7 Different Kinds of Alimony
Now that we know about the different aspects of alimony, we can discuss the different kinds of alimony. In Mississippi, there are seven different kinds of alimony, which mix and match the five different aspects of alimony that we’ve just discussed:
Permanent, periodic alimony
Lump sum alimony (as support)
Lump sum alimony (as property division)
Rehabilitative alimony
Reimbursement alimony
Payment of designated expenses
Hybrid alimony
1. PERMANENT, PERIODIC ALIMONY
This is what people typically think of when they think of alimony: a monthly payment that is paid until the wife dies, remarries, or cohabits with someone (we’ll talk about how cohabitation affects alimony in another section). Permanent, periodic alimony is taxable-deductible to the payor and included in the recipient’s income (but remember, this aspect has been [temporarily] abated by the Trump Tax Cut as discussed above).
Most importantly, it is modifiable. Either party can go to court and complain that the permanent, periodic alimony is too high or too low and ask the judge to modify or even terminate it.
Looking back to the five aspects of alimony, here’s how Permanent, Periodic Alimony stacks up.
Is it for a fixed term? No.
Is it paid in installments? Yes.
Does it vary in amount? No.
Can it be modified? Yes.
Is it tax-deductible? Yes (but not under the Trump Tax Cuts currently in effect).
2. LUMP SUM ALIMONY (as support)
An award of this form of alimony is fairly unusual. The general idea behind Lump Sum Alimony (as support) when it was first created in the early 1900s was that, rather than pay alimony in monthly amounts, all of those payments can be bundled into one or more large payments and paid all at once. Husbands wanted the option of paying one, big payment and then being through with paying alimony. Not all ex-husbands could afford to do this, but for those who could, it provided the option to pay off the alimony in one stroke and be done with it.
Nowadays, the thinking behind Lump Sum Alimony (as support) is more pragmatic.
Imagine that you are at the point in your divorce negotiations that alimony is “on the table,” and it appears that the wife is likely to be awarded some alimony but not a lifetime award. Let’s assume in our hypothetical that the lawyers think that she will be awarded payments for somewhere between five and 10 years. [Remember the very first thing that we said in this Guide: Predicting what the judge is going to do when awarding alimony is one of the most difficult things that divorce lawyers do.]
If you are the wife, your concern is that the judge will only award five years of alimony, and you’re also concerned that, after the divorce is over, your husband might ask the judge to reduce even this. Another concern that you might have is that your husband’s business will fail, or that he might file bankruptcy, or simply become unable to pay you even if he wanted to. Meanwhile, the husband’s concern is that the judge will award 10 years’ worth of alimony and that his wife will later ask the judge for even more.
This fear of the unknown creates significant incentive for both parties to agree to a one-and-done payment of Lump Sum Alimony (as support). In our example, the parties might agree that the husband will pay, say, seven years’ worth of alimony. This might be paid in regular, monthly amounts, or they might add up the total that he will pay over seven years, and agree that he will pay it all at once, or within the first year. Of course, he will demand some concessions for paying the Lump Sum Alimony (as support) now, instead of over time, but this is all part of the negotiation.
Judges have the authority to award Lump Sum Alimony (as support), but where we see it most often is in settlement negotiations.
Looking back to the five aspects of alimony, here’s how Lump Sum Alimony (as support) stacks up.
Is it for a fixed term? Yes.
Is it paid in installments? Maybe.
Does it vary in amount? No.
Can it be modified? No.
Is it tax-deductible? No.
3. LUMP SUM ALIMONY (as property division)
If you’ve already read our Ultimate Guide to Dividing Assets, then you will recall that sometimes a judge will require one spouse to pay the other an Equitable Distribution Payment. For example, let’s say that the only marital asset is the house, and the wife is going to get the house so that the parties’ children can continue to live there. So she gets the house, the husband gets nothing, and that’s not exactly fair.
To make it fair, the judge might order the wife to pay the husband half of the equity in the house. She still gets the house, but now he gets a cash payment. That payment is called an Equitable Distribution Payment, but it is also sometimes called Lump Sum Alimony (as property division).
