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Episode 65 - What Will Happen To Alimony When It Can No Longer Be Deducted?

Episode 65 - What Will Happen To Alimony When It Can No Longer Be Deducted? Image

11/20/2018 9:12 am

In 2018, US Tax Code went through some major revisions. One of the things changed was the ability to deduct alimony payments from your taxes. The change does not go into affect until after December 31, 2018. In 2019, however, this change could have a profound impact on family law. In this show, Leh and Todd discuss what impact it will have on settlement discussions and alimony awards after 2018. They also break down how this change could influence the 8 factors that a Court can consider when awarding alimony.

Transcript

Leh Meriwether:              Welcome, everyone. I'm Leh Meriwether and with me is Todd Orston. Todd and I are partners at the law firm of Meriwether and Tharp, and you're listening to Meriwether and Tharp Radio on the new Talk 106.7.

Leh Meriwether:              Here, you'll learn about divorce, family law, tips on how to save your marriage if it's in the middle of a crisis, and from time to time even tips on how to take your marriage to the next level. If you want to learn more about us, you can always call or visit us online, atlantadivorceteam.com.

Todd Orston:                     I'm just so happy it already happened. You're just going to get that out right at the beginning.

Leh Meriwether:              I did.

Todd Orston:                     All right.

Leh Meriwether:              No more-

Todd Orston:                     Fantastic.

Leh Meriwether:              ... tongue tied.

Todd Orston:                     All right, well, if you need some help with english language, let me know. I'm here for you.

Leh Meriwether:              Hey, you know what, Todd, though? This actually ... Getting tongue tied is easy.

Todd Orston:                     Yeah, for you.

Leh Meriwether:              Yeah, apparently it is really easy for me. But what makes our job difficult, is it seems like every year something changes in the law and all of a sudden our advice to our clients has to change as well.

Todd Orston:                     It really does seem like it is almost every year that something is changing. Today, we're going to be talking about something that we have experienced some recent changes again. And it impacts everybody going through a divorce. Or not everybody, but many people going through a divorce. Why don't you tell the listeners what that is.

Leh Meriwether:              In the past, people have been able to ... If someone was paying alimony, they got to have that as what's called an above the line deduction. It was a tax deduction. And with the introduction of the new tax reforms, that tax deduction has been taken away. Before that, like back in 1984 when there was a tax code change, they actually changed it because what was happening back then is when people were getting divorced, if you had some wealth or wealthy business owners or that type of thing ... Wealthy individuals, when they wanted to do an equitable division because there's no tax benefit to a equitable division ... That's when you split all your assets. They would create these ... They would get creative and they would pay the wife a lot of money, and call it alimony, so the husband could take a huge tax deduction.

Leh Meriwether:              So, they created this thing called the alimony recapture rule because they recognized they were doing this to avoid paying taxes. So they created this alimony recapture rule. So, anything under three years, the IRS could come back and say, "Nope. That's not tax deductible. We're going to call that equitable division and you have to pay taxes." But that's now out the door.

Todd Orston:                     Yep, yep. It was made irrelevant, and basically with the new tax changes, it is a more global change that doesn't just relate to how something is structured. It relates just to all alimony payments starting in 2019.

Leh Meriwether:              Yep. So as long as you have a settlement agreement where there's a final order sometime before December 31st, 2018, you're okay, you can still write off. But anything after that point, it's no longer tax deductible. And for me, we've always used alimony as a negotiation tool because it was a tax ... Whoever was paying it, it's usually the husband, rarely it's the women, but normally the wives ... It's normally the husband. And it was an advantage because depending on the tax bracket, if you agreed to pay your wife three thousand dollars in alimony, the net effect would be more like two thousand dollars, because you got a thousand dollar deduction out from your taxes. So, it became very advantageous to the wife. Now, she did have to pay taxes on the three thousand dollars she received, however, in her tax bracket, that wasn't very much in the way of taxes. And depending on how much she was actually getting, because if you include child support, that's not taxable, she may have had no income taxes associated with that alimony depending on where she was sitting and if she had a job.

Leh Meriwether:              So, it was really nice to negotiate that, especially if you had families that had tight financial circumstances. But that's gone now, and I think it's going to create more ... Particularly here in Georgia, I think it's going to create more litigation because it's more difficult to settle. And I think one of the things that's different today than it was back in the 1980s is consumer debt. It is so much higher today than it was back then. So, we see this all the time, where we'll see very high income families come in, but they have so much debt that they're having trouble making ends meet, even with the amount of income coming in. And a lot of times, they have credit card debt existing. So, they were actually borrowing money to maintain their lifestyle, and then all of a sudden now they're getting a divorce and they have to double their monthly expenses. So, it creates a problem.

