ALIMONY ECONOMIC ANALYSIS AND TESTIMONY

A court's decision on alimony is complex and heavily discretionary. Only a few states have alimony guideline formulas. Even in these states, the court has significant discretion to vary the award from the guideline formula.

For all but a few states, alimony statute typically states general principles that the award should be based upon. The following is an example of such code from Georgia (Official Code of GA-O.C.G.A.).

Section 19-6-5:

  • 19-6-5. Factors in determining amount of alimony; effect of remarriage on obligations for alimony
    • (a) The finder of fact may grant permanent alimony to either party, either from the corpus of the estate or otherwise. The following shall be considered in determining the amount of alimony, if any, to be awarded:
      • (1) The standard of living established during the marriage;
      • (2) The duration of the marriage;
      • (3) The age and the physical and emotional condition of both parties;
      • (4) The financial resources of each party;
      • (5) Where applicable, the time necessary for either party to acquire sufficient education or training to enable him to find appropriate employment;
      • (6) The contribution of each party to the marriage, including, but not limited to, services rendered in homemaking, child care, education, and career building of the other party;
      • (7) The condition of the parties, including the separate estate, earning capacity, and fixed liabilities of the parties; and
      • (8) Such other relevant factors as the court deems equitable and proper.
    • (b) All obligations for permanent alimony, however created, the time for performance of which has not arrived, shall terminate upon remarriage of the party to whom the obligations are owed unless otherwise provided.

Also Section 19-6-1:

  • 19-6-1. Alimony defined; when authorized; how determined; lien on estate of party dying prior to order; certain changes in parties' assets prohibited pending determination
    • (a) Alimony is an allowance out of one party's estate, made for the support of the other party when living separately. It is either temporary or permanent.
    • (b) A party shall not be entitled to alimony if it is established by a preponderance of the evidence that the separation between the parties was caused by that party's adultery or desertion. In all cases in which alimony is sought, the court shall receive evidence of the factual cause of the separation even though one or both of the parties may also seek a divorce, regardless of the grounds upon which a divorce is sought or granted by the court.
    • (c) In all other cases in which alimony is sought, alimony is authorized, but is not required, to be awarded to either party in accordance with the needs of the party and the ability of the other party to pay. In determining whether or not to grant alimony, the court shall consider evidence of the conduct of each party toward the other.
    • (d) Should either party die prior to the court's order on the issue of alimony, any rights of the other party to alimony shall survive and be a lien upon the estate of the deceased party.
    • (e) Pending final determination by the court of the right of either party to alimony, neither party shall make any substantial change in the assets of the party's estate except in the course of ordinary business affairs and except for bona fide transfers for value.

Analysis to Assist the Court

Generally, a judge appreciates the presentation of exhibits that show the impact of alternative awards on the parties.

Such exhibits frequently include after-alimony, after-tax income of both parties.

Another useful economic exhibit is to show the "implied monthly payment" of a lump sum award using discounted value analysis.

Other Issues

Some states have specific exclusions for qualifying for alimony. Such can include "misconduct" by a party.

Some states differentiate between lump sum alimony and indeterminate alimony (the timing of when alimony ends is uncertain).

IRS code may interpret some portions of alimony as awarded in court as not alimony for tax purposes-thereby affecting which party incurs income taxes on the monies received or paid.

A qualified domestic relations order likely is necessary to preclude tax penalties for transferring financial assets for division of assets.

Child support often is awarded along with alimony. It can be important to show the full impact of the combined award on after-tax income.

Rogers Economics has experience in assisting clients and attorneys with addressing these issues.