What if, in our example, the wife doesn’t have the money right now to make that payment? The judge can order her to pay it out over time. Or the judge might order that she sell the house after the children have graduated and then give the husband his payment when the house sells. But the idea is that this payment is a fixed amount. It’s not paid because the husband needs the money; maybe he does, maybe he doesn’t, but that’s irrelevant. This payment is strictly a mechanism whereby the spouse who is otherwise receiving too much in the property division has to make a payment to the other spouse in order to “even-up” the division of assets.
Since Lump Sum Alimony (as property division) has nothing to do with a party needing financial support, it may seem a little odd that in Mississippi it’s still called “alimony,” which most people think of as spousal support. The terminology is a little odd to us, too, but that’s what it’s called.
Looking back to the five aspects of alimony, here’s how Lump Sum Alimony (as property division) stacks up.
Is it for a fixed term? Yes.
Is it paid in installments? Maybe.
Does it vary in amount? No.
Can it be modified? No.
Is it tax-deductible? No.
4. REHABILITATIVE ALIMONY
Imagine that you are the judge, and the parties before you are in their late 20s or early 30s. They have a short-term marriage, less than 10 years. There is not much marital property to divide; in fact, after paying off the credit cards and selling the house that neither of them can afford after the divorce, neither will receive much more than their vehicle and maybe a few hundred dollars in their bank accounts.
Imagine further that the husband is pretty well launched on his career but is nowhere near the income that you expect he will earn when he hits his stride in his 40s and 50s. In the meantime, the wife has little or no income, perhaps because she has stayed home to raise the parties’ young children.
Since this is a short-term marriage, and the parties are both relatively young, your inclination is against awarding permanent, periodic alimony. That’s too much. Your inclination is also against awarding no alimony. That’s too little.
What you would like to do is award alimony but only for a few years — just long enough so that the wife can get on her feet and become self-supporting. Chances are, you would award rehabilitative alimony. It’s just what it sounds like: alimony awarded so that the recipient can rehabilitate her ability to support herself.
Rehabilitative alimony awards might be similar to permanent, periodic alimony awards in amount but not in duration. While permanent, periodic alimony lasts until the recipient’s death or remarriage, we’ve seen awards of rehabilitative alimony that were as brief as six months. It’s unusual for them to last as long as five years. Again, the idea is an award of alimony that is big enough, and is paid for long enough, for the recipient to become self-supporting.
We’re also noticing another trend in rehabilitative alimony. In cases where the ex-wife is already self-supporting, there’s no need for rehabilitation. Nevertheless, judges who want to award some alimony, for a few years but not permanently, are starting to award rehabilitative alimony. We’re not sure whether the trend will continue, and there is some legal authority for the proposition that if the alimony recipient is already self-supporting, a judge should not award this form of alimony. Stay tuned.
Looking back to the five aspects of alimony, here’s how Rehabilitative Alimony stacks up.
Is it for a fixed term? Yes.
Is it paid in installments? Probably.
Does it vary in amount? Usually not.
Can it be modified? Yes.
Is it tax-deductible? Yes (but not under the Trump Tax Cuts currently in effect).
5. REIMBURSEMENT ALIMONY
The idea behind reimbursement alimony occurs so infrequently that we don’t often see it. But it does come up from time to time.
Imagine that a couple gets married right after high school. The husband goes to college; the wife goes to work. Her income pays the bills.
Four years later, the husband graduates and starts medical school. Same deal: He studies, the wife goes to work, and her income pays the bills. Then residency and the same deal.
Not long after the husband finally becomes a doctor and is earning six figures, he decides that he wants a divorce. The wife sees a lawyer, who does some research and finds that no marital property has accumulated, so she’s not going to get much from the division of assets. [As we noted in our Ultimate Guide to Dividing Assets, in Mississippi a professional degree/license is not an asset that the divorce court can divide.] Also, since the wife already has a job, is self-supporting, and is still young, her husband’s lawyer is going to argue that she’s not entitled to alimony. And even if she did get permanent, periodic alimony, it stops whenever she remarries.
This is the situation that Reimbursement Alimony was intended to address. The idea is to reimburse the supporting spouse, who has postponed present consumption and a higher standard of living, in the hope of a better life — one that she won’t receive because of the divorce.
