You’re at the crossroads of a divorce and the same worries keep flooding your mind:
“Can I afford to keep the marital home?”
“Will I be able to pay my bills and meet my financial responsibilities?”
“How will I get health insurance coverage after my marriage ends?”
“Will I have enough financial resources to be able to save for my retirement?”
All of these fears are typical in divorce and have one thing in common:
When it comes to money and divorce, there's one topic that's more stressful, more emotional and more difficult for parties to resolve than any other.
Whether you call it alimony or spousal support, California couples needing to come to an agreement that will require one ex-spouse to pay money to the other ex-spouse to support their lifestyle is challenging, to say the least.
* Note: For the purposes of the article, the terms alimony and spousal support are used interchangeably. In California, spousal support is currently the preferred term.
What is the Real Purpose of California Alimony and How Does Alimony Work in California?
Alimony is one of four topics that are discussed and must be agreed upon by the parties in mediation along with:
It’s important to understand that alimony (California based or anywhere else for that matter) is strictly based on need and is gender neutral. Meaning that both women and men can be eligible to receive it.
Spousal support is not meant to unjustly enrich one party or penalize the other. The idea is to strike a balance and allow you and your ex to live somewhat equally for a period of time just as you did during your marriage.
Alimony is intended to aid the lower earning spouse in making the transition from married to single.
To give them time to get back on their feet and become self-sufficient after the divorce.
How long that will take is a matter of much debate as depending on how long you and your spouse were married, the answer may be never!
There are a few things you need to understand about the challenges of determining alimony in California:
While there are guidelines to calculate temporary spousal support in California, you and your spouse are free to agree on any amount and duration for more long-term alimony amounts;
Since the Tax Cuts and Jobs Act (TCJA) passed in 2017 has eliminated the deduction of spousal support payments for payors and recipients are no longer required to report payments as taxable income at the Federal level, long-standing tactics used to foster agreement are no longer useful;
While on the surface, it might appear as if this tax change benefits the recipient and hurts the payor, it actually negatively impacts both parties;
Further adding to the complexity is the decision by the State of California to allow the deduction of spousal support payments for payors and to require recipients to report payments as taxable income on their California state tax returns;
With news of record government deficits due to Covid-19, and a new president in the White House, calls to repeal the 2017 TCJA may grow louder throughout 2021, once again reversing the tax treatment of alimony;
This topic has less to do with guidelines and more to do with money and negotiation;
There is more than meets the eye on this issue - especially if child support is involved and/or you have a long-term marriage - and this topic is much too complex (and emotional) for you to try to resolve on your own.
That's why you'll get the best result by mediating with us.
"With emotions running high and very few formulas or guidelines to help you come to an agreement on alimony, California divorces can quickly go off the tracks if family law attorneys are involved in the negotiations.
That’s why it's better to work with an experienced divorce mediator like me.
I’ll take you through my proven, step-by-step process and help you and your spouse negotiate and come to an agreement on alimony that's fair to both of you."
The California alimony guidelines only apply to temporary support payments.
When it comes to child support, there's a mathematical formula that outputs a specific minimum amount each party should pay to support their children. And reasonably clear guidance on when it will end.
So at least divorcing couples have a solid foundation from which to start their negotiations about that issue.
But in California, despite there being a guideline for temporary spousal support, the amount of alimony you pay or receive, and for how long it will last once your divorce is final, is wide open for negotiation.
California does provide you and your spouse a way to calculate temporary alimony, but that’s where it ends. There is no explicit formula to help you determine a more long-term spousal support amount in your case.
Naturally, this can lead to a lot of trouble, especially if one of you wants to continue using the temporary alimony amount moving forward, but the other party wants to renegotiate.
Right off the bat, you’re already at odds!
Instead of using an alimony formula, California bases spousal support payment amounts on the following 14 “factors.”
They may include, but are not limited to:
(1) Each party’s ability to maintain the “marital lifestyle” once divorced, based on your respective current incomes;
(2) If the party requesting support contributed to the other party attaining a college degree, professional license, or some other career or position of high earnings;
(3) The ability for the supporting party to pay alimony, taking into account how much they earn and their cost of living;
(4) Each party’s needs, based on the lifestyle lived during the marriage;
(5) The debts and assets each of you received in the settlement, as well as any separate property you or your spouse may own;
(6) How long you were married;
(7) The ability of the party requesting support to earn a living, without it impacting their role as the primary caregiver of the couples’ children, should they have any;
(8) The ages of the parties as well as the condition of their health;
(9) If there was documented domestic violence during the marriage;
(10) The impact on each party’s taxes;
(11) If either party has any known hardships;
(12) The ability of the supported party to become self-sufficient within a reasonable period of time.
