Alimony Substitution Trust

AAA

DEFINITION of 'Alimony Substitution Trust'

A trust agreement in which a divorced person agrees to pay spousal support from the income generated from a trust. An alimony substitution trust is different from receiving alimony because this trust is taxed differently. The ex-spouse responsible to provide income from the trust is not required to pay income taxes on the income generated by the trust nor do they receive a tax deduction for payments made from this trust.

INVESTOPEDIA EXPLAINS 'Alimony Substitution Trust'

A trust is a bank account that is managed by a trustee (person or institution) who holds a legal title enabling them to manage trust funds for the benefit of the beneficiary. The money held in this trust is referred to as trust money. This trust agreement ends when the obligation to pay the ex-spouse ends. Payments made from these trust accounts are done automatically and periodically as long as there are enough funds or assets in the trust to cover such spousal support payments.

RELATED TERMS
  1. Living Trust

    A property interest created during a person's life that allows ...
  2. Alimony Payment

    A periodic pre-determined sum awarded to a spouse or former spouse ...
  3. Child Support

    The monetary payments that are made from one ex-spouse to another ...
  4. Alimony

    Payments made to a spouse or former spouse under a separation ...
  5. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  6. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
Related Articles
  1. Retirement

    Become A Certified Financial Divorce ...

  2. Budgeting

    You Can't Live On Love

  3. Retirement

    Divorcing? The Right Way to Split Retirement ...

  4. Retirement

    Marriage, Divorce And The Dotted Line

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center