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What Is Spousal Maintenance?

What Is Spousal Maintenance?

DEFENDING THE PEOPLE OF ARIZONA

MORE THAN 100 YEARS COMBINED EXPERIENCE

What Is Spousal Maintenance?

The end of a marriage does not necessarily mean that the two parties no longer have responsibilities to one another. They may still have responsibilities to fulfill if they share custody or if paying spousal maintenance is ordered by the court.

Whether or not you pay spousal maintenance is part of a settlement and how much is owed by one party are often points of great contention during divorce proceedings. It can be a struggle for both sides.

You need to know all about this topic ahead of divorce proceedings to ensure that you’re not getting the raw end of the deal. Learn more about spousal maintenance, when it becomes necessary, how they calculate it, and several other related topics by continuing with this article.

What Is Spousal Maintenance?

Spousal maintenance is known by a few other names. You may have heard it referred to in the past as spousal support or as alimony. Regardless of how it’s called, the goal for spousal maintenance remains the same.

That goal is to give both parties a chance to land on their feet following the end of the marriage.

So, let’s say that only one of the parties involved had a career throughout the marriage while the other stayed at home to watch the kids. Should the two of them separate, the spouse who remained at home most of the time and did not pursue a career will obviously have a tougher time finding a good job following the end of the marriage.

It would be unfair to that spouse if they suddenly ended up with no means to make money because of the sacrifices they made throughout their marriage.

Furthermore, the state of Arizona also regards the accomplishments reached during the marriage to be the results of the two spouses working together. As such, the contributions of both sides will count following the divorce.

spousal maintenance meeting

Differentiating Spousal Maintenance from Child Support

Before we go deeper into the topic of spousal maintenance, it’s worth taking the time to discuss an important distinction first. Maintenance is not the only financial support you may be required to provide post-divorce. In some cases, you may also be required to pay child support.

So, how do those two differ?

Child support is only for goods or services that your child or children need. They are not for any personal purchases.

Spousal maintenance is different because your former partner can decide how to use it. They can use it on personal purchases if they so desire.

It’s important to make that distinction whether you’re sending or receiving the payments. You could end up running into trouble with the law if you fail to make that distinction.

When Does Spousal Support Become Necessary?

One of the parties involved in the divorce requests spousal support. Even before the matter reaches the court, the two sides may already decide that spousal maintenance is necessary and will include that in their divorce.

However, there are also cases wherein one side will request alimony while the other will object. In that case, the court will be the one to decide if the provision of alimony is indeed necessary.

The court generally considers a few factors when deciding whether paying spousal maintenance is needed.

The Party Seeking Maintenance Lacks the Means to Cover Their Reasonable Needs

First off, the court may order the payment of spousal maintenance if the party seeking it lacks the means to cover their daily needs. If the party requesting support does not have a steady income, the court may order the other side to pay maintenance.

The Party Seeking Maintenance Is Unable to Secure Employment Due to a Lack of Skills or Due to Their Child’s Needs

Maintenance also becomes a necessity if the court sees that the party requesting it cannot find work so easily.

The reason they struggle to find work could be because they don’t have the requisite skills and/or experience. After many years spent staying at home, the party in question may not have had the opportunity to develop their skills. Spousal maintenance will help make up for that.

There are also cases where the party requesting support is the primary parent of a child who cannot be left alone due to their age or condition. The regular support payments will help those parents out.

The Party Seeking Maintenance Contributed to Their Former Partner’s Education, Career, or Training

Let’s say that you helped pay for your spouse’s college education earlier in your marriage. Now that the two of you are separating, they must compensate you for those earlier contributions via spousal maintenance.

The Party Seeking Maintenance May Struggle to Find Adequate Employment Due to Their Age and Long Marriage

If a marriage lasts long enough and the party asking for spousal support is at an age where securing adequate employment becomes hard, the courts may grant their request. Note that there are no set guidelines for what constitutes a long marriage in the eyes of Arizona law. That matter will be left up to the court to decide.

