Spousal support or alimony can be both the most contentious and complicated discussion in a divorce negotiation.
​One spouse may need it, but the other spouse does not want to pay it. It's also a long-term commitment and connection--both being things that a divorce is trying to end. But in most long-term marriages, spousal support is a financial right. So, how can you develop a strategy in asking for your alimony?
 
Know the Rules of the Game
One thing that's not obvious to a layperson is that the rules around spousal support calculations are state-specific.

Some states have a set percentage. Some other states relate payments to the length of the marriage and duration of the payment. And there are states which do not allow spousal support at all. Instead, they designate funds to be paid for a limited time for specifically prescribed purposes. The starting point is understanding the framework of how spousal support is calculated in your area.

Next, factor in the 2017 tax reform that eliminated the tax deductibility of alimony, and made alimony tax-free to the recipient. The effect has been a reduction in the amount or the percentages paid in most jurisdictions.
 
Make Sure You Consider All Income Sources
It's critical to focus on all income sources. This is where a CDFA can be of help. We are used to asking and locating all income sources. Be aware of your date of separation, as this date is often the line of demarcation for dividing both marital assets and income.

Some of the most common income categories are:

• W2, bonuses and Commissions
• Deferred Compensation
• Business Income
• Equity compensation sources from options.
• Royalties, speaking fees, rental income, tip income, employee perks, expense reimbursement.
• Investment income. Oil and gas lease payments, side gigs, home based businesses.

​Review Expenses

• Review previous expenses form different time periods to determine if there are any unusual patterns.
• Note historical debt levels. Has there been a change in borrowing habits? Has there been an increase in home equity borrowing, margin funds or credit card spending? Review credit reports to determine indebtedness that might now be showing up on financial statements.
• Are there going to be additional expenses for minor children, educational medical or special needs support?

Begin the Calculation Process
Here, it's important to review both income and expenses, to identify and correct any unusual patterns, and begin to consider the possibilities.

• Payments--What will be a dedicated amount paid to the receiving spouse as indicated in the statutory rules of your jurisdiction?
• Time--What is the statutory framework of duration in your jurisdiction?
• Are there extenuation issues to consider? These can include but are not limited to: age of parties, health of parties, proximity to retirement, care of other dependents, and stability of employment.
• Over time, will there be a step down indicated for support as children emancipate, or as a spouse seeks more training and enhanced employment?
• Is a lump sum buyout a more amenable prospect?
• Are there other assets to trade or use in lieu of spousal support?

The important thing to recognize is that spousal support is unique to each divorce. And the financial realities are unraveled by each unique data set. No two divorces are the same. 

Want to know more about financial planning for a smarter divorce? 
You can learn more about The Better Half, or schedule a free consultation, by clicking here. 

A new client came to me at the recommendation of her Family Law attorney.
She wanted to consult with a financial advisor while preparing for her mediation. She wasn’t necessarily looking for a specialist, a Certified Financial Divorce Analyst. She just wanted someone who could help her envision her financial life post divorce.

I am a CDFA and understand divorce law in New Hampshire. 
But in this case, that really wasn’t my role. As her attorney defined it, my role was to help her understand what she and her husband owned and how some of that would support her for the rest of her life.

Therein defines the respective roles of an attorney and a financial advisor during a divorce process. 
The attorney will address the legal issues, and the CDFA® will assist the client and his/her lawyer in understanding how the financial decisions he/she makes today will impact the client’s financial future.

Today’s Family Court is a crowded and complex arena.
Family Law attorneys are handling increasingly complex issues such as commercial real estate, business interests, and complex family dynamics with child custodial issues. If attorneys can receive assistance in developing the financial settlement, it allows them to focus only on those legal issues.

Financial Planners have always assisted clients in understanding their financial resources.
Those resources, such as retirement plans, social security, and real estate holdings, all work together in retirement and other exit situations. Divorce is one of those exits with its own legal overlay.

During the divorce process, attorneys and their clients are often asked to present mediators with very clinical financial affidavits. 
These affidavits contain assets, budgets and family statistics, and outline only the very basic facts and financial information of a family’s circumstances. Proofs at trial can be equally empty and perfunctory.

What is lacking is a great deal of “non-legal” information from other disciplines. 
That information would take those same financial facts and incorporate them into a process that includes economic assumptions, tax consequences, and actuarial projections. These projections help all parties involved see the whole picture long term.

Divorce has the possibility of being devastating to the families involved.
But it doesn’t have to be. A mutually agreed upon settlement hammered out by informed parties can help. It has a greater possibility of successful acceptance and implementation than one handed down by a judge.

I've experienced the challenges firsthand.
I went through a lengthy divorce with painful consequences for myself and my children. Since then, it has been an ongoing mission for me to help others avoid the same challenges. And yes, it can be done!

Want to know more about financial planning for a smarter divorce? 
You can learn more about The Better Half, or schedule a free consultation, by clicking here.