Separating couples face a series of ultimatums throughout the divorce process, but the alimony versus property conundrum is perhaps the most agonizing. Both types of spousal support have unique ramifications that, unfortunately, many people don’t fully appreciate until a decision is made. If you’re faced with the choice, here’s what to consider.
Property and alimony get significantly different tax treatment. Generally speaking, alimony is treated as income for the receiving party (and is therefore taxed); for the payer, it’s considered a tax-deductible expense. Property distributions, on the other hand, often do not have tax consequences for either party.
Parties seeking long-term stability may prefer property distributions over alimony payments. Although alimony may seem like a sure thing after the divorce is finalized, spousal payments are subject to modification. If the economic circumstances of the paying spouse change, the court may lower their monthly payments. Monthly payments can only be modified with judicial approval.
Furthermore, spousal support payments cease if the paying spouse dies or if the receiving spouse gets remarried. Property distribution, on the other, isn’t as prone to change. For example, if real estate is exchanged, such as a house, the receiving spouse retains the property permanently; in fact, it can even be left in a will or trust.
Protect your future
Issues like spousal support may seem straightforward on the surface, but they’re far reaching implications at play that can be difficult to foresee. Furthermore, family law is notoriously slippery, even arcane.
It’s critical to have professional help by your side for this reason. A lawyer understands the breath of consequences at stake with each decision and can craft a custom legal strategy that protects your present and your future.
If cost is a concern, many lawyers offer a free initial consultation at no out of pocket cost to the client.