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June 2012 / Bronx/​Riverdale Family / Brooklyn Family / Long Island Family / Manhattan Family / Queens Family / Staten Island Family / Columnists / Divorce & Separation

Divorce and dollars

Understand the intricacies of alimony

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“Hello Oscar boy, your alimony’s due

If you don’t pay up, I’ll sick the cops on you

And you’ll spend Christmas in the clink

With other bums like you.”

I remember these words well. In an episode of the TV sitcom “The Odd Couple,” Blanche had this message delivered (via singing telegram!) to her ex-husband, Oscar Madison, who owed her an alimony payment following their divorce.

Not surprisingly, the subject of alimony doesn’t get a lot of laughs in real life. It is a serious matter, complicated by a lack of information about its potential uses and advantages, and our own feelings and emotions.

What is alimony? Alimony (also known as spousal maintenance) is a series of payments made by one spouse to the other under a divorce or separation agreement. The payments can also be made to a third party (for instance to a bank for a loan) on behalf of the receiving spouse.

Recently, I spoke with Diane Rivers, a New York City divorce coach, neuro-linguistic programming master practitioner, and former tax lawyer and certified public accountant with estate planning experience. We discussed alimony — how it can be used, the emotions spouses may feel, and certain changes that have taken place over the years.

As the status of women has changed in the workplace and in society, so, too, have expectations surrounding alimony. With the large increase in the number of women receiving higher education and entering the work force, a woman may well be the payor today, rather than the payee. Men can, and do, receive alimony.

Another difference in the way spousal maintenance is approached today concerns the type or nature of the alimony agreed to or awarded. “Lifetime” alimony has become less common, though it may still be appropriate, especially in long-term marriages.

Instead of lifetime alimony, what can often be expected is rehabilitative alimony (or durational maintenance), which is financial support that is provided for a relatively short period of time, or even in a lump sum. It allows the receiving spouse time to adjust and hopefully become self-supporting. Frequently, this money is used to pay for the spouse’s job training, education, or therapy.

Alimony can also be employed to balance a division of property. Let’s say the spouses agree that the husband will keep his business, which the wife has a claim to. It is an asset of significantly greater value than the house, which the wife will keep, and which the husband has a claim to. As part of their deal, the parties further agree that the husband will make alimony payments to the wife so that both get their fair share.

Alimony can even be used — indirectly — to pay for child care.

Rivers points out that divorce comes with tax implications, and couples should look at all of their assets, liabilities, cash inflows, and outflows; alimony may not be necessary as part of their settlement. She teaches her clients to be self-sufficient, always encouraging them to question advisers, such as tax planners and accountants, about whatever is not understood until they are comfortable with the answer and fully grasp it.

People can often be tripped up by their feelings or shortsightedness about paying alimony. Perhaps you can afford alimony but, feeling angry, refuse to pay. Perhaps you could receive alimony, but don’t like the idea of getting anything from your ex, or of paying taxes on the money. Such reactions, if they result in your not making use of alimony, may cost you.

And imagine a payee who happily receives alimony, but fails to save for emergencies or for estimated taxes. As April 15 or the final payment approaches, with no income to replace it, there can be feelings of panic and despair.

If alimony is an option, get the information and advice you need. Consider it carefully, and try not to let your emotions get in the way. Efficient tax planning may keep you from leaving money on the table at a time when every penny counts.

Disclaimer: All material in this column is for informational purposes only and does not constitute legal advice. Discussing your particular case and circumstances with a legal professional before making important decisions is strongly encouraged.

New York City and Long Island-based divorce mediator and collaborative divorce lawyer Lee Chabin, Esq. helps clients end their relationships respectfully and without going to court. Contact him at lee_chabin@lc-mediate.com, (718) 229-6149, or go to lc-mediate.com/home.

Reach Diane Rivers at Diane@DianeRivers.com or (212) 722-4084.

Posted 12:00 am, June 9, 2012
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Reader feedback

Brenda from Midwood says:
I never gave these aspects of alimony much thought. Another good article.
June 12, 2012, 5:15 am
Barry from Staten Island says:
Accepting alimony is more complicated than I thought!
June 20, 2012, 7:54 am
Brett Ward from Manhattan says:
Many good points in this article. However, there is one point that should also be made. In the example above of taking alimony as a substitution for a payout for an intangible assets (such as to make up the difference between the value of the Husband's business --which he keeps -- and the marital residence -- which the wife gets) is quite risky. The reason for this is that, in New York, maintenance (a/k/a alimony) agreed upon by the parties can be downwardly modified in certain circumstances by the court, such as a significan downturn in the income of the paying spouse. However, equitable distribution awards are not modifiable under such circumstances. It is far better for the wife in the above example to simply take a long term payout as part of equitable distribution for the difference between the values than to call the payments maintenance. Also, the equitable distribution payments are tax-free, so there will be no anxiety come April 15th.
June 20, 2012, 1:49 pm
Clifford Rohde from Albany NY says:
The "horse trading" mentioned is often deployed in divorce mediation, to great effect. As another commenter noted, however, not all types of asset transfers are treated in the same way, by the courts or by taxing authorities. It is best to understand the potential implications of any transfer contemplated in the dissolution of the marriage, as the writer well describes.

Clifford Rohde, Esq.
Rohde Law Firm PLLC | Focusing on Family and Divorce Mediation
June 21, 2012, 7:44 am
Kathy Jaffe from Rockland County says:
Great article, great Information and I really liked the fact that you put a disclaimer at the bottom of your column.
June 21, 2012, 7:45 am

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