Todd Orston:                     Absolutely. I mean, I am unfortunately thinking that you're right. We're going to be seeing a lot of some additional litigations. Some problems arising because of this change, because from the payor point of view, now it's one of those things that they have to pay taxes and therefore, in their minds, they're going to be thinking, "Well, clearly I have to pay taxes on this amount and therefore I am more limited. Especially if I have debt I have to pay and children's expenses I have to pay, and child support perhaps I have to pay. And now on top of that, I have to pay not only the alimony, but there's also taxes associated with that." And that's going to, to some degree, limit and further limit the amount that is available to pay support. And then on the flip side, there's going to be spouses who have perhaps even a desperate need for support, and the amount might be more limited in terms of what they're actually getting because the payor is just not capable of paying more.

Leh Meriwether:              Right. Yeah, so for like that example I gave where he's giving her three thousand dollars a month, but he's actually ... When he gets his tax deduction, he's only giving her two thousand dollars a month. But because of her tax bracket, she's barely paying any taxes on that. So, her take home is pretty close to that three thousand dollars a month. Now we take that away, and he really only had two thousand dollars a month to give her. Now, he has to earn three thousand to give her two thousand and that all she gets is two thousand. So, he has to work harder to give her less money now.

Todd Orston:                     And I agree with what you were saying before. We see this again and again and again. People coming in and we start diving in, looking at their finances, and we look at credit card and other types of debt, and some of these people are mortgaged to the hilt, they have tons of credit card debt and other things. It has to be paid. So, now you are looking at someone and sometimes there's a disconnect where one spouses is saying, "I have needs." And I understand it, we respect that.

Todd Orston:                     But then you look at the flip side and you look at the total big picture, and there's just so much money to go around. And making this change in the tax law, now all of a sudden, the person who has the higher tax bracket, they have to earn more, they pay more taxes on that money. It absolutely, I believe, is going to have a negative impact, especially on the families where the payor spouse is cutting it pretty close. We're not talking about somebody who makes a million dollars a year. But still, has to pay some level of support. And they're cutting it close already, and now this change has to be applied? I think it's going to really limit what can be paid, and that's going to impact the recipients.

Leh Meriwether:              Yeah, because I think ... In my understanding ... I haven't thoroughly researched. We were hoping to have a CPA on, but with the tax time coming around the corner, it was very difficult; nobody was available. But my understanding is one of the ... They thought there was ... I guess the calculation was that there was about 10 billion dollars in lost revenue because alimony was a tax deduction, so they thought they were going to get that back. But as often we see with government, regardless of who's in charge, there's [inaudible 00:08:27] a short sightedness because they think that the same behaviors are going to continue. But taking your example where now the mother who has a desperate need and can't get back out in the workforce right away, all of a sudden she's going to be kind of dependent on government programs. So, this tax savings over here can be all set by ... But our ... The expense borrowing money ... Getting government assistance will eat up some of that, and then ... So, let's say the husband has to pay ... At the time, pays less ...

Leh Meriwether:              Let me flip it. A lot of times if the husband will ... We tend to see this ... If they have a little more extra money, they're going to put that money into some sort of retirement vehicle, again, for some sort of tax avoidance. So, that money doesn't get into the economy, per se. It may get in the stock inside of that retirement vehicle, whereas the money that the wife is receiving, she needs that money to live, and so that money is actually going back into the economy right then and there. So, you're kind of losing that ... There's a tax impact there and obviously I haven't seen the research, but I would be surprised if they took that into consideration, because all too often we see them ... It's "Hey, won't the behaviors continue? Won't the alimony payments continue?"

Todd Orston:                     And it can't. It can't because the payor, now they are getting hit with this requirement to pay the amount of support that the recipient needs. They know they have to earn more.

Leh Meriwether:              Right.

Todd Orston:                     Or cut back in other places. And the recipient is sitting here thinking, "I'm not going to be receiving less." Because more than likely, they are going to receive less because of the change. So, it absolutely, I think it's going to impact across the board the spending habits of people. And again, the shortsightedness that you're talking about, I think it's appropriate. I'm curious as to whether or not they sat down and truly thought this through to see how it would impact families and by impacting families, how it would affect the overall economy.

