Child & Spousal Support

Child Support

In Alabama, child support is calculated by the state’s Child Support Guidelines, which must be followed in all cases involving children under the age of 19. Before passage of the guidelines, child support was calculated in a variety of ways, and some judges and parties even waived support in many cases. But the law is clear now that child support must be paid and cannot be waived, even with a parent’s consent. The money belongs to the child, not the custodial parent: parents cannot decide to excuse its payment. Only in limited circumstances will the court even consider a reduction in child support.

The Support Formula

Child support is based on a formula that considers both parents’ combined total monthly income prior to any deductions for taxes or other forms of withholding. That figure then determines the child support payment on a pro rata basis. The payment increases with the number of children. However, the payment does not increase in an equal amount per child. The child support guidelines are comparable to federal income tax charts that display similar increases with the income of the parents and the number of children.

The child support calculation also considers day care expenses and health insurance costs related to the children. If the parent paying child support also pays for health insurance, that parent receives a credit against child support for the payment of that premium.

Alabama Child Support Guidelines are capped at a $10,000 combined monthly income. In cases where the total monthly income exceeds this amount, the guidelines do not apply and child support is based on the needs of the children. This can be a contentious argument, since there are few criteria for determining the needs of children and the specific calculations for child support in high-income cases. This is determined on a case-by-case basis, and many times these cases result in litigation. There have been child support awards of $6,000 to $10,000 a month in certain cases, but there is almost always a dispute over the difference between the needs and wants of the children. Typically, the court tries to maintain a lifestyle similar to what the children enjoyed during the marriage. If the children of a wealthy household have always had access to expensive extracurricular activities, the court will consider those expenses.

The child support guidelines contain certain limitations on child care costs. You may be limited to the Alabama Department of Human Resources’ recommended guidelines for day care expenses. If so, these numbers may be considerably less than the cost of private child care, and the custodial parent may be forced to bear the majority of this expense unless there is a variation in the agreement with the non-custodial parent.

An unemployed parent may not be required to pay child support until he or she is once again employed. The court can calculate income based on earning potential for the unemployed spouse. If a payor parent is self-employed, it is often difficult to estimate that party’s true income. Many self-employed people receive income in cash, and this income is difficult to prove in a contested divorce. If you are involved in a divorce with a self-employed person, financial records and other documentation are extremely important and valuable in proving your case. Sometimes, the lawyer will look at consumption rather than income and illustrate to the court the purchases made by the spouse, despite the declared income. For example, a person who pays a $1,500 monthly mortgage, $500 car payment, $1,000 in credit card bills, $800 for taxes and insurance, plus an indeterminate amount for groceries and incidentals could only get by on a $2,500 per month draw if he or she was employed as a magician. Some dogs, like this one, don’t hunt, and most judges instantly recognize the fact.

Withholding Child Support

You can have child support withheld directly from your spouse’s paycheck in Alabama through an income withholding order, if the payor spouse lives in the state or the employer does business here. Most jurisdictions require that an income withholding order be entered automatically, unless the parties can reach an alternate arrangement, with the non-custodial spouse paying the custodial spouse directly. These orders are becoming the norm in many cases. They simplify payments and no longer reflect negatively on the paying spouse.

You may enter an income withholding order in the court clerk’s office at the time of the divorce, but stipulate that it is not served upon the paying spouse’s employer until he or she becomes delinquent in child support by more than 30 days. If you are concerned that your soon-to-be ex will not pay child support without some force being applied, it is much simpler to address this issue at the time of divorce than to enforce an income withholding order in the future.

Post-Majority College Support

In most cases, child support must be paid until children reach 19 years of age, the age of majority in Alabama, unless the children marry or become self-supporting. Beyond that age, children can only receive child support for payment of specific college and other education-related expenses. If at all possible, the payment of college expenses should be addressed in the settlement agreement. Most settlement agreements specify that one parent will pay these expenses, or the parties will divide them on some pro rata basis. Eligible expenses include tuition, books and room and board. The parties may agree to pay other items such as a weekly allowance, entertainment fees, fraternity and sorority expenses, and transportation to and from school, but courts will rarely order these expenses to be paid. Usually, scholarships are credited against these expenses and regular child support is discontinued when the parent pays these specific expenses.

The court usually will not force a parent to pay private university tuition without a prior agreement between the parties. Costs for most private colleges can total as much as double the amount for public schools. If, for example, a child wants to attend a private university, the agreement should specify the anticipated school or level of support to avoid any confusion in the future. Vanderbilt or Duke may be the child’s preferred choice, but the paying parent may argue that community college is a better alternative.

The college obligation usually continues until each child receives his or her undergraduate degree, but no longer than a specified time period from the date he or she graduates from high school. Usually, the child must maintain an overall “C” average or better and be on track toward obtaining a college degree within the specified time period. Most parents request access to the child’s grades and academic standing.

If a parent will not agree to the payment of college expenses at the time of the settlement, or if the children have not reached high school at the time of the divorce, the court may reserve the issue of college support in the settlement agreement. This gives the custodial parent the right to come back to court and ask for the payment of these expenses in the future. A formal request must be made to the court before the child reaches age 19, or it is forever waived. If this is a contested issue, the court will look to the actual expenses of the college education and the child’s scholastic aptitude for college. Rarely will the court force a parent to pay for college for a student who does poorly in school. And you must realize that when the issue of college support is reserved, it is difficult to plan for this major expense in the future and additional attorney’s fees will be required to implement the request.