The Party Seeking Maintenance Gave Up Career Opportunities or Steady Income for the Other Spouse

One of the parties in a marriage may have sacrificed career prospects for their spouse. They could have decided to stay at home to watch over their kids and put their career on pause because of that. Spousal maintenance is supposed to compensate the party who made that sacrifice.

How Are Alimony Payments Calculated?

Spousal maintenance payments are not determined randomly. The court will first take into consideration a variety of factors to come up with the right amount that one party has to pay. They consider numerous factors when calculating the total amount of spousal support to be paid, and they are below. The standard of living established throughout the marriage

  • The length of the marriage
  • The status of the party seeking maintenance accounting for their age, wellbeing, earning ability, and employment history
  • The ability of the party to provide spousal support to sustain themselves and the party requesting maintenance
  • The finances and earning abilities of the two parties
  • The contributions made by the party seeking maintenance to the other spouse’s earning ability
  • The sacrifices made by the party seeking maintenance to benefit the other spouse
  • The abilities of both parties to pay for their children’s education
  • The resources of the party seeking maintenance and their ability to self-sustain
  • The time the party seeking maintenance will need to find adequate employment and whether they need further education or training
  • Excessive expenditures, the concealment, destruction, or fraudulent disposition of community, and properties held in common
  • The cost of health insurance the party seeking maintenance will need to pay, and the reduction in payment the other spouse will pay if they change their health insurance plan following the divorce
  • Damages resulting from the criminal conviction of either party that resulted in either the other spouse or their children being victimized

Can the Amount of Spousal Maintenance Payments Change?

How much you receive as spousal support or how much you pay can change over time.

Spousal maintenance payments could increase if the party receiving them lost their job. Other changes to the job market could also be cited as reasons why the payments should be increased.

On the other hand, the payments could decrease if the party on the receiving end has landed a higher-paying job. The court may also decide to lower the payments if the party charged with making them lost their job.

One side will typically ask the court to make changes to the spousal support payments before they can take effect.

spousal support payment

How Long Are Spousal Support Payments Supposed to Be Made?

No law sets a specific length of time for spousal maintenance. The courts will decide how long they will need them on a case-by-case basis. They will continue until such time that the prescribed payment period ends.

However, spousal support can terminate for a few reasons. If the party receiving the support dies, the other spouse will no longer make the payments. Support can also end if the party on the receiving end gets married again.

Do note, though, that getting married again does not automatically put an end to spousal support.

For instance, the court may decide to re-evaluate the payments after the party receiving the support remarries. Upon doing so, the court may check if the new marriage has improved that party’s financial situation. If their financial status has not improved significantly, the court could rule that spousal support must continue even after the party receiving the payments is married again.

The court could also find that the party receiving spousal support’s financial status has at least improved to some degree. Citing that, the court may opt to lower the payments that the other spouse has to send.

Spousal support can also continue through remarriage if the party receiving the payments made significant contributions to their former spouse’s education or career. They must still compensate for their previous contributions so their new marriage will not impact spousal support.

How Are Spousal Maintenance Payments Made?

The process of paying alimony will depend on the paying party’s employment.

If the party in question is an employee at a company or business, the courts can place an Income Withholding Order on their paychecks. The order instructs the employer of the paying party to deduct the amount corresponding to the spousal maintenance payments from their employee’s paychecks.

The employer will then send those deducted amounts to the clerk of the superior court. The clerk of the superior court will then record the payments and send them to the other party.

If you’re self-employed, you will send the payments to the clerk of the superior court yourself. The same holds true for unemployed individuals who make spousal support payments.

Can You Send the Spousal Maintenance Payment in a Lump Sum?

For those tasked with sending spousal support payments, having to make regular trips to the clerk of the superior court can become tedious and bothersome. The good news is that lump sum payments are permitted.

How Do You Request Alimony?