Leh Meriwether:              Yeah. And up next, we're going to actually dive into the eight factors that the court considers, especially here in Georgia, when it comes to determining an alimony award. And we're going to break down these factors and then we're also going to go into how we think the tax all might impact each one of these factors when it comes to a decision that a judge may make if the case has to go to court. Definitely don't want to miss that because we are going to break down exactly the things that the court looks at when making a ruling.

Leh Meriwether:              Welcome back, everyone. I'm Leh Meriwether and with me is Todd Orston. Todd and I are partners at the law firm of Meriwether and Tharp, and you're listening to Meriwether and Tharp Radio on the new Talk 106.7. If you want to learn more about us, you can always call or visit us online at atlantadivorceteam.com.

Leh Meriwether:              Today we've been talking about really changes in the law. Particularly the tax change that came down this year, 2018, and how that is impacting alimony awards in divorce cases. We just, Todd and I gave our own two cents on what we thought about the change in the law and how we think it's going to negatively impact family law and potentially cause more litigation. Because now, today, or starting January 1st, 2019, that people paying alimony no longer get a tax deduction for those payments. But now we're going to sort of break down the eight factors that the court looks at when making an award of alimony. And the court makes that award only when the parties can't sit down and negotiate. So, even when negotiating, we consider all these factors when we make a proposal. They all are taken into consideration. So, let's start hitting them.

Todd Orston:                     Yeah. And just to be clear, when we say "the factors," what we're talking about is when a court is asked to make a determination as to whether or not it would be appropriate in any given case to award a party some amount of alimony or spousal support, then the court's going to think of things and is going to consider these factors; these general things that the court wants to think about and look at and the evidence they want to review, in determining whether or not an award would be appropriate. And if so, what amount would be appropriate. So, these factors are ... This is the tool, for lack of better way of putting it, that the judge or judges use when making this determination as to whether or not an award of spousal support would be appropriate.

Leh Meriwether:              Right. It comes from ... And we're going to be pulling this from the official code of Georgia. So we are in Georgia, we're going to talk about Georgia. And I know a lot of these that we're going to touch on, that states around the country, they use something very similar to this. But if you're listening to this and you're in another state, you obviously are going to want to talk to a local lawyer about what these particular factors are in your state. But I do know that even though we're going to talk about specifics, these specifics, because I'm licensed in Florida, it's very, very similar in Florida when they consider an award of alimony.

Todd Orston:                     Yeah. And here, it's the official code of Georgia annotated and it's 19-6-5, which establishes what the factors are. So, having said that, let's jump in.

Leh Meriwether:              The first one is standard of living. You actually hear this on TV all the time, like some shows when someone says, "Hey, you're going to pay me in the ..." And I'm trying to be one of the actors.

Todd Orston:                     No, I was getting into it. You had me fooled there for a moment. You were in character.

Leh Meriwether:              Yeah. Because you've seen it on TV where they go, "You're going to pay me in the standard I've become accustomed to."

Todd Orston:                     I was about to pay you some alimony, I'm just telling you.

Leh Meriwether:              Not that people really say it that way, I'm just trying to be funny.

Todd Orston:                     So the standard of living. So, generally speaking, what that means is ... And in the way that it reads is the standard of living established during the marriage. What kind of a lifestyle? How did the parties live during the marriage? So, if you lived a very basic life and by that I just mean there weren't a lot of additional, frivolous, expenditures, then that's your standard of living. If you on the other hand belong to a country club and you go on lavish trips and you this and you that, then that is your standard of living.

Todd Orston:                     But I will say this; just because you lived a certain standard of living as a married couple, sharing expenses together, does not mean that the court is absolutely going to keep you in that standard of living post-divorce, because then there's a new reality, right? It's something we're going to talk about in this show and other shows, where things change. Once you get the divorce, you have to understand that instead of one salary or both salaries maintaining one home, now there's two separate homes and two sets of bills and all the other expenses that go along with it. So, standard of living can change and a court doesn't always guarantee, never guarantees, that you will be living that same standard of living, but that is at least one of the factors.

Leh Meriwether:              Yeah. It's a factor for the court to consider awarding the alimony. Now, this factor does not mean that by law, the judge has to keep you in the same standard of living. Because going to your point, the standard of living is going to take a notch down because now you have two households you have to maintain, there's a lot more expenses, and you just can't afford to ... There's not enough money to go around to double the cost.

Todd Orston:                     And that sometimes is a hard concept for people to grasp, just because, especially when we're working with the people who will be the recipient of a spousal support award, where they come and they're like, "Well, I want to go to this gym and I want to do X and Y and Z and go on these trips and do all of this stuff that I did as a married person living under a roof with my spouse." And sometimes it is difficult when we have to sit down and show them what their budget looks like, and then show them what the budget is going to look like when they are living on their own and their spouse is living on their own, that there's only so much money to go around.