(13) The conviction of a spouse in cases of domestic violence; and
(14) Any other factors the courts deem relevant.
Even with these factors, there is little guidance on how to resolve this topic. Not one of the “factors” listed above results in an actual dollar amount.
Leaving you and your spouse no choice but to negotiate it.
Which, given the nature of divorce itself and specifically, this heated issue, is very difficult to do.
Don't Forget About Cost of Living.
As if figuring out alimony in California wasn't difficult enough, there's yet another factor you need to bring into the mix. And that's the cost of living.
Given the sheer size of the state, cost of living can vary widely from county to county, even town to town.
Say your marital home was in Encinitas, in San Diego County. And you're the one paying alimony. And your recipient spouse is moving to Ontario, east of Los Angeles, after the divorce. There is about a 20% difference in the cost of living between these two places.
Do you pay them based on what it cost to live in Encinitas? Or do you pay them based on what it will cost to live in Ontario?
Determining an amount of alimony is just one piece of a larger picture.
You also need to determine duration.
And just like determining an amount, duration is not so easy to agree on.
Despite what you’ve heard about alimony in California after 10 years, there is no set formula for determining how many years you need to be married to get alimony in California. Or for how long it will last.
The answer once again is you and your spouse will have to negotiate it.
What if you have children?
You may have heard that California alimony amounts are based in part, on the net income of the paying party.
Which means if you have minor children, and there is child support involved, that will reduce the amount of net income available to pay alimony.
Now in some states, alimony must be determined first, before a child support amount may be agreed on. But in California, the opposite is true.
In California, alimony can only be determined once a child support award has been agreed upon.
The child support award is deducted from the paying party’s net income, and that “new” net income is then used to determine spousal support.
But then if the recipient of child support’s household income goes up, shouldn’t that reduce the amount of spousal support to be paid?
All good questions – with no easy answers.
When thinking of spousal support, most people think of the "check in the mail" approach.
But there are other, more creative ways to resolve this because some people just don’t like paying alimony.
For example, you and your spouse could agree that in exchange for not getting that monthly check in the mail, one of you would take a larger share of the community property, to offset the amount of support that would have been paid out over time.
Or do lump sum alimony or an alimony buyout where by you’d calculate the present value of the future stream of alimony payments and come to an agreement on how much cash would needed to “buy out” the spousal support obligation.
The bottom line is there’s no such thing as "typical spousal support."
And there are many different ways to resolve this issue.
There is more than meets the eye when it comes to alimony.
Alimony is not a one-size-fits-all topic and every couple’s situation and circumstances are unique.
And if you have children, and child support is involved, it gets even more complex!
So coming to a fair agreement on alimony with your soon-to-be ex-spouse requires more than just a passing conversation or a wild guess. And as you’re starting to see, there’s a lot involved in this highly complex matter.
And a lot of places you can make costly mistakes.
In the majority of cases, this issue is much too complex and emotionally charged for you to attempt to determine on your own.
When lawyers get involved, it’s a problem.
Because there's no formula, if you go the attorney route, your family lawyers can drag your negotiations on forever.
Fighting and fighting. Around and around in circles - in a very gray area. All while billing you their outrageous hourly fees.
Until neither you nor your spouse has any money left to keep paying your legal fees.
And there's no money left for alimony!
Just one more reason it’s better to not involve family lawyers in your divorce.
When a judge gets involved, it’s a problem.
And if the issue cannot be resolved between the two of you and your lawyers, your case will go to litigation.
There’s something you need to understand here: In a litigated divorce, a judge determines in court who gets what on a case-by-case basis.
Sounds scary, doesn’t it?
Because they’ll dictate the terms of the settlement and tell you what you’re ordered to pay or receive. Using the 14 vague “factors” listed above.
And each of you might wind up with an alimony outcome you don’t think is fair or that doesn’t meet your needs.
That’s why it’s better to negotiate an amount and duration each spouse finds fair. And negotiation is exactly what divorce mediation is all about.
In mediation, you get to decide - and come to an agreement you both agree is fair - out of court - instead of letting your circumstances and future be decided by a stranger.
