0232: How Does Spousal Support Work? - Part 2

0232: How Does Spousal Support Work? - Part 2 Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.   In this episode, we are continuing the series on spousal support/alimony, whatever name you want to call it. And the importance of this episode is to cover the different types of spousal support or alimony available. I'm going to go through five different types, temporary support, permanent support, rehabilitative support, lump sum, and partial lump-sum support. So, let's jump in. Let's start with temporary support. Temporary support, generally speaking, is - before or during the divorce process - you have a temporary support amount you may be paying or receiving. It's the support you agree upon before the divorce is over. Pretty clear. The important thing to know about temporary agreements, and I say this almost every day on calls or when people are negotiating, whether you're the person about to pay or receive temporary spousal support, be very careful about what you decide. The numbers that you agree upon for temporary support often become the support numbers you use after divorce. And so, if you agree to a $1,000 a month, oftentimes the agreement after the divorce will be $1,000 a month. There is a lot less flexibility. Generally speaking, once you agree upon a temporary support number that often becomes the final support amount that you use after the divorce process. So, something to be very careful about there. Permanent support. Permanent support is what it sounds like. Permanent support is support for life. It's generally speaking, not as common as it used to be. If you were in a long-term marriage and you didn't work and you're near retirement age, there may be a permanent support amount, but if you are relatively young, then there usually isn't permanent support. It's not something that's automatic or even expected the way it once used to be. That said, it still exists, and that's something that you should be aware of. Every state, of course, as always has its own circumstances in revolving permanent support. Now, there's something between temporary and permanent support that wasn't on my list that I want to jump in, is there's just what your final support amount is. So, it's just what you negotiate. It doesn't necessarily have a fancy name other than your alimony number. So, if your alimony is $1,000 a month for eight years, either paying or receiving, that's just the amount. That's not temporary, that's not permanent, that's just your amount. So, that is the alimony payment. I just want to make that distinction in there very quickly. There's something called rehabilitative support. And it's not always known by that name, but I'm going to go through what it means because its meaning is very relevant to many of the discussions that I have, and that you may be thinking about when it comes to thinking about support and what makes sense. So, rehabilitative