Leh Meriwether:              Yeah. And I think there's two ends of the extreme here of like ... And we've seen both of them. On one end of the extreme, you have people that the reason they were living this lavish lifestyle was that they were borrowing money and living above their means. And the court will make a ... They'll look at the finances and say, "I understand that y'all live this lifestyle, but you can't maintain it. I'm not going to order that you pay this much."

Leh Meriwether:              Now, on the flip side, however, if the husband had introduced the wife to a certain lifestyle and then she has the kids and the kids are going to move out and they don't have that financial strain of a lot of debt, the court's got to recognize if Dad over here makes 500 thousand plus a year, and he has the ability ... He has created this standard of living, he can afford to keep this standard of living. And the court's actually going to ... We sit it usually when the wife has kids. They're going to say, "Hey, look. We want the kids to have sort of the same environment at Mom's and at Dad's and we'll order Dad ..." We've seen courts order Dad to pay a large amount of alimony; I mean 10 to 20 thousand dollars a month. And it's amazing how people will become accustomed to that because we have clients that have to live on two to 2500 dollars a month or less, and then we've had situations where we looked at the budget and 10 thousand dollars a month in alimony wouldn't cover all their bills.

Todd Orston:                     And that's why, from the very beginning, I made sure my wife ate ramen noodles every night. If I'm going to establish a standard ... For the record, if she's listening, she is a CEO of a company, and she does well for herself. So, just a joke, Honey. Actually, there's too much sodium in ramen noodles. She wouldn't eat that. So, anyway. But that's standard of living and yes, things can change and will change. Not can change. Unless you're talking about the income, there's not a lot of debt and the income for the payor is so high that there's clearly enough money to keep people in that same standard, almost across the board, there is a change.

Todd Orston:                     People have to take, for lack of better way of putting it, a haircut. And they have to cut some things out of their budget. Like I said before, it can sometimes be a difficult conversation because people want. They don't like they're going through the divorce, it's already painful. And now you have to explain to them, "Oh, and by the way, the way you were living, yeah, that's going to change as well." It's not just a matter of who you're living with, it's now a matter of all the things that you were doing, you can't do all of them anymore.

Leh Meriwether:              Right. And I think another thing that ... I do think that they change in the tax law is going to impact this a bit because the court's going to take into consideration ... Well, for instance, let's say the wife is receiving two to five thousand dollars a month. Well, the court could, in its mind, or when it's sort of thing through this like subconsciously ... Well, for her to get two thousand dollars, it's more like three thousand dollars because she's not paying taxes on it. So, there is a value there. There's that mental adjustment. So, the wife may not get as much money because the court's going, "Well, gosh, she won't have to pay taxes on this anymore."

Todd Orston:                     If I'm making an assumption, I'm assuming that the court will absolutely award less because the court's going to take into account the impact ... And we're going to get into this a little more later, but the impact on the payor spouse. The fact that they have this income tax requirement. If that's the case, if the court is already trending lower to take into consideration the tax impact on the payor, unfortunately I think it's going to trend lower.

Leh Meriwether:              Yeah.

Todd Orston:                     So, in other words, I think courts may miss the mark in terms of how much lower, and it could significantly impact the recipient. And that's going to have major impacts on how they live their lives, how they spend, and I think that trickles down very quickly to the economy as a whole. This is what we were going into before.

Leh Meriwether:              Yeah. I think what we need to do is two years from now, when you listen to the show and what we're predicting happens, see if it really happens.

Todd Orston:                     Yeah, yeah.

Leh Meriwether:              Hopefully we won't ...

Todd Orston:                     All right. I'm putting it in my phone right now.

Leh Meriwether:              To listen to it in two years.

Todd Orston:                     Absolutely.

Leh Meriwether:              Yep, and that way we'll see if our predictions hold true. But you know what? Up next, we're going to talk about more of the factors, including how the court looks at the duration of the marriage. What are the physical and emotional condition of the parties? What are the financial resources of each party? So, we're going to get into more of these factors, how the court looks at it, and what we have seen in our experience. How the court takes these statutory factors and applies them to cases that we've actually litigated.

Leh Meriwether:              Well, hello everyone. I'm Leh Meriwether, and with me is Todd Orston. Todd and I are partners at the law firm of Meriwether and Tharp, and you're listening to Meriwether and Tharp Radio on the new Talk 106.7. If you want to learn more about us, you can always call or visit us online at atlantadivorceteam.com.

