Spousal Maintenance in Minnesota
Alimony is the old term for what is now referred to as spousal maintenance in Minnesota. The term alimony comes from the Latin word for sustenance and was considered an obligation to provide financial support for the wife’s lodging, food, clothing, and other necessities after divorce. Traditionally, Alimony was paid by a husband to his former wife, but since the 1970s gender equality movement it is recognized that a former husband may also be entitled to spousal maintenance from his former wife.
Types of Spousal Maintenance
Temporary Spousal Maintenance is awarded for a predetermined period of time to provide financial support for one of the parties to acquire training or education toward employment that will allow them to be self-supportive.
Indefinite Spousal Maintenance is paid until the recipient spouse remarries, one of the parties dies, or the court re-examines the question of spousal support and makes a reallocation based on a substantial change in circumstance.
The term permanent spousal maintenance has been phased out in that it erroneously implied that one party is entitled to receive this amount until they die regardless of changes in circumstances. The trend seems to favor temporary over indefinite support but courts may make an indefinite award for a longer marriage (over 20 years) with a large discrepancy in earnings.
Factors that Contribute to Determining Spousal Maintenance
Spousal support is determined on a case-by-case basis by considering factors including:
- Length of the marriage
- Earnings of each party
- Opportunities one missed to stay home and raise a family
- Lifestyle during the marriage
- Value of the property allocation
- Health of the parties
- Age of the parties
Steps to Consider the “right” Amount for Spousal Maintenance
- Create a budget of reasonable future expenses based on the standard of living during the marriage.
- Calculate monthly ongoing income factoring in deductions for taxes, retirement savings, and child support payments.
- Each party must act in good faith and attempt to be gainfully employed appropriate to the level of their education and work history.
Tax Implications of Spousal Maintenance
- Spousal maintenance is tax deductable to the person who is paying it and taxable to the person receiving it.
- Working within the IRS regulations, spousal maintenance agreements can “create money” for the parties by moving money from a higher tax bracket to a lower tax bracket which creates less tax liability.
- Financial experts may be helpful to create a solution with the best tax benefit for both parties.
- Unlike spousal maintenance, child support payments are not taxable or deductable to either party.