North Carolina law provides for post-separation support and alimony to be paid by a supporting spouse to a dependent spouse for the purpose of meeting the dependent spouse’s reasonable needs during and after divorce. Post-separation support is awarded on a temporary basis and ends either when a divorce is granted or the issue of permanent alimony is determined or at a time set by a judge. Alimony is paid on a continuing basis by lump sum payment, periodic payments, income withholding, or by transfer of title or possession of personal property or any interest therein, or a security interest in or possession of real property, as the court may order for the support and maintenance of a former spouse. This payment is not for child support paid for the benefit of the minor child or children. The parties must still be married when a claim for post-separation support or alimony is filed. In other words, such claims cannot generally be made after the divorce has been granted. Therefore, it is crucial to consult an attorney to protect all claims you have during separation and divorce.
Generally, whether a spouse is considered dependent is determined by such factors as level of financial dependence on the other spouse, accustomed standard of living during the marriage, and earning capability of both parties. The goal is for both parties to maintain a lifestyle during separation and after divorce that is similar to that present during the marriage. A finding of dependence is not required if the parties agree to the payment and amount of alimony.
As is possible with other issues during separation and divorce, the parties may agree on the payment and amount of post-separation support and alimony. If an agreement on these issues is not reached, they will be brought before the court for a decision by a judge.
Primary Factors Used in Determining Alimony: North Carolina statutes contain sixteen factors which guide the court in making an alimony determination.
- The marital misconduct of either of the spouses (including misconduct that takes place after the date of separation which may corroborate marital misconduct before the separation). Illicit sexual behavior is a bar to payment of alimony to a dependent spouse unless the supporting spouse has also committed acts of illicit sexual behavior.
- The relative earnings and earning capacities of the spouses.
- The ages and the physical, mental, and emotional conditions of the spouses.
- The amount and sources of earned and unearned income of both spouses, including earnings, dividends, and benefits such as medical, retirement, insurance, social security.
- The duration of the marriage.
- The contribution by one spouse to the education, training or increased earning power of the other.
- The extent to which the earning power, expenses, or financial obligations of a spouse will be affected by reason of serving as the custodian of a minor child.
- The standard of living of the spouses established during the marriage.
- The relative education of the spouses and the time necessary to acquire sufficient education or training to enable the spouse seeking alimony to find employment to meet his or her reasonable economic needs.
- The relative assets and liabilities of the spouses and the relative debt of the spouses, including legal obligations of support.
- The property brought to the marriage by either spouse.
- The contribution of a spouse as homemaker.
- The relative needs of the spouses.
- The federal, state, and local tax ramifications of the alimony award.
- Any other factor relating to the economic circumstances of the parties that the court finds to be just and proper.
- The fact that income received by either party was previously considered by the court in determining the value of a marital or divisible asset in an equitable distribution of the parties’ marital or divisible property.
We will assist you in creating a detailed history of your financial affairs so that you have a clear picture of your financial situation and that of your spouse.
Taxation of Post-separation Support and Alimony: Post-separation support and alimony are reportable as income to the dependent spouse and tax deductible to the payor spouse (except if the parties file joint income tax returns), as long as the following criteria are met:
- Payments are in cash and not in kind;
- Payments are made pursuant to a court order or written separation agreement;
- The parties have not designated the payments as non-alimony;
- The parties are not living in the same household; and
- The payor has no liability for payment after the death of the payee spouse.
Due to tax reform legislation, effective January 1, 2019, alimony is not taxable to the recipient nor deductible by the payor. This new rule applies only to alimony agreements or court orders entered on or after January 1, 2019. . The law also permits former spouses to agree that an earlier divorce agreement may be modified to adopt the new rule after January 1, 2019.
Termination of Post-Separation Support: Payment of post-separation support will cease if (1) the parties resume marital relations; (2) the dependent spouse cohabits with another adult as defined under North Carolina law (see definition below); (3) the dependent spouse dies; or (4) the supporting spouse dies.
Termination of Alimony: For alimony paid pursuant to an order entered by a North Carolina Court, the alimony must cease upon the first of the following to occur: (1) the date, time period, or circumstances specified by the court in its order, (2) the death of either the supporting spouse or the dependent spouse; (3) the dependent spouse’s remarriage; (4) or the dependent spouse’s cohabitation as defined under North Carolina law (see definition below).
North Carolina law defines cohabitation as two adults “dwelling together continuously and habitually” in a private heterosexual or homosexual relationship, as evidenced by the assumption of marital rights, duties, and obligations typically present in marriages (but not necessarily including sexual relations).
For alimony paid pursuant to a valid written agreement between the parties, a properly drafted agreement should state the conditions upon which alimony would terminate.
Modification of Alimony: A request for modification of a North Carolina order awarding alimony may be made if (1) the alimony is being paid under a court order, and (2) a substantial change of circumstances has occurred as determined by comparing facts at the time of the original order to those when modification is sought . Such changes must relate to a change in the financial needs of the the spouse receiving alimony or in the supporting spouse’s ability to pay. However, a judge is not required to modify an alimony obligation even if there is evidence that a substantial change in circumstances has occurred on the part of either party. (Note that North Carolina courts may not modify an alimony or spousal support order entered by a court in another state.)
When alimony is being paid pursuant to a valid written agreement between the parties, then the terms of the agreement generally will specify under what circumstances, if any, the alimony may be modified.
As your attorneys, we will insure that your order awarding alimony includes detailing findings of fact so that a modification may be sought in the future.
Stroud & Panetti, P.C.’s attorneys are dedicated to protecting our clients’ interests and rights and have been practicing in the Winston-Salem area for over twenty-five years. We listen carefully to the specific details of your case, provide counsel and options, and then implement solutions. We are experienced and accomplished family law attorneys who provide efficient and effective legal representation. Should you be in need of a family law attorney, please call us to schedule a consultation.