How to Avoid Paying Alimony
Learn how to avoid paying alimony that is too much and for too long
How to Avoid Paying Alimony That Is Too Much and For Too Long
You want to know how to avoid paying alimony? Let's get to it
Nobody wants to pay too much alimony or pay any alimony for too long. However, avoiding alimony payments that are too much or too long depends greatly on your diligence before there is a court order. This is a no bull article. We give it to you straight.
Help for the higher earning spouse who wants to avoid paying alimony
This article is for the higher earning spouse during the marriage who has a potential exposure to alimony.
This article on how to avoid paying alimony is all about smart, preventive measures that are consistent with the law.
For a comprehensive look at alimony, check out our excellent guide on California alimony laws. Click on the image below to visit that guide.
Ready? Let's dive into this interesting topic. Everything we write here applies only to California divorces.
How to avoid paying alimony through smart settlement negotiations
How to avoid paying alimony for (a) an amount more than a spouse should or (b) longer than a spouse should in a settlement agreement requires diligence in negotiations.
Experienced representation is a must
First, an experienced family law attorney is a must. That means the attorney must be knowledgeable in family law and ideally limit his or her practice to family law.
Inexperienced attorneys or those who lack expertise in family law sometimes use a cookie-cutter approach to settlement agreements that may not fit a spouse's situation.
These same types of attorneys may also lack family law knowledge and how it may help that spouse in the specific situation.
Negotiate intelligently to avoid paying alimony
In addition, the spouse should exercise diligence to ensure the alimony number to which he or she intends to agree is an amount the spouse can afford in light of other agreement terms.
Here is one example - If a spouse takes on a high level of debt that is community property and which the other spouse should pay half of but does not, is it really reasonable to agree to pay alimony on top of taking all that debt? The short answer is usually no.
If one spouse takes on 100% responsibility for community debt and alimony without taking that extra debt into consideration, that paying spouse gets hit hard financially. There is only so much disposable income to go around.
The higher earning spouse should not look at alimony in a vacuum
The above example underscores an important point - settlement agreements that include alimony should take into consideration other terms when determining alimony amounts.
Cookie-cutter settlements where assets are divided equally, debts are divided equally and one spouse should clearly pay an alimony amount consistent with the marital standard of living are one thing. But if one spouse takes on more debt than the other or other terms exist that impact the higher earning spouse's net disposable income, negotiations should take these into consideration when spouses negotiate alimony.
Avoid paying alimony by knowing ahead of time when it should end
Regarding duration, if the marriage is of a short duration, consider whether it makes sense to have a termination date for alimony written into the agreement. This is usually half the marriage's duration.
If left open ended, the spouse risks the time and expense it will take to end alimony once the alimony reaches the one half duration.
The spouse who pays alimony should not assume the other spouse will just agree to be reasonable in the future.
In long-term marriages, it is also possible to reach such agreements and the family law attorney you hire can give you advice on what makes sense for you.
These are just a few examples of how to avoid paying alimony that is too much and for too long as part of a settlement agreement. An experienced family law lawyer will provide you with much more information for your specific case.
How to avoid paying alimony in an unreasonable amount when income fluctuates
What we wrote above applies to self employed spouses. But there is also more to consider.
As one example, how to avoid paying alimony in an amount more than the self employed spouse should starts with ensuring he or she knows what income available for support actually is.
Some self employed spouses do not actually understand their own income. They rely on bookkeepers or certifies public accountants who prepare their tax returns to figure it out. They then rely exclusively on those tax returns when determining alimony.
Self-employment income can fluctuate through the months and years
Unless the self employed spouse is in an unusual industry, self-employment income can vary from month to month, quarter to quarter or year to year. This is especially true for small businesses.
Because of that fluctuation, basing alimony on the income after payment of business expenses may cause the self employed spouse to agree to a monthly base alimony higher than what he or she can reasonably afford.
By the way, we wrote a nice guide for self employed spouses on divorce strategies you should check out.
A forensic accountant can help you keep monthly alimony to a reasonable dollar amount
Instead, with the aid of a respected and experienced forensic accountant, that accountant and family law attorney can estimate what income available for support actually is on a predictable month to month basis.
The forensic accountant can also advise what the self-employed spouse may receive in additional bonuses or distributions.
The factors may include income history, the particular industry and more. Nobody can predict such numbers but at least history may give the spouse, attorney and forensic accountant indicators to come up with reasonable amounts.
This will allow the self-employed spouse to figure out a base alimony number and then a reasonable percentage of the bonus or distribution if and when it is received, as additional alimony.
But the analysis does not stop there. Keep reading.
How to avoid paying alimony in an amount beyond the marital standard of living
With experienced representation, the spouse with the alimony exposure should calculate alimony consistent with the marital standard of living.
