Distinguishing Spousal Maintenance From Alimony
In our Dallas and Fort Worth divorce practice, clients often ask if they can expect to get alimony from their former spouse. The better question would be whether they can expect to receive some measure of continuing financial support from their spouse.
For many years, Texas divorce courts could only divide community assets and debts to dissolve a marital estate. Where there were few assets, many people had no means of financial support. Take an example; suppose after 12 years of marriage, a husband seeks to divorce his wife who has stayed home to raise their children. While the husband makes over $100,000.00 a year, all of the family income has gone to the payment of monthly expenses and maintenance of the family lifestyle. Consequently, there is no savings, stock, retirement or other cash accounts to divide upon divorce.
At divorce, the husband may be ordered to pay child support and assume the community debt, but he still leaves the marriage with his job and ability to simply go make more money to continue with his life. The wife, however, is left with the children and little else. She had been out of the workforce for 10 years and her options for a career are limited, especially when balanced against child care costs.
The Texas Family Code Spousal Maintenance laws, or “court ordered” alimony laws found in Chapter 8 of the Family Code provide some relief. In order to qualify for Court Ordered Alimony in Texas one of the four requirements must be met:
- Must have been married a minimum of ten (10) years and requesting spouse lacks sufficient property to provide for minimal needs and is the custodian of a child who requires substantial care and personal supervision making it necessary for that spouse to stay home with the child
- Must have been married a minimum of ten (10) years and requesting spouse lacks sufficient property to provide for minimal needs and that spouse’s earning capabilities do not provide for that spouse’s minimal needs
- The paying spouse committed a felony within 2 years of filing for divorce; or
- Must have been married a minimum of ten (10) years and requesting spouse is unable to sup-port him/herself through appropriate employment because of an incapacitating physical or mental disability
If Spousal Maintenance is ordered in any of the first three scenarios the maximum period of time alimony will be required is three (3) years and the amount cannot exceed 20% of the paying party’s gross income or $2,500 per month, whichever is less.
While this type of alimony is limited in its amount and duration, it has the benefit of being Court ordered which means a failure to pay can be enforced by contempt of court.
Contractual alimony, on the other hand, is frequently used as a financial planning tool. Contractual Alimony may be used in a situation where a divorcing couple does not necessarily have a lot of liquidity in the estate or it is not a good time to sale assets but there is property that needs to be divided and the lesser earning spouse is in a lower tax bracket or needs known income. In this instance it may make sense to create a payment structure over a period of years to equalize the estate and make payments over time from the higher wage earning spouse to the lesser or non-wage earning spouse. One advantage to paying a spouse over time versus a lump sum is that is tax deductible by the payer spouse and must be included in income to the recipient spouse.
At Schreier & Housewirth Family Law, we’ve helped clients in Fort Worth, Tarrant County and Dallas make the best financial decisions for themselves and their children in the face of divorce. We are experienced divorce and child custody attorneys with offices in west Fort Worth and the Park Cities in Dallas.