Tennessee Alimony Law |
Tennessee Alimony Law
Introduction to Tennessee Alimony Law
In Tennessee, alimony law allows an award of support and maintenance to assist the economically disadvantaged spouse during or after divorce. The other spouse’s financial ability to pay support is important under Tennessee’s alimony law, too. Attorneys advise their clients on type, basis, and justification for alimony. With four alimonies possible, do choose an experienced Tennessee lawyer for your divorce.
When Tennessee alimony is ordered, one spouse receives money from the other spouse. Those alimony payments might continue for months, years, or a lifetime. And the total price tag could fall anywhere between “modest” and “substantial,” depending. Of paramount concern in every divorce, the need for alimony should be fully explored in discussions with your family lawyer.
You should also be aware that, under Tennessee alimony law, either spouse’s divorce attorney can petition the court for maintenance and support. Of which, there are four types to consider: Alimony in solido, Alimony in Futuro (also called Periodic Alimony), Rehabilitative Alimony, and Transitional Alimony.
The Tennessee judge may order alimony in a divorce or legal separation for the support of the economically disadvantaged spouse or former spouse. The source of alimony funds may be the obligor’s earnings or income, but it could also be paid from the spouse’s property. To guide you through this discussion and the ones to follow with your lawyer, familiarize yourself with Tennessee’s main alimony statute, T.C.A. § 36-5-121.
Why Does Tennessee Have Alimony?
Recognizing an inherent economic imbalance when most couples divorce, our legislators have settled on alimony as a much-needed financial equalizer. Tennessee’s public policy reasons for giving our courts authority to order multiple types of spousal support are threefold.
First, society encourages the institution of marriage and family arrangements that raise children to become “healthy and productive citizens of our state.” T.C.A. § 36-5-121(c)(1).
Second, when a husband and wife follow the more traditional marital arrangement there is typically, often necessarily, a division of labor within their family. One spouse may focus on career employment, financial opportunities, and economic mobility. The other spouse may focus on running the household, caring for and educating the children, social mobility, or working to keep a roof over the family while the other spouse earns a professional degree. The nurturing spouse, by subordinating his or her educational and career goals indefinitely “for the benefit of the marriage” should not suffer excessive hardship in divorce for having bolstered the other spouse’s financial successes during the marriage. T.C.A. § 36-5-121(c)(1).
Third, the economically disadvantaged spouse should enjoy a standard of living after the divorce that is “reasonably comparable” to their married life or, in the alternative, match the post-divorce lifestyle that the other spouse is expected to experience. T.C.A. § 36-5-121(c)(2).
On a more pragmatic level, today’s alimony determinations in Tennessee divorce are factor-driven, although judges can and do interpret laws and rules differently. Comparative fault is an important consideration, as it is generally with divorce, but the greater focus should be on the supported spouse’s financial needs and the obligor-spouse’s ability to pay. Most alimony awards still go to former wives, but there is nothing in Tennessee law prohibiting the payment of alimony to former husbands.
For immediate answers to frequently asked questions read up on Tennessee Alimony Law in Divorce | Answers to FAQs. Also, contact us to get your free copy of our essential divorce planning e-Book: Your First Steps: 7 Steps Planning Your Tennessee Divorce.
When To Seek Tennessee Spousal Support as Alimony
Decisions about spousal support should not be postponed or left to chance. The issue of support and maintenance must be raised in the divorce. Do not be fooled into believing alimony can be addressed as a separate lawsuit after the divorce is final. No petition for alimony will be considered by the court after the final divorce decree is entered.
Prepare for alimony by discussing anticipated post-divorce finances, career and educational objectives, and transitional assistance for new living arrangements with your Tennessee divorce lawyer. If you wait until after the divorce is final to see “how things work out” with your economic situation, it will be too late.
Tennessee’s Alimony Factors
Assuming the parties do no voluntarily settle the issue of alimony between themselves, the decision to grant or deny alimony is left to the judge. The court must apply the 12 statutory factors identified in T.C.A. § 36-5-121. No two judges are the same, however. The outcome in one divorce may be quite unlike that of another.
Unlike child support, no specified formulas or strict guidelines direct the parties, their attorneys, or the judge in awarding alimony in a divorce or action for separate maintenance. Instead, the judge should apply the statutory support factors when deciding whether alimony is necessary. If so, the court continues the analysis. What type of alimony is needed to given this couple’s circumstances? How much support is enough? How shall each type of alimony be paid? How long should alimony payments continue?