A mistake we sometimes see the higher earner spouse make is to base alimony on his or her higher, current income when that income is not consistent with the marital standard of living.
A spouse who expects to receive alimony is generally not entitled to alimony based on increases in income after separation.
For example, if the most amount of money the spouse who pays alimony received during the marriage per year was $150,000 and now he or she earns $250,000, is it reasonable for the other spouse to receive alimony on that additional amount? The answer in most instances is no.
However, the paying spouse should be diligent ahead of time and before he or she agrees to a court order or goes to trial to properly present or consider these issues in the agreement or to the court. That way, whether by settlement or through a formal hearing, alimony has a reasonable cap or ceiling.
How the marital standard living may apply to your situation is not black or white. Once again, to get answers for your specific situation requires a private consultation with an experienced family law attorney and representation.
How to avoid paying alimony when the supported spouse refuses to work
If the spouse who wants alimony has the ability, capacity and opportunity to be gainfully employed but refuses to work or is willfully underemployed, one option is a vocational examination.
A vocational examiner, once ordered, can evaluate the spouse's earning ability, capacity and opportunity and let the court know if the spouse should and can earn an income. If the examiner sets that number (usually a range if one is set) and if the court agrees with the vocational examiner's assessment, the court may even impute income to the spouse if the spouse refuses to work.
It is of course much more complicated than what we wrote here. Family Code section 4331 controls vocational examinations.
Vocational examinations do cost money. Typically, the spouse who requests the examination pays for the examiner.
To learn more about vocational examinations, please read our article on vocational examinations in California.
How to avoid paying alimony when the supported spouse does not have a "need"
You may be wondering, what do you mean does not have a "need?" How does a spouse prove that?
There are many scenarios this can come up but one common one deals with independent wealth separate from marital funds.
If the alimony seeking spouse has an inheritance as one example or otherwise has access to money he or she can use to pay for his or her expenses, that spouse may have a lesser need for alimony.
This may be true even though the other spouse was the breadwinner during the marriage and has the ability to pay alimony.
In addition, third parties, such as parents as one example, may pay the alimony seeking spouse's expenses. This payment, when recurring, triggers the question whether that spouse has a reduced need for alimony, even if that spouse is not employed.
Family Code section 4320 requires the court to consider many relevant circumstances
The court must do this when it evaluates alimony amount and duration. A spouse should not assume that analysis begins and ends with income.
We have another California Family Code section that partially addresses this issue. Family Code section 4321(a) states:
In a judgment of dissolution of marriage or legal separation of the parties, the court may deny support to a party out of the separate property of the other party in any of the following circumstances:
(a) The party has separate property, or is earning the party's own livelihood, or there is community property or quasi-community property sufficient to give the party proper support…
This is section (a). We discuss section (b), below.
How to avoid paying alimony when the high-earner spouse has sole child custody
Family Code section 4321(b) states:
In a judgment of dissolution of marriage or legal separation of the parties, the court may deny support to a party out of the separate property of the other party in any of the following circumstances: …
(b) The custody of the children has been awarded to the other party, who is supporting them.
Remember we discussed Family Code 4321(a), above? Well, now you have section (b).
The reasoning behind this code section should be obvious. If a spouse and parent has sole custody of the child or children, he or she has significant responsibility for their day-to-day care and payment of expenses. This may significantly impact that spouse's ability to pay alimony.
How to avoid paying alimony when the alimony-seeking spouse is cohabiting
Family Code section 4323 states:
(a)(1) Except as otherwise agreed to by the parties in writing, there is a rebuttable presumption, affecting the burden of proof, of decreased need for alimony if the supported party is cohabiting with a nonmarital partner. Upon a determination that circumstances have changed, the court may modify or terminate the alimony as provided for in Chapter 6 (commencing with Section 3650) of Part 1.
(2) Holding oneself out to be the spouse of the person with whom one is cohabiting is not necessary to constitute cohabitation as the term is used in this subdivision.
(b) The income of a supporting spouse's subsequent spouse or nonmarital partner shall not be considered when determining or modifying alimony.
(c) Nothing in this section precludes later modification or termination of alimony on proof of change of circumstances.
This is important. Pay attention to it. If your spouse is cohabiting with a non-marital partner, he or she is presumed to have a reduced need. Ignore this at your own risk. Read our guide on cohabitation and alimony in California.
We hope this article on how to avoid paying alimony was helpful
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It is all about knowing the facts and the law before agreeing to alimony or taking the issue to court. What we wrote here are only a few important considerations on this topic. It is not practical to cover every scenario here.
An experienced family law attorney in a private consultation can advise you of your options specific to your case.
Note: Nothing in this article is legal advice nor should it be construed as legal advice.