You should request spousal maintenance early in the divorce proceedings. When exactly you should make your request depends on whether you are the petitioner or the respondent to the petition for dissolution of marriage.

As the petitioner, you should request spousal support when you file the petition initially. Make it known as soon as possible to both the court and your former spouse that you need that financial support.

As the respondent, you should mention spousal support in your response to the petition. Don’t forget to mention that right away so they can consider it during the divorce proceedings.

Do You Need to Worry about Taxes When It Comes to Spousal Maintenance?

There are no blanket responses regarding taxes and spousal maintenance payments. They will need to consider the specifics of your situation first to determine your potential obligations.

Do note, though, that the party sending the payments may sometimes be allowed to deduct those from their tax obligations. On the other hand, the party receiving the spousal support may also report the payments as additional income.

Divorce could end up being one of the hardest ordeals you’ll ever go through. It could be even tougher if you lack the resources necessary to re-establish your life following the end of your marriage.

Make sure that you receive the support you’re entitled to by requesting spousal maintenance. Partner with us at the Schill Law Group if you want to receive the compensation you deserve.

High Net Worth Divorce in Arizona

High Net Worth Divorce in Arizona

Defending the People of Arizona

With more than 100 Years of combined experience

High Net Worth Divorce in Arizona

When younger couples get divorced in Arizona, the process may be fairly straightforward because they may not have had much time to accumulate very many assets. However, if you have been married for a long time and have built substantial assets during your marriage, you may have to go through a type of dissolution called a high net worth divorce.

This type of divorce can be very complex because of the different types of assets that may be involved. High net worth divorces may involve complex asset classes and holdings worth hundreds of thousands up to millions of dollars. People who go through these types of divorces will likely need to get the help of a competent family law attorney who is experienced in handling high net worth divorce cases.

The Schill Law Group understands complex asset and debt division matters and is prepared to help.


How is a High Net Worth Divorce Different from a Regular Divorce?

A high net worth divorce will frequently involve complex legal and business issues that are not involved in regular divorces. High net worth couples may have vastly more extensive assets, including businesses, real estate holdings, art collections, trusts, stocks and bonds, investment accounts, retirement accounts, jewelry, and more. All of these types of assets may need to be identified, located, and valued to accomplish an appropriate division of property.

Under A.R.S. § 25-211, Arizona is a community property state.[1] This means that all of the assets that you have accumulated during your marriage that are not deemed separate property are considered to be equally owned by both spouses and subject to equal division. In many high net worth divorces, however, there may be antenuptial agreements in place.

High net worth divorces are likelier to include disputes about whether certain assets should be considered to be separate or community property.


How are Trusts Handled in High Net Worth Divorces?

Some wealthy couples have trusts established to hold substantial amounts of their assets. The handling of the assets of a trust can be crucial for the outcome of the property division in a high net worth divorce. When a spouse funds a trust with community property, it can transform the assets in the trust from being considered to be the separate property of that spouse to being considered to be the community property of both spouses to be divided in the divorce.

Normally, a trust that was created by a third party to benefit one spouse but not the other will be considered to be the beneficiary spouse’s separate property. The other spouse might argue that the court should consider the trust when it determines the amounts of spousal and child support that the other spouse should be granted.

When a trust is involved in a divorce, an attorney will need to seek disclosure from the trust. This can be hard because trust accounts may be located outside of the U.S. Trustees for U.S. trusts will normally send disclosures in response to a request. Offshore trusts might have trustees that fail to respond. When that happens, you might have to file a petition with that country’s court to seek an order for the trustee to provide disclosures.


How are Businesses Handled in Divorces?

Many high net worth divorce cases involve private businesses. When a private company is owned by one of the spouses, multiple complex issues will need to be addressed. The business will need to be properly valued. If the company has assets that are spread around the world, the valuation will be more complex. Often, business valuations will require significant investigations and the work of forensic accountants.

