Monday, August 13, 2007

Just What the Doctor Ordered: Alimony

One word that evokes strong feelings of love and hate in the divorce world is "alimony". It’s obviously related to that other word with similar connections to love and hate: "money".

In Texas, alimony can be awarded while a divorce is pending or after it is final. Attitudes of judges, lawyers and the parties often make "temporary" alimony a very limited option, and post-divorce court-ordered alimony is very rare in Texas because of both the long-ingrained attitudes and a very restrictive statute that makes it difficult to qualify for alimony and permits only a small amount for a short duration. On the other hand, voluntary alimony paid by agreement can be very flexible and mainly needs to comply with IRS regulations.

In some divorces, clients refuse to consider alimony in voluntary settlements. That is a very short-sighted approach. It is often because of popular misconceptions that assume Texas alimony law is like alimony in other states where it can be almost automatic, substantial and long term.

Wiser and more creative parties discover that alimony can be an excellent tool that helps cases settle. It can enable both parties to meet their goals and needs, while providing tax relief for the paying ex-spouse. The parties need to make sure that it is not used to replace child support and that it is not tied to events or dates relating to children; the IRS really looks for disguised child support. Done properly, alimony can be a cost-effective means to help the other party get on his or her feet, start a new career or deal with other transitional issues resulting from the break-up of the family.

Alimony payments can promote good will within the family which may trigger a willingness to make concessions in other areas. While alimony may not be appropriate in every case, it certainly should be considered for the benefit of both parties in a high net worth divorce situation. In many long-term marriages, one spouse has not worked outside the home for years and that spouse will need some extra help. Providing that help in a thoughtful and creative manner can lead to a win-win situation for both parties, which is the best cure for a family in pain.

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