Leh Meriwether:              Today we've been talking about changes in the law that are impacting families that are going through a divorce, and particularly how is it impacting alimony? Because affective January 1st, 2019, you can no longer write off an alimony payment to your spouse. If you were ordered to make it in a case or you settled your divorce action and agreed to pay alimony, you can no longer write it off. For years, decades actually, you were able to write that off; it was a tax deduction.

Leh Meriwether:              So, we've been breaking down the eight factors that the court uses; the statutory factors that they use here in Georgia, and breaking down how this might impact those factors and just talking in general about what the court considers when making an award. When we last left off, we addressed standard of living; that's one of the things the court looks at. Now we're going to talk about duration of marriage.

Todd Orston:                     Yes we are. I'm done. No. So duration of marriage, it's exactly what it sounds like. All right? But it is one of the formal factors considered by the court. To use an extreme example, if you're married for a year, you're not getting five years of alimony. If you're married for 30 years and you are a recipient, meaning you are let's say the person who would be receiving and might be entitled to receive alimony, you're not getting six months of alimony, if you don't have a lot of other assets to draw upon or there are some other factors [crosstalk 00:24:23].

Leh Meriwether:              We're talking about all the different factors.

Todd Orston:                     Right. So, a factor is duration. The court is going to consider a number of things as it relates to duration. But the bottom line is if let's say it's a 10 year marriage, the court's going to think of things in terms of, "Okay. How long was the marriage? And in relation to the other factors, what are the needs of that spouse and what would be an appropriate duration of alimony in relation to the duration of the actual relationship and marriage?"

Leh Meriwether:              Right. So, we're going to talk about the other factors because they all come into play here. I don't want to dive into all those, but when we're talking about duration, every state's a little bit different, but all the states as far as I know, take into consideration duration of marriage. So, some of them actually have set down, you know, if you've been married less than eight years, there's a presumption of no alimony at all. And that's not the way it is in Georgia, but other states in the ... Or over eight years, or between eight and fifteen years I think it is ... This may be Florida. Anything in that range, it's called rehabilitative alimony. So, it's not some sort of permanent alimony. And then after a certain time period, it's permanent lifetime alimony.

Leh Meriwether:              Some states are pretty tough now. Texas, I think Texas has a cap on alimony, so alimony can't be more than five thousand dollars a month. So, every state's a little bit different. In Georgia, we don't have anything like that, so the court ... This is one of the factors it looks at. And there was a study done by a lawyer ... Wasn't it like eight years ago or 9 years ago in the Family Law Bar Journal or our Bar Journal here in Georgia? This lawyer went around to all the metro Atlanta judges and asked them, in a vacuum, with no other factors to consider, and you're looking at duration of marriage, what are your duration of alimony awards. And sort of the average was for every three to five years of marriage, one year of alimony. That was sort of what he had ... After talking to all these judges, he put it all together and that's what he found was the range. So, a 30 year marriage might be 10 years of alimony.

Todd Orston:                     Now I will say this, though; because it is subjective, because the court can rely on all of these factors, not just duration, but the standard of living and all the other ones we're going to go into; the problem is that I've seen 10 year marriages with eight year alimony requirements. I've seen 10 year marriages with six month requirements or no requirements. So, duration ... I'm not saying one factor is more or less important than the other, but duration is so heavily dependent on some of these other factors that it's across the board. It's all over the place, is what I'm trying to say. I've seen big awards, I've seen small awards, for short marriages, long marriages. It's really going to be heavily dependent on so many other things that the court's going to consider when determining what is reasonable.

Leh Meriwether:              I've even seen ... I've only seen a few times, but I've even seen with a 15 year marriage a couple times where there was permanent, lifetime alimony.

Todd Orston:                     Yeah.

Leh Meriwether:              Which shocked me, but here in Georgia at least.

Todd Orston:                     I saw that once when I was dealing with a case where there was a dependent child. There was a child with significant needs.

Leh Meriwether:              That makes sense.

Todd Orston:                     That was not going to ... In other words, there were some development issues, and so the child was going to be, unfortunately cared for by the parents. So, the wife in that situation, who had shouldered that burden, got lifetime alimony because of that fact. Because child support has to stop at 18.

Leh Meriwether:              At 18 in Georgia.

Todd Orston:                     So, this was a way of the judge saying, "You know what? Sir, you are going to be to some degree responsible for the fact that your wife is going to have to cut back on how much she can work, because she has to take care of your special needs child."

Leh Meriwether:              Yeah. And that makes sense.

