Both Marital and Non-Marital Assets Are Considered in Determining Alimony
If you or your spouse have assets, or will be getting assets in the ultimate division of property between you and your spouse, those assets will be considered in determining alimony – no matter where they came from.
What is Alimony? The purpose of alimony is to provide the economically dependent spouse with an appropriate degree of financial support post divorce. Alimony and division of marital property are viewed together. While there are factors to consider and guidelines to use as a resource, alimony remains very subjective and difficult to predict. Alimony is therefore one of the hardest areas in a divorce matter to resolve and can often lead to litigation.
How is alimony determined? Unless you and your spouse agree, the court will determine alimony by considering various factors, some of which include: the ability of the party seeking alimony becoming self-supporting, the time for the party seeking alimony to find suitable employment, the standard of living, duration of the marriage, circumstances that led to the estrangement, age of each party, physical and mental condition of each party, the ability of a party to pay alimony, financial needs and resources of each party (including marital and non-marital or separate assets), and will there be unconscionable disparity.
What are marital and non-marital assets? Generally, the court characterizes property into two categories: (1) marital property; and (2) non-marital (in Maryland) or separate property (in DC). Marital property is property acquired during the marriage, that is not non-marital or separate property. Non-marital property is property acquired prior to marriage, by gift from third a party or by inheritance, or is directly traceable to non-marital property. Separate property is property acquired prior to the marriage, by gift from a third party or by inheritance, and any increase thereof, and property acquired in exchange therefore.
Why are assets considered in determining alimony? Your and your spouse’s financial resources includes marital and non-marital/separate assets. To provide a complete financial picture, assets and alimony are considered together.
If someone has assets such that they produce income sufficient to meet their needs, it may lessen their need for alimony, or on the other hand, increase their ability to pay alimony. One example is a couple that have sufficient marital assets and where each party is walking away with assets more than sufficient to meet each of their needs – even if one party earns more than the other there may not be alimony.
I can see the Court considering marital assets, but why would my or my spouse’s non-marital or separate assets be considered in determining alimony? This is one of the most common questions we receive from clients. The Court will consider non-marital or separate assets that produced income or have the ability to produce income. All your income no matter the source is income for purposes of alimony. This is true for both spouses.
One common example is one spouse is the sole “breadwinner” while the other spouse is a homemaker without advancement opportunities and the parties agree to equally divide their limited marital assets. One would expect that there would be an alimony award from the earner to the homemaker. But, what if the homemaker had been gifted or inherited assets, which produces interest income in excess of the earner’s income?
A second example is two spouses who neither work, are supported solely by one spouse’s family’s trust, and the other spouse does not have significant earning potential. The spouse with the trust has an endless supply of income and established a standard of living during the marriage. What should happen to the other spouse? What if they have been married for 35 years?
Couples often don’t understand that the family choices they made do affect what happens financially in a divorce. In this complicated area, it is important early on to meet with an attorney.