After a business valuation is completed, the divorcing couple will then need to determine how to distribute it in the property division portion of their divorce. One spouse may not be willing to give up his or her interest in the company. The spouse that wishes to keep control of the company might need to give a larger portion of the other assets to his or her spouse to retain control of the business.


How is Real Estate Handled in a High Net Worth Divorce?

While a regular divorce might involve dividing the marital home, high net worth divorces may involve real estate holdings beyond the home. Wealthy couples might have rental properties, commercial properties, and vacation homes. An appraisal of each of the various properties that are owned will need to be completed to understand what their fair market values are.

Some of the real estate properties might be the separate property that one spouse brought into the marriage. Other properties might be community property. Finally, some separate real estate might become community property if marital funds were used to make improvements. All of these issues will need to be addressed to ensure a fair division of the property.


Types of Complex Valuations in a Divorce

There are multiple types of complex valuations that might be necessary for a high net worth divorce. Some of the types of valuations that might need to be completed include the following:

  • Retirement accounts
  • Investment accounts
  • Stocks and bonds
  • Jewelry
  • Art collections
  • Intellectual property
  • Real estate
  • Businesses
  • Yachts
  • Other valuable assets

Different experts might have to value the assets from within their fields and submit written appraisals. In some cases, each spouse will hire his or her experts to testify about how they arrived at their valuations.


Spousal Maintenance in High Net Worth Divorces

Under A.R.S. § 25-530, spousal maintenance is a type of support that may be ordered by the court in cases in which the divorcing spouses have a large income disparity. Spousal maintenance is in addition to any child support that might be ordered, and it is frequently at issue in high net worth divorces. However, some cases involve prenuptial agreements through which the lower-earning spouse may have waived his or her rights to spousal maintenance.

In those types of cases, the lower-earning spouses might challenge the prenuptial agreements’ validity and claim that he or she signed under duress. A lower-earning spouse might also claim that the wealthy spouse failed to disclose all of his or her assets, meaning that the lower-earning spouse could not understand the rights that he or she was waiving.


Managing tax implications involved with asset division

Many tax implications might be involved in high net worth divorces. Both spouses will need to consider credits and deductions that might be lost after divorcing. Spouses who will have to pay spousal maintenance are not able to deduct the payments on their taxes any longer, and spouses who receive spousal maintenance are required to report the payments as income on their tax returns.

Transferring certain assets in divorces can trigger tax consequences. Some of the illiquid assets that might involve tax issues include the following:

  • Brokerage account funds
  • 403(b) accounts
  • 401(k) accounts
  • IRAs
  • Stock options
  • Annuities
  • Thrift savings plans

To prevent tax consequences when transferring some of these illiquid assets, a qualified domestic relations order may need to be prepared. This might help people to avoid penalties and taxes on what is transferred.


Concealment of Assets During a Divorce

Unfortunately, some spouses try to conceal or hide assets to prevent their spouses from getting their rightful share in divorces. They might try to transfer assets to family members or friends, hide them, or spoliate the assets. Others simply do not disclose all of their assets. For example, they might have accounts that are not disclosed and transfer funds from disclosed accounts to make it appear as if they have less. They might also move assets to offshore locations or place community assets in trusts.

Whenever a spouse believes that the other spouse is concealing or hiding assets, he or she will need to get help from an experienced attorney. A lawyer might work with a forensic accountant to find assets that have been spoliated, hidden, or concealed. If it is not possible to determine the extent of the person’s actions, the court can draw an adverse inference against the spouse who has engaged in this type of behavior.


Schill Law Group Experienced High Net Worth Attorneys

If you have accumulated substantial assets during your marriage and want to get divorced, getting help from an experienced high net worth divorce lawyer at The Schill Law Group is important. Our experienced property division and divorce lawyers understand how to handle the complex issues that are frequently involved in these types of divorces.

Contact us today to schedule a consultation by calling us at 480.525.8900.

 

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