Todd Orston:                     Yeah, but that was a situation where the length of the marriage was much shorter than the award of alimony.

Leh Meriwether:              Right. That didn't play into ... That wasn't a heavy factor the court considered.

Todd Orston:                     Right. Yeah, duration there, it was not important at all. There, it went into some of the other factors that established a high need for support.

Leh Meriwether:              The next one is physical and emotional condition of the parties. And we see this where, let's say ... What we've seen in most situations where you've got a disabled spouse on the other side and they can't work, and the other person can, so the court may award in that situation more alimony than the average duration I just talked about. In fact, I had a case where my client, the wife was disabled; she had received a disability rating from social security, SSDI, and it was a 10 year marriage, but she was asking for lifetime alimony because of her disability.

Leh Meriwether:              My argument to the court, though, which ... And the court wound up awarding five years of alimony, which was a lot for a 10 year marriage based on the average of the cases that I've had. But the court did not order lifetime alimony because he didn't want the divorce, she did. So, I said well, "She has a choice. She can stay married to him. And he said he'd be willing to go to counseling and do whatever you want. But it's her choice to leave this marriage, so he shouldn't have to pay for it." And the court took that argument and still awarded a little bit more alimony than I was hoping I would win, but [crosstalk 00:30:00].

Todd Orston:                     Did not give her a lifetime. And that's a ... So, the code section, it says the age and the physical and emotional condition of the party. So, we're dealing ... That's an example of dealing with some of the physical and or emotional conditions. But there's also an age issue, and that is where ... Rarely do we see lifetime awards anymore. I'm just saying, it happens, but it was much more prevalent in years past. Okay? But when you're dealing with a situation, if let's say the recipient is 40 years old. Well, that person is young. That person is very capable and able to go out and start a career or at least get a job and over the years make some money and really contribute to their own financial care. But if somebody comes in and they are 65, let's say, there's only so much that a 65 year old can do within that short period of time; that window that they have to literally start a career or just start working and get something more than just minimum wage. That will weigh heavily, also.

Todd Orston:                     So, the court in other words is going to look not just are they physically well? Are they emotionally well? We've seen physical impairments where it's ... Medical issues where they are physically incapable of doing work. A back problem, leg problems, whatever. I've seen, we've seen the emotional issues, and then there's the age issue. We've seen people come in where they ask for long periods of alimony and they get it because they are at the tail end of their working career, and they worked by keeping up the house, taking care of the children, taking care of the home, doing all of that heavy lifting on that end of the marital relationship; and the court recognizes that.

Leh Meriwether:              Following up on that, let's say you have the husband who's worked throughout the marriage, and now he's 68 or 69 years old. He's about to retire, or in some cases we've seen them where they're in a industry that has mandatory retirement age for safety issues.

Todd Orston:                     That's right.

Leh Meriwether:              It could be air traffic controllers I think have an age, I think. And I think ... I thought airline pilots had an age where they said after this age, we can't ... For safety reasons you can't be a pilot anymore. In those situations, the court may not award alimony if they're like, "Well, they're both going to retirement, and they're both have access to the equal resources." So there isn't going to be an award of alimony. Even though the marriage may have been a 40 year marriage, they're both at retirement age, so there's no award of alimony.

Todd Orston:                     Right. And the example that you're using where it is dictated by that person's profession that you must retire at a certain age, well that makes it easy. Because then for the attorney, it's easy to just prove they are a pilot or they are an air traffic controller. They must stop working in this area at this time. But when we're talking about some of these other areas, it's not as clear cut. And we can go into that in a moment.

Leh Meriwether:              Yep. And up next, we're going to go into the additional factors the court looks at; the financial resources of each party, the time needed to obtain employment, the contribution to the marriage, and the financial conditions of the party. So, we're going to get into those up next.

Leh Meriwether:              Welcome back, everyone. I'm Leh Meriwether and with me is Todd Orston, and we are diving into the eight factors that the court looks at when it comes to determining alimony, and how the recent tax law changes could impact these things. And you know what? We're going to keep going real fast because well, Todd just kept talking and we just couldn't get to all the factors on time.

Todd Orston:                     I am Chatty Cathy today.

Leh Meriwether:              I'm just kidding. But we have four more factors we want to get to, and we're coming up ... This is the last segment of the show. So, let's get to it. The next one is the financial resources of each party.

Todd Orston:                     Yeah. And keep in mind, when you're getting married ...

Leh Meriwether:              That's too long, Todd.