College support after the divorce is a hotly contested issue with serious constitutional undertones. Some think all parents should be required to pay for college for their children. However, it is surely unconstitutional that a child of an intact, happy marriage cannot require the parents to pay for college, whereas a child of a divorce can compel payment of college tuition. There are many concerns affecting the decision to pay for college: the behavior and attitude of the child, the child’s scholastic aptitude and the relationship of the child with the parent. Furthermore, if parents are ordered to pay for college and fail to comply, they can be put in jail for contempt. This is an issue that has been declared unconstitutional in many states. At this writing, it is up for review in Alabama.

Spousal Support

A rule applies to the payment of alimony; recipients praise its fairness, and those making payments think it is a form of cruel and unusual punishment. There are limited circumstances where a spouse is willing to pay a reasonable amount, but those cases are the exception. There is usually debate about the amount and length of the term of the alimony payment. The following discussion summarizes alimony in its basic forms and the factors the court considers.

Rehabilitative Alimony

This form of alimony is designed to help a spouse recover financially after the divorce and is payable for only a short period of time. Rehabilitative alimony is appropriate for a spouse who has not worked in several years or is working but needs time to recover from the financial impact of the divorce. The goal of rehabilitative alimony is to rehabilitate the spouse over a specified period of time.

Another alimony option consists of one spouse paying a lump sum to the other spouse as part of the property settlement. This payment is usually characterized as alimony in gross, and the settlement agreement should specify the amount and terms of the payment. Alimony in gross may be dischargeable in bankruptcy, and any provisions in this area should be closely examined with your lawyer. Alimony in gross cannot be modified, even if circumstances change.

Periodic Alimony

Periodic alimony generally is awarded in longer-term marriages (more than 10 years) and is valid until the spouse remarries, dies or cohabitates with another individual. On occasion, periodic alimony can be awarded in some short-term marriages as well. There are misconceptions concerning periodic alimony. Many divorcing people believe they are entitled to receive periodic alimony regardless of the length of the marriage, the parties’ financial resources or the fault of the parties. But the courts consider numerous aspects of the case when making a periodic alimony award, including the parties’ financial resources, which can be the greatest determining factor.

If the debts and obligations of the parties result in a negative cash flow, the court may not award a substantial amount of money. At the same time, the court may award considerable periodic alimony in long- and short-term marriages where the payor spouse’s fault caused the breakup of the marriage. In those cases, the value of the alimony award may be from several hundred thousand dollars to several million dollars when the payments are valued over the life of the client.

In certain circumstances, periodic alimony can be modified in the future. The receiving spouse can request a modification if his or her needs change or the resources of the paying party increase. The modification issue can provide a tremendous safety net for the receiving spouse, but also can be a tremendous trap for the paying spouse. You may pay all the periodic alimony ordered, only to discover that your ex-spouse has asked for an extension. Recently, we represented a man who was shocked to learn that his ex-wife filed a petition to extend the alimony he had been paying for 10 years. In the original divorce, the husband gave the wife most of their assets in consideration for paying alimony for only 10 years. The wife requested five years, but the husband extended it to make sure she had more than enough time to get on her feet. During the 10-year period, the husband’s income drastically decreased due to changes in the economy, but he continued to make the large alimony payments at a personal sacrifice to himself. With one month remaining, his former wife filed a petition to extend the alimony, alleging she still needed the money. After a lengthy court battle, he eventually succeeded in denying her effort to extend the alimony.

Whether the alimony can be modified rest largely with the specific language in the agreement, and the facts and circumstances of each case. Address the issue of future alimony modification in the settlement agreement.

Periodic alimony is taxable income to the receiving spouse and is deductible to the paying spouse. You should meet with your accountant to determine the tax consequences of any periodic alimony award before you can properly evaluate the true value of the payment.

Factors Considered by the Court in Making an Award of Alimony

When determining an appropriate alimony award, the court normally considers the following factors:

• The apportionment of property under the settlement agreement
• The parties’ financial resources
• The length of the marriage
• The respective age, health, occupation, employability, and trainability of the parties
• The degree to which one spouse has diminished his or her future earning capacity or education because of years spent caring for children or serving as a homemaker
• Standard of living during the marriage
• Tax consequences of the awarding of alimony
• The fault of the parties

Tax and Bankruptcy Consequences of Alimony

Alimony payments create specific tax consequences in a divorce, depending on the type of alimony a party receives. In most circumstances, rehabilitative alimony in gross is nontaxable to the receiving spouse and nondeductible to the paying spouse. Periodic alimony, on the other hand, is taxable to the receiving spouse and deductible to the paying spouse. These tax consequences may have a significant effect on the actual value of the award and the cost of the award to the paying spouse. Divorcing couples should consult with their accountants when evaluating the options related to alimony.

The type of alimony you decided upon and how it is dealt with in your agreement can also be affected if you or your ex are contemplating bankruptcy. Federal bankruptcy laws have specific applications for alimony payments. Certain forms of alimony in gross may be discharged in a future bankruptcy action, leaving the recipient spouse with nothing. Periodic alimony, on the other hand, is generally not dischargeable in bankruptcy. If you think your spouse might file bankruptcy to avoid these payments, inform your attorney because the terms of the settlement agreement may drastically affect your rights. Certain language in your settlement agreement may prevent your spouse from avoiding payment of a large amount of past due alimony.

The fail-safe way to protect yourself from losing money to your ex in a bankruptcy is to require, in the settlement agreement, that he or she provide additional security against loss. This may mean giving you a lien against a piece of real property or another valuable asset. Make certain the property does not have any encumbrances on it when you accept the lien, and be sure you can locate and repossess the property if your spouse tries to bankrupt the debt.