Judicial Discretion. The Supreme Court of Tennessee has recognized the trial judge’s “broad discretion in awarding spousal support” and authority to consider any information relevant to the support and maintenance of a spouse. Broadbent v. Broadbent, 211 S.W.3d 216 (Tenn. 2006). How might this impact your divorce? The court may, in its discretion, give significant weight to some factors (such as your work experience) while giving little weight to other factors (such as the parties’ respective marital fault).
Evidence For and Against.
In applying the facts of the case to the statutory factors, the court will attempt to answer the following questions by looking at the admissible evidence proffered by the parties’ attorneys:
1. Income and Financial Resources: What is the earning capacity of each spouse? Obligations and financial needs? What financial resources are available to each? Retirement plans, pensions, profit-sharing? Other income? Some courts may look to a vocational expert to testify about a spouse’s earning capacity rather than recent actual earnings.
2. Education and Training: How do the spouses’ education and training compare? Is additional focus necessary to improve earnings? What opportunities for additional instruction, schooling, or training are available to each? Does the recipient spouse have a college degree?
3. Length of Marriage: This is always a very, very important factor. How long did the marriage last? Less than 10 years? Over 15 years? Was the couple married for 20 years or longer?
4. Age and Mental Health: How old is each spouse? Any mental health concerns?
5. Physical Health: Does either spouse have a disability, disease, incapacity, or other physically limiting condition? Does the limitation affect earnings capacity?
6. Residential Parent: Is it undesirable for the Primary Residential Parent to work outside the home?
7. Assets: What personal assets (including separate property) are available to each spouse?
8. Marital Property: What will each spouse walk away with one assets and debts are divided in the divorce? (Is the impact of property division on alimony deeply concerning to you? Read more on Tennessee Property Division Divorce Laws & Factors | Answers to FAQs.) Are there assets from which income may be generated, such as an investment portfolio?
9. Standard of Living: What was the lifestyle maintained during the marriage?
10. Tangible and Intangible Contributions: How did each spouse contribute to the marriage? Income generation? Asset acquisition? Homemaking? Primary caregiver for the children? How did one spouse assist in other spouse’s education, training, or increased earning power? Did one spouse support the other through college, law school, medical school, or dental school?
11. Marital Fault: Did both spouses commit acts of marital misconduct or marital fault?
12. Taxes and Equitable Considerations: What are the tax consequences of divorce and alimony for each spouse? What other equities should the court balance?
For many spouses, the marital fault alleged as grounds for divorce will also influence the judge’s decision to order alimony if spousal support is a contested issue that must be litigated at trial. And there is always a possibility that trial will result in an unfavorable alimony decision from the bench, from the perspective of one or both parties. Through alternative dispute resolution (ADR), a trial could be avoided. An experienced lawyer can be of enormous value during negotiations and mediation, but should also be skilled at trial advocacy if ADR fails to result in agreement.
You may be wondering where all of this evidence comes from. During the discovery phase of every divorce there will significant disclosures of information through affidavits, interrogatories, subpoenaed records, expert witness reports, financial disclosures, depositions, requests for admission, requests for production of documents, and so on. You can learn more about the discovery process as it pertains to alimony by reading our discussion on The Tennessee Divorce Process: How Divorce Work from Start to Finish.
Forensic Accountants, Lifestyle Analysis, and Hidden Income
Every award of alimony will include mandatory disclosures and discovery into both parties’ financial information, including income, assets, liabilities, and other valuable resources. Unfortunately, some parties will attempt to conceal the truth about their finances in an effort to defeat the other party. That is, to avoid paying alimony or to ameliorate their cause for more alimony.
When brought to light before the court, the consequences for such deception can be severe. The failure of a party to provide a true, accurate, and complete account could result in perjury, contempt of court, fines, being order to pay the innocent spouse’s attorney fees, being on the losing end of the property division and alimony award, among other things.
Whenever suspicions arise that a spouse may be manipulating financial information or deliberately providing inaccurate disclosures, further investigation and discovery is justified. Attorneys frequently utilize forensic accountants (Certified Public Accountants) to assist their clients in uncovering hidden income, concealed assets, or undiscovered resources that need to be considered for purposes of spousal support, child support, and the division of property in divorce. By involving a forensic accountant early in the case, your lawyer has time to request additional discovery beyond the initial financial disclosures required of both parties at the outset. The CPA’s professional role includes accounting, auditing, investigating, reporting, and then testifying as an expert witness in the divorce.
The trail of deception ordinarily begins with the past several years of income tax returns, quickly moving on to financial statements, company records, stock options, pensions, and more. The more complex the asset picture, the more difficult it can be to identify false information on a financial statement or deliberate manipulation of financial records in preparation for divorce.
