce. If you and your spouse have relied primarily on your spouse’s income to pay your joint and individual expenses, it can be hard to transition to single life without the continuation of that financial support. Additionally, a benefit to receiving spousal support payments is that for most people, payments are automatically deducted from the payor’s paycheck and remitted to the Michigan State Disbursement Unit, where they are then direct deposited into the payee’s bank or credit union account. This removes any necessity for the former spouses to interact with each other each and every month about spousal support.
However, spousal support can be a gamble. As a payee, or the person receiving spousal support payments, you are in a vulnerable situation. After you are divorced, you will still be financially dependent on, or at least very connected to your former spouse. Having a connection to your former spouse when they can take you back to court over spousal support issues doesn’t provide much peace or closure. In addition, spousal support doesn’t come tax free. It counts as taxable income, so you’ll need to pay taxes on what you receive.
Sometimes divorcing spouses will agree that the amount and term of spousal support are non-modifiable. In most situations, however, the amount of spousal support to be paid and the term (how many months or years it is to be paid) are both modifiable based on a change in circumstances that warrants it. If your former spouse is fired, takes a lesser paying job, becomes disabled or retires, your spousal support payment may be temporarily reduced, suspended or terminated altogether. Likewise, if your situation changes, such as if you remarry, live with someone who supports you financially, obtain a better paying job or your expenses decrease, your former spouse can ask the court to reduce or terminate his obligation to pay spousal support to you.
Lastly, many spousal support orders provide that a person’s obligation to pay spousal support ceases upon his or her death. This can be a scary position to be in as the payee when the payor has a short life expectancy or is much older than you. In that case, a life insurance policy, or beneficiary designation on another asset, should be put in place to secure the payee’s financial future. Another way to avoid this potential problem is to forgo an award of spousal support altogether and in its stead receive a certain asset (e.g., an investment property), or a lump sum cash payment that represents a negotiated amount that the payor is willing to pay and the payee is willing to receive in lieu of alimony. For some people, this is a simpler, easier way of tying things up after a divorce versus maintaining an ongoing financial relationship with your former spouse.
Myth 3: You Should Avoid Having to Pay Spousal Support Like the Plague
Paying spousal support can be a good way to transfer money and financially support your former spouse because it comes with some benefits. First, spousal support payments are tax deductible. If you are debating between transferring an extra amount from your 401(k) to your soon-to-be former spouse, or paying spousal support, this factor might tip the scales in favor of paying spousal support.
Second, if you can afford a monthly payment of spousal support comfortably, doing so can help preserve and grow your existing assets, such as the equity in your home, your retirement accounts and other investments. The more equity you keep, the more your assets can grow. By not tapping into your investments to pay your spouse off in lieu of alimony, you can utilize those assets to continue to grow your wealth.
In addition, this can help you preserve assets to pass on to your family members upon your death, rather than giving them to your former spouse. As referenced above, most spousal support orders include a provision that eliminates your obligation to pay spousal support upon your death or the death of the payee. And, as mentioned above, spousal support is modifiable, so if your financial situation changes, in most cases, you could petition the court to reduce or terminate your spousal support obligation. But, beware, spousal support can also be modified upward, so if your former spouse suffers from a health problem or some other situation arises that justifies an increase in the spousal support award, you could have to pay more later.