Todd Orston:                     When you're getting married, or when you are married and you're getting a divorce rather, obviously there's what I'm going to call the marital pot. But what the court is really talking about here is let's say somebody during a marriage inherits a bunch of property. That money, let's say it's a lot of money; a quarter of a million dollars, is sitting in an account somewhere, and that's not subject to division. So, on the equitable division side, they can't touch it. But the court can consider that. So if that same person is saying, "I need support. I'm only getting X from the marital pot and I need financial support," the court can absolutely look and say, "Oh, wait. Hold on one second. You have 250 thousand dollars sitting in this account over here. So, as it relates to your need, you don't have as great a need because you're actually sitting perhaps on a lot more money than your spouse is."

Leh Meriwether:              Yes. And it's not just that, but also military retirement benefits. Because we've seen, there's been some recent changes in the law. I'd love to do a show on that, but I don't think all the changes have fully sunk in yet. But basically, somebody's in the military and I don't have any issue with this, it's just created all kinds of issues in the family law arena, can set up their retirement where it's not divisible. The government does not have to share that with the spouse. So, in that situation, the court can take into consideration, "Hey, this person over here has this retirement benefit that's non-divisible. Well, I'm going to order alimony to make up for it." That's one of those factors the court can look at when considering alimony.

Leh Meriwether:              On the flip side, Todd, if you've got a husband over here that's sitting with two million dollars in the bank from inheritance, the court can say, "You've got the ability to pay. You've got money over here." So, while they can't divide it from an equitable division standpoint, the court can award alimony because of this ability to pay.

Todd Orston:                     And it's not really the court saying "Pay it from your inherited money."

Leh Meriwether:              Right.

Todd Orston:                     The court basically just says, "You're paying it. I don't care where it's coming from." So, it's not the court saying improperly, "Take it from inherited money." And unfortunately, you're in a situation that you are going to have to pay it then.

Leh Meriwether:              And the other example is a personal injury settlement; that's separate property. The court can look at that, whether to award or not award alimony. And then the other thing is if the parties have a large estate, we've seen situations with large estates, 10 million dollar estates, and the wife was going to get the majority of the cash of that. So, it was five million dollars in cash. Now there was this standard of living argument and I saw jury trial one time where the wife was asking for alimony on top of that award. If I remember correctly, the jury did not award alimony because most of the people in that jury, the concept of having a million dollars in the bank is a dream. She already had five million dollars in cash that she was getting, so they didn't award alimony. Those are the factors that they look inside of this financial resources of each party main factor.

Todd Orston:                     All right. Let's move onto the next one; the time necessary for either party to acquire sufficient education or training to enable him to find appropriate employment.

Leh Meriwether:              So, time needed to find employment. And this really goes to that ... You have a shorter term marriage, maybe like a 10 or 15 year marriage, or we've even seen 20 year marriages where the wife, very intelligent, lots of degrees, but what happened was she gave up her career to raise the children. But she still has that to get back into the workforce, so the court says, "Okay. Well, you know what? What do you need? What do you need in the short term?" And we actually counsel clients all the time because I think when you come to the court with, "Hey, I need to finish my nursing degree. It's going to take two years. The cost of the school is X, my expenses during this time are Y, and so I need a three year alimony award to get myself back time to get up to earn this kind of level of income, which still isn't close to his."

Leh Meriwether:              And the court will look at that and often, if you are very reasonable and specific about why you need it, the court will award an alimony award and a duration that will meet that time to get full employment.

Todd Orston:                     All right. Next one.

Leh Meriwether:              Contribution to the marriage. And you actually touched on this earlier. Because we often see, well ... And I'm using the stereotypes because that's what we see the most. Where the husband worked and the wife stayed home with the kids. We've seen husbands come in, "Well, she didn't put anything in the retirement account."

Todd Orston:                     "It's my money. I earned the money. It was my job, I'm the one that went to work every single day."

Leh Meriwether:              Right.

Todd Orston:                     That's not how Georgia law looks at it.

Leh Meriwether:              And the court says, "Well, she was making sure your clothes were taken to the dry cleaner's, you had food on the table, your kids were taken care of, she took care of the house, she took the kids to all their extracurricular activities so that you could build up your career." So, the court will look at her contributions in that situation.

Leh Meriwether:              On the flip side, we've seen situations where the wife was the employed, who did the work and then the dad stayed home. But mom still did a lot of duties at home. There was a recent conference with the judges that one of the other partners went to, and some of the judges say ... I'm actually starting to look at this a little more closely, because I've had cases where husbands and wives really didn't contribute a whole lot. That the wife was ... She was not only earning the income, but then she was taking the kids to all their extracurriculars and dad was kind of just ...