Does it seem that your spouse has plenty of cash, but claims to earn very little? Is he or she living a dual existence? Miserly with marital sharing, but a spendthrift who has extra-marital affairs, enjoys gambling through the night, or travels frequently to destinations unknown on “business”? A search for hidden assets may be necessary.
A forensic accountant can conduct a lifestyle analysis to compare a spouse’s stated income to the money he or she regularly spent. A significant disparity between reported income and actual spending habits may evidence hidden financial resources. A report from a forensic accountant will focus on informing a court about the supporting spouse’s ability to pay the recipient spouse’s need for support. During the lifestyle analysis, red flags like the following could indicate a spouse has under-reported his or her income:
- Stock options granting the employee-spouse a right to purchase company stock below market rate;
- Grant stock issued to the employee-spouse;
- Profit sharing with the employee-spouse;
- Perquisites (a.k.a. “perks”) and nonstandard benefits provided to the employee-spouse, such as an expense account, health insurance, personal use of a company vehicle, country club or health club memberships, uniform allowance, cafeteria benefits, free or discounted company merchandise or products, tuition reimbursement, and other seemingly inconsequential fringe benefits;
- Cash income, tips, and commissions (which may or may not have been reported as income on tax returns);
- Compensation for unused sick leave, vacation days, or personal leave;
- Bonuses regularly paid (until the divorce);
- Deferred salary or deferred compensation; and
- Recreational use of company-owned real property for employee-spouse’s paid vacation.
Discovering hidden assets is not an easy task. But obtaining the services of a forensic accountant is the first step. For those professionals and individuals interested in acquiring an introduction to forensic accounting in divorce and family law, start by reading Hidden Income and Assets in Tennessee Divorce. For more in-depth discussion of forensic investigation, obtain a copy of The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers.
Addressing Spousal Support in the Marital Dissolution Agreement
To stay in control of this issue, couples should attempt to negotiate or mediate any conflict over the need for alimony. If they settle their differences with the assistance of counsel, then the terms of their agreement are written into the Marital Dissolution Agreement (MDA). The judge, absent objection, will include the MDA in the decree of divorce. For more details on the MDA process, read our discussion on Tennessee Divorce Settlement | Marital Dissolution.
Is Temporary Alimony Available in Tennessee?
In any divorce of action for separate maintenance, there may be a need for interim support orders for a child or for a spouse. Temporary alimony, or alimony pendente lite, may be ordered while the lawsuit is pending. This is most often called a motion for temporary support or pendente lite support. When the final judgment of divorce is entered, whether a final award of alimony is ordered or not, the temporary alimony order will terminate.
Even a request for temporary support should be thoughtfully considered. Strategically, an order for interim alimony could open the door to permanent support orders. For example, if the spouses agree that $1,000 a month is reasonable for alimony pendente lite while the divorce is ongoing, then the court may determine that $1,000 a month is also proper for alimony in futuro. Not more, not less. Be careful what you agree to! Always talk to your lawyer first.
Four Types of Alimony Under Tennessee Law
Essential to a decision on alimony is a determination of the supported spouse’s financial needs and the obligor spouse’s ability to provide support. A great deal of careful strategizing goes into each client’s legal position on the payment of alimony. Watch our video with Memphis, TN, attorney Miles Mason, Sr., explaining his Top Five Tennessee Alimony Strategies in Divorce.
Tennessee’s Alimony in Solido.
A request for alimony in solido, or lump sum alimony, may be granted to serve two seemingly opposing objectives. On the one hand, support can be ordered to compensate a spouse in the division of the couple’s marital property and could include attorneys’ fees, too. (A solid and permanent solution to the spouses’ economic inequity.) On the other hand, lump sum alimony may be ordered as long-term financial support and maintenance for the recipient. Unique as a method of equalizing imbalance in asset and debt division, in solido support may be awarded in conjunction with three other support types available under Tennessee alimony law. T.C.A. § 36-5-121(h).
The term “lump sum” can be confusing in that it seems to imply that the award demands a single payment. Not so. The total alimony in solido figure must be stated in the court’s decree, but the judge may provide for installment payments over a specified period. A more manageable arrangement for the obligor, installments still fulfill the goal of alleviating the recipient’s financial struggles.
Note that alimony in solido cannot be modified after the divorce decree is entered. Unless the parties negotiate an agreement to permit modification through their lawyers (with that agreement incorporated into the court’s order), no substantial and material change of circumstances, not even death, will terminate or diminish a lump sum alimony award. Modification is possible with other forms of alimony, however, which could result in the total obligation being reduced for cause shown.