This form of alimony has not received widespread attention in Mississippi, so the rules of how it works are still unclear. One national conference of divorce attorneys reported that reimbursement alimony should operate more or less the way that Lump Sum Alimony (as property division) works, i.e., that the award is a fixed amount, payable either in one lump sum or in installments, and that the supporting spouse’s subsequent remarriage (or death) will not relieve the professional spouse of having to pay.
If that’s the case, here’s how Reimbursement Alimony stacks up with the five aspects of alimony:
Is it for a fixed term? Yes.
Is it paid in installments? Maybe.
Does it vary in amount? No.
Can it be modified? No.
Is it tax-deductible? No.
6. PAYMENT OF DESIGNATED EXPENSES
People usually think of alimony as a monthly check that the ex-husband writes to his ex-wife. Although the purpose of the check is for the ex-wife’s support, she is free to spend the alimony money any way that she chooses. She can gamble it away, she can buy a piece of art, she can do whatever she wants.
Here’s another idea: Sometimes, a judge decides that the wife needs alimony, but only for a specific purpose — to meet a particular financial need (such as to pay for college tuition) or to pay a debt (such as a mortgage). If the wife is awarded, say, $3,500/month in alimony, it might not be apparent at trial how many monthly payments will be necessary to pay for whatever the judge had in mind. For example, how many monthly payments will the wife need to get her teacher’s certificate and relocate to whatever school district she takes a job with? There’s really no way to know for sure.
Judges have the option of ordering payment of a particular expense rather than payment of a monthly check. For example, the judge might order that once the children graduate, the house is to be put up for sale and when it sells, the sales proceeds are to be evenly divided between the husband and wife. But in the meantime, until the house is sold, the husband is ordered to pay the mortgage payments and the utilities.
We’re not talking about the children’s expenses. That’s a separate matter, which we address in our Ultimate Guide to Child Support. Even if there are no children, a judge can order payment of expenses.
Looking back to the five aspects of alimony, here’s how Payment of Expenses stacks up.
Is it for a fixed term? Yes.
Is it paid in installments? Probably.
Does it vary in amount? Only to the extent that the expense being paid varies in amount.
Can it be modified? Yes.
Is it tax-deductible? Yes (but not under the Trump Tax Cuts currently in effect).
7. HYBRID ALIMONY
Each of the six forms of alimony that we have listed above is something that a judge can award after a divorce trial. These are forms established in divorce law with defined characteristics (or as we have called them, aspects). Here are those five aspects again:
Alimony can be for a fixed, definite duration, or it can be indefinite
Alimony can be paid in one single payment, or it can be paid in installments, such as monthly
Alimony can be for a fixed, definite amount, or it can vary in amount
Alimony can be subject to modification by subsequent court order, or it can be non-modifiable
Alimony can be tax deductible, or not
But what if you wanted to mix and match different aspects? For example, you and your spouse like the idea that alimony should not be modifiable — whatever you agree to, you both want that to be it. End of story. So that suggests Lump Sum Alimony (as support). But suppose you also agree that the alimony should be indefinite — “payable until the wife dies or remarries?” Of the six forms of alimony that we’ve described, not one of them has the aspect of “not modifiable” and also “indefinite.”
Can you customize your own alimony award, so that it has the aspects that you and your spouse agree to? In almost all situations, you can. When you customize your own form of alimony, the result is called Hybrid Alimony.
The ability to create Hybrid Alimony is a significant advantage of negotiating a settlement of your divorce. If you take the divorce to trial and the judge makes the decision to award alimony, he can only choose one of the six forms listed above. But if you negotiate a settlement, you can mix and match the aspects of alimony that are right for you and create your own version of Hybrid Alimony.
Multiple Forms of Alimony in One Divorce
One last point, an important one, before we wrap up this section about the seven Forms of Alimony: Can a judge award more than one form of alimony in the same divorce? For example, can he award permanent, periodic alimony AND payment of expenses AND Lump Sum Alimony (as support)?
The answer is yes. But remember, a judge will NEVER award any alimony that is beyond the husband’s ability to pay, and in most cases that a judge sees, the husband does not have the ability to pay a single dollar of alimony. So although theoretically he has in his judicial toolkit the ability to award more than one form of alimony, that certainly doesn’t mean that in reality he is likely to do it.