Todd Orston:                     Yeah. You were a stay at home parent, but you weren't really a stay at home parent. You weren't staying at home so that you could take on the lion's share of the responsibility, taking care of a child or children. So, courts are starting to look a little more closely at that.

Leh Meriwether:              And I think the other ... In that same thought process, there was situations where you have someone that does drugs, and so they're not contributing to the marriage. In fact, they're taking away from the marriage because of their drug use. So, for that reason, I've seen sometimes courts not award alimony.

Todd Orston:                     And very quickly, I've also seen just because let's say somebody ... I have situations and I've seen situations where someone really hasn't contributed. Let's say again, very quickly, stereotypical ... The wife who ... There are nannies, they play tennis, they this, they that. That's the standard of living, though. So, a court may look and say, "Okay, you're right. Maybe that parent, that party, didn't do as much. But then again, that was the way your family was structured and that was the standard of living that both of you allowed to go on. So, you can't now complain when you've been doing that for five, 10 years, and now all of a sudden you come in and you're saying, 'Well, no. I'm not going to allow ... I don't want to pay any money for support because she didn't contribute.' Well, you didn't ask her to contribute."

Todd Orston:                     There's a lot of nuances, there are a lot of things that we as attorneys have to look at, consider, and sort of incorporate into the argument.

Leh Meriwether:              Yeah, and the last one is the financial condition of the ... Oh, no. I'm sorry. The second to the last one is financial condition of the parties. Now this has a little bit of overlap with the financial resources of the parties, and actually I think you may have jumped ahead earlier, Todd.

Todd Orston:                     Yeah.

Leh Meriwether:              This is part about the separate estate earning capacity.

Todd Orston:                     Right.

Leh Meriwether:              You almost could combine those two factors.

Todd Orston:                     Because I really look at four and seven as being very similar.

Leh Meriwether:              Yeah, they are very similar.

Todd Orston:                     As it relates to ... Look, it comes down to need versus ability to pay. That's what alimony is. So, if you have a need, you have to establish that you have a need that support needs to be paid, or else you don't have the financial resources and ability to take care of yourself and pay your minimum expenses. So, the court is going to look at the financial resources that you have, and also is going to look at your financial condition, including separate estates and things like that. I did jump ahead, but they are very closely related.

Leh Meriwether:              They overlap a lot. And then the last factor ... I love this factor ... is all other relevant factors.

Todd Orston:                     That means as the court deems equitable and proper. So what does that mean? The court can do whatever the court wants to do.

Leh Meriwether:              Yeah. Very limited ... There is one limitation. The court can't use alimony to punish another party.

Todd Orston:                     Absolutely.

Leh Meriwether:              That's the only limitation.

Todd Orston:                     That's very important because that comes into play when there's adultery or there are other things where parties come in and go, "Oh, I'm going to take that person to the cleaner's because they committed adultery."

Leh Meriwether:              Right.

Todd Orston:                     Or they physically abused me or they did something else. And we have to explain that unfortunately, the court is not allowed to use this as a punitive tool. It is 100 percent, you mentioned this before, rehabilitative. In Georgia, all alimony is really deemed rehabilitative. It is what is necessary to get somebody back on their feet so they can support themselves. And if that takes one year, great; if it takes 20 years or a lifetime, fantastic. Whatever it is, it's to rehabilitate that person and make sure they can pay their expenses.

Leh Meriwether:              Mm-hmm (affirmative). Well, that about wraps up this show. We were able to get the last four segments in.

Todd Orston:                     You stopped talking and we got it done.

Leh Meriwether:              I've just got to quit talking so much. Well, hey everyone, thanks so much for listening. Next week we're actually going to get into ... We're going to discuss a little more about alimony. You definitely want to check it out. We're going to talk about the five things that can block, stop or reduce your alimony payments. You definitely want to check that out. And you can always read more about us and find more information about us or this topic at atlantadivorceteam.com.

Leh Meriwether:              If you have a topic you'd like for us to explore, please email us at [email protected] or post your question on our Facebook page at Facebook.com/atlanta.divorce.lawyers. If there's a part of this show you'd like to hear again, you can actually download the show as a podcast at most podcast directories such as iTunes. Just look up Divorce Team Radio and you'll be able to find us. And by the way, if you are actually enjoying the show, getting a lot out of it, we'd love for you to post a review online. Give us five stars, please. But definitely post a review. Thanks so much for listening.

Speaker 3:                           This audio program does not establish an attorney-client relationship with Meriwether and Tharp.