We have many case examples of actual Tennessee divorces in which alimony was awarded, denied, or modified. Visit our TN Family Law Blog and select the Alimony category that interests you (cases are grouped by length of marriage).
Tennessee’s Alimony in Futuro.
The purpose of alimony in futuro – periodic alimony continuing into the future – is to maintain the recipient in a standard of living similar to what both spouses enjoyed while married. In the alternative, reasonable periodic alimony can raise the supported spouse’s lifestyle to that which the other spouse is anticipated to experience after the divorce is final. T.C.A. § 36-5-121(d).
Alimony in futuro is typically awarded after marriages of long duration, although analysis of all relevant alimony factors should direct the judge’s decision. In some divorces, a comprehensive lifestyle analysis conducted by a forensic accountant could assist the court, the parties and their attorneys in putting real-world figures on the standard of living enjoyed during the marriage.
Understand that Tennessee’s “statutory framework” prefers short-term support over long-term support of a spouse when the circumstances so allow. If the court determines that rehabilitative alimony will suffice, for instance, then payment of periodic alimony could be avoided. Gonsewski v. Gonsewski, 350 S.W.3d 99 (Tenn. 2011).
In applying the 12 alimony factors, periodic alimony may be combined with rehabilitative alimony or transitional alimony, as well as alimony in solido.
In futuro support is a versatile form of maintenance and may continue for an indiscernable period. Although the court will order a specific payment schedule, the total amount is seldom determinable from the judgment. In this, periodic alimony differs substantially from all other types of spousal support. Importantly, the court has continuing jurisdiction over periodic alimony and may, upon proper showing by the proponent, modify the original award.
Any attempt to modify alimony will require evidence of a substantial and material change in circumstances. If you believe the alimony award is too much or too little, then talk to your lawyer. To learn about modifying spousal support and maintenance read Tennessee Alimony Modification Law | How to Modify Alimony in Tennessee.
Periodic alimony terminates with either spouse’s death or with the supported spouse’s remarriage (possibly with cohabitation). As always, alimony terms – amount, duration, modification, payment schedule, and so on – may be negotiated, agreed to, and included in the parties’ MDA with the advice and assistance of counsel.
Tennessee’s Rehabilitative Alimony.
Still focusing on improving the economically disadvantaged spouse’s post-divorce financial situation, rehabilitative alimony provides the means to improve career opportunities and earnings with the ultimate goal of self-sufficiency. Rehabilitative alimony is purpose driven and temporary. Experienced Tennessee divorce attorneys often recommend rehabilitative alimony for those clients whose marriages were short-lived, assuming the supported spouse is of working age and can be trained. Ideally, the rehabilitated spouse will achieve an independent standard of living similar to, or better than, what was enjoyed while married. T.C.A. § 36-5-121(e).
By receiving assistance to help cover college tuition costs, vocational training, apprenticeship, continuing education, professional licensing, and the like, the supported spouse can vastly improve his or her earning potential. This type of alimony ordinarily ends when the training or coursework should be completed. It will also terminate with the death of either spouse. In some circumstances, rehabilitative alimony may be modified. Be aware, however, that rehabilitative and transitional alimony (discussed below) are mutually exclusive.
When rehabilitation is an issue in the divorce or legal separation, then either lawyer may have a vocational expert or career counselor serve as experts. The role of these expert witnesses is to assist the judge in determining the need for and scope of rehabilitative alimony. Might this issue be raised in your divorce? For an explanation of this expert testimony read the Strategic Use of Vocational Experts in Tennessee Alimony Divorce Cases.
Tennessee’s Transitional Alimony.
The fourth form of Tennessee spousal support is transitional alimony, which should be awarded by Tennessee courts only when rehabilitative alimony is unnecessary. For example, the economically disadvantaged spouse is nearing retirement age for purposes of Social Security, making skilled trade or education rehabilitation to become self-sufficient an unreasonable objective. Consider the spouse who has a college degree and is already capable of earning a good income, but who needs additional funds during the months or years immediately following the divorce to get over the hump. An award of transitional alimony may be ordered for a term of years, but always ending with the death of either spouse. A life insurance policy could secure payment of alimony beyond the obligor’s death, something to talk with your attorney about.
An award of transitional alimony is intended to assist the supported spouse in adjusting to the “economic consequences” of divorce or legal separation, nothing more. T.C.A. § 36-5-121(g). Starting over as a single person can take a lot of getting used to.