You’ll get the best result by mediating with us.
Using our extensive financial knowledge into the complex matters of alimony and spousal support, we'll help you determine which of factors apply in your situation and discuss with you both how they may impact the amount and/or duration of alimony in your California divorce.
We'll discuss which of the five types of alimony in California (listed below) may be appropriate in your case. And explore the feasibility of using some combination of alimony types in conjunction with child support and equitable distribution, as all three topics are inter-connected.
We’ll actively guide you through our comprehensive budgeting process to reflect your marital as well as projected post-marital expenses. So we can take a close look together at what each of you earn, spend and will need to move forward.
We’ll then help you negotiate an alimony result you both find fair and will best enable both of you to meet your financial obligations after you're divorced.
And since we offer all-inclusive, flat-fee mediation services, we have no vested interest in prolonging the conflict because we don’t bill you hourly like a divorce lawyer would.
Equitable Mediation enables you to get a fair alimony outcome in your no-fault divorce.
Why be forced to accept a settlement created by an attorney or judge when you can have a direct say in your financial future instead?
If you want to arrive at an agreement on alimony that’s fair to each of you and doesn’t bankrupt you in the process, mediate your divorce with Equitable Mediation.
If you and your spouse have both agreed to divorce and both want to mediate out of court, take the next step and book an initial meeting for the two of you.
The Five Types of Alimony in California
Now that you know mediation is the best way to determine spousal support In California, let’s now take a look at the 5 different types of alimony available to you and your spouse to discuss and come to agreement on.
1.) Temporary Alimony
Temporary alimony in California is paid when you and your spouse are separated but your divorce has not yet been finalized. Temporary alimony is determined using a guideline which varies across 5 county-based formulas: Santa Clara, Alameda, Marin, Kings, and Yolo.
In general the guideline takes 35% to 40% of the higher earning spouse’s income and subtracts 40% to 50% of the lower-earning spouse’s income. And which percentage is used for each of your incomes varies by county.
It is important to note that the determination of temporary alimony is typically based on the last 12-months of earnings for you and your spouse and may not end up being the long-term alimony amount that you and your spouse agree on.
2.) Rehabilitative Alimony
The idea of alimony in California is that it is only paid until the recipient party (spouse) becomes self-sufficient. But how long that will ultimately take after the marriage ends is a subject a great debate. And there is no easy formula or guideline used to determine it.
Rehabilitative alimony is the most common type of spousal support in California and has an amount and duration. The payments are intended to allow the receiving spouse some period of time to bring their post-marital lifestyle closer to (or in line with) the marital lifestyle.
There may be times when given the ages, educational levels of the parties, or a host of other factors, it’s impossible for one of you to begin earning an income commensurate with the marital lifestyle, permanent alimony may be more appropriate.
3.) Permanent Alimony
Unlike rehabilitative alimony, permanent alimony has no duration, and is typically paid until you and / or your ex-spouse passes away, or if you’re the party receiving it, you get re-married.
And while the amount may remain constant through the entire term, it may also be modified if for example, the payor party retires, or encounters some other involuntary change in financial circumstances that impacts their ability to pay.
4.) Reimbursement Alimony
Reimbursement alimony may be used either alone, or in conjunction with, other types of spousal support. It is intended to address a specific goal.
A common use of rehabilitative spousal support in California is for one party (spouse) to pay for the other party to go back to school and earn a degree. In turn, the recipient spouses’ earning potential is in theory greatly increased because they'll have a marketable skill, and the need for additional spousal support in future years is reduced and / or eliminated.
5.) Lump-Sum Alimony
It is possible to “buy-out” an alimony obligation by exchanging assets or agreeing to take on liabilities instead of making regular periodic payments. For some the idea of paying spousal support is an unpleasant reminder of a painful past and so they wish to sever ties to their ex-spouse.
The challenge with lump-sum spousal support is that if the recipient spouse remarries, the payment or accommodation has already been made. And therefore the spouse who was the payor of the lump-sum, or took on the additional debts, will have no ability to ask for modification.
Joe Dillon, MBA is a professional divorce mediator and founder of Equitable Mediation Services. Joe is passionate about helping couples avoid the destruction of attorney-driven litigation and specializes in helping couples resolve the issues required for divorce -peacefully, fairly and cost-effectively. When he’s not mediating, you can find him exercising, cooking, and watching Cubs baseball.