As painful as divorce is emotionally, the financial aspects can be just as traumatic as the parties face uncertainty regarding their economic situation. Alimony or spousal support is hotly contested in many divorces especially since judges have substantial discretion in awarding it. Similarly, how money, property and debts will be split in equitable distribution is the most common source of dispute in divorce. Although each case is unique, there are many questions that are commonly asked by parties seeking a divorce. We’ve assembled some of them to help divorcing spouses understand more about how alimony and equitable distribution work.
Is permanent alimony really “permanent?”
Permanent alimony can be permanent, but it does not have to be. If your spouse is ordered to pay what is currently considered “permanent” alimony, he or she will have to pay alimony until he/she experiences a significant change of circumstances. Examples of a change of circumstances can be retirement, disability or elimination of your need for alimony (e.g., if you remarry or are financially independent). The New Jersey Legislature has passed a bill that will eliminate the term of “permanent alimony” and will clarify the circumstances under which a party may apply for a modification of his/her alimony obligation.
What happens if my spouse earns unreported income?
If you suspect that your spouse earns unreported income, there are ways to determine that through the use of a forensic accountant. If you have filed joint tax returns with your spouse in the past, the fact that your spouse did not report income will have an impact on you and your spouse. If your matter cannot be settled and must go to trial, the court is obligated to report to the IRS any unreported income that it discovers.
If my spouse had nothing to do with my business during the marriage, can he/she still receive a part of the business?
Yes. If you have your own business, even one established before the marriage, it can still be subject to equitable distribution if your spouse was not involved in the business at all during the marriage.
If I leave the marital home during the divorce, do I lose my rights to the house?
No, you will not lose your equitable rights in the home. However, it may become difficult for you to return to the home and it is common for the spouse remaining in the home to change the locks once a spouse has departed from the home.
Do I have to be on the Deed to the marital home to receive equitable distribution?
No, you do not need to be on the Deed to receive equitable distribution from the marital home.
Is my spouse entitled to my pension?
If you contributed to your pension during the time you were married to your spouse, then your spouse is entitled to an equitable share of your pension. If you married your spouse after you stopped contributing to your pension or after your pension went into pay status, your spouse will most likely not be entitled to any portion of it.
Are gifts/inheritances subject to division via equitable distribution?
If you have received a gift or inheritance from a third party, it will not be subject to equitable distribution. However, gifts between spouses are generally subject to equitable distribution.
Do I have to pay taxes on my alimony?
Alimony is tax deductible to the payor and is taxable to the payee. Therefore, if you receive alimony, you will have to pay taxes on it unless an agreement is made to the contrary
Alimony and equitable distribution involve complex determinations of each party’s finances and economic situation. Parties should consult a qualified attorney to ensure all factors have been considered by the court and discussed during any settlement negotiations.
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