Along with the emotional aspects of separation and the time needed for divorce recovery, adjusting to a limited-income lifestyle is challenging. Particularly so for the economically disadvantaged spouse with few alternatives. The cost of moving, paying first and last month’s rent, making a down payment on a house, placing deposits on utilities, furnishing the new residence, maintaining a vehicle or buying a new car, searching for employment – all while still reeling from the cost of divorce – can be an expensive proposition and a budgeting nightmare.
In general, transitional alimony cannot be modified after the divorce. But there are exceptions. For one, modification and other conditions may be agreed to and included in the couple’s MDA for incorporation into the court’s initial order. The judge has discretion to include language allowing modification, as when the supported spouse cohabits with another adult who is presumed to contribute funds to their living expenses. The court may also order that alimony terminate with the recipient-spouse’s remarriage.
Minimizing Divorce’s Impact.
Divorce is capable of inducing economic upheaval for both spouses, so approach how each form of alimony might apply to your factual circumstances cautiously. To minimize the financial impact of divorce, prepare to investigate the application and potential consequences of alimony with your attorney early in the representation. Educate yourself. Start building a solid foundation by acquiring your copy of The Tennessee Divorce Client’s Handbook: What Every Divorcing Spouse Needs to Know.
Income Taxes and Alimony
Wondering what alimony has to do with income taxes? Before you continue any further, take a few minutes to review our discussion on Divorce and Taxes | Tennessee Divorce Law & Tax Resources.
Essentially, taxation of alimony shifts tax burden from one spouse to the other. On the one hand, the obligor-spouse may be able to deduct alimony payments made from his or her gross income. On the other hand, the recipient-spouse will need to declare alimony as income. Generally, the tax savings for the paying spouse is more than the tax burden added to the recipient spouse. Both parties should determine what their respective income tax liability is likely to be with alimony figured in so they are fully prepared to discuss alternatives during divorce negotiations. Counsel for both spouses should refer clients to seek advice from a Certified Public Accountant (CPA) or financial advisor.
When spouses agree, they could include a provision in their MDA stating that alimony payments “cannot be deducted from the obligor-spouse’s income or added to the recipient-spouse’s income,” or words to that effect. Such a provision is clearly intended to lift the tax burden from the recipient’s shoulders. It is perfectly legitimate if bargained for in good faith during divorce negotiations. Discuss the repercussions of such an agreement with your attorney before signing off.
Divorce or Separation Instrument.
An informal, voluntary agreement between spouses to provide financial support is insufficient to shift the tax burden. For one spouse to deduct alimony from income, the support must be pursuant to a “divorce or separation instrument” as defined by the IRS. Such an instrument must be a permanent alimony award, court-ordered alimony pendente lite, divorce decree, separation agreement, or similar judicial order.
Are alimony payments deductible from gross income for federal tax purposes? The following general IRS rules apply:
- Only a spouse or former spouse received alimony;
- There is a written divorce or separation instrument;
- The taxpayers file separate returns;
- Alimony terminates with the recipient’s death;
- Alimony payments were made in cash (including checks or money orders); and
- The taxpayers’ reside in different households.
Always seek tax advice from a CPA or financial advisor. To jumpstart your own education, though, you can read and download IRS Publication 504: Divorced or Separated Individuals at IRS.gov for more detailed information and instructions. Understand that all criteria must be met to deduct alimony payments from income!
When the alimony obligor is ordered by the court to maintain life insurance (ensuring payment to the beneficiary-spouse after his or her death), then life insurance policy premiums could also be deductible. Even though premiums are paid to an insurer, not the spouse, the IRS may consider them cash payments of alimony.
Consult with a tax professional on the impact alimony will have on your tax liability. We have only provided an overview here, a brief one at that. Exceptions may apply to your particular situation. Always seek tax advice from a Certified Public Accountant or tax attorney. If you need help locating a qualified tax professional, look to our Memphis Tennessee Divorce CPA and Tax Professionals Directory or call for a referral.
References, Resources and More:
- Tennessee Alimony Law in Divorce | Answers to FAQs
- Top 5 Tennessee Alimony Strategies in Divorce
- Tennessee Bar Association Family Law Section – Alimony & News
- Supreme Court of Tennessee – Alimony Law –Gonsewski Decision – Google Scholar
- You’ve Come a Long Way, Alimony
- In Many States, Alimony Reform Has Gone Too Far (Opinion)
- Tennessee Alimony in Futuro (Periodic)
- Tennessee Rehabilitative Alimony
- Tennessee Transitional Alimony
- Tennessee Alimony in Solido (Lump-sum)
- Tennessee Alimony Factors
- Tennessee Alimony Modification Law
- Tennessee Alimony Statute Section 36-5-121
- Lifestyle Analysis