DEFINITION of Alimony
Alimony refers to court-ordered payments awarded to a spouse or former spouse within a separation or divorce agreements. The reason behind it is to provide financial support to the spouse who makes a lower income, or in some cases, no income at all.
Alimony can be awarded to a husband or wife; however, in cases when there are children involved, the man is usually the breadwinner, and the woman may have given up a career to raise the kids and will be at a financial disadvantage. A divorced spouse has the right to live the same quality of life he or she had when married.
BREAKING DOWN Alimony
How much and how long a spouse must pay alimony depends upon how long the marriage lasted and current and future potential incomes for both spouses. Many factors differ state-to-state; however, if a couple separates or divorces after 10 years, alimony is almost always awarded unless both spouses have the same earning power. If not, the lower-earning spouse will likely receive alimony payments.
Alimony generally stops when a judge sets a specific date, a former spouse remarries, children no longer require a parent at home, retirement, death or if a judge deems that the recipient is not making efforts to become self-sufficient.
For the receiver, alimony payments are considered taxable income; for the payer, they are a deductible expense. Alimony should not be confused with child support. Alimony payments are specifically meant to support a spouse or former spouse, while child support payments are specifically intended to support one or more children from a dissolved relationship or marriage. Neither alimony nor child support payments may be discharged in bankruptcy.