Even if the state has a formula for alimony, family law attorneys have some leeway in negotiating a spousal support settlement as long as both parties agree. Divorce Financials divorce settlement software by Easysoft includes alimony calculators but lawyers can also come up with their own options.
Some states have a formula for alimony that might take into account length of marriage, income of each spouse, age of each spouse and other factors. Attorneys in these states must at least show the results of this calculation even if both parties agree to a different support amount. Spousal support settlements have been overturned by courts when attorneys do not present this calculation.
Ability To Pay
Spousal support can be calculated by the payor’s income, though often this is done in relation to the recipient’s income. The idea is that a wealthy spouse is in a position to pay more than a poor spouse when it comes to support. Typically these calculations look at net income, meaning income after taxes, when calculating support.
This is probably the most common method of spousal support calculation. The recipient has been at a certain standard of living during the marriage and is entitled to an equivalent standard of living after the divorce. Attorneys use divorce financial software to analyze the couple’s expenditures to determine a fair support amount. This type of lifestyle analysis looks at the couple’s expenditures over a period of time, often the preceding calendar year, to determine how much the payor should pay the recipient.
Rather than paying a monthly amount the payor may prefer to pay a lump sum up front. Although this can be a financial burden there can be both financial and emotional benefits to getting all payments out of the way immediately. The tricky part of this is calculating how much of a lump sum is equivalent to years of payments, adjusting for inflation and other factors. Divorce Financials includes an Alimony Buyout calculator designed to calculate a fair amount.
Child Support Tradeoff
Since alimony is taxable and child support is not, some couples choose to trade these amounts to change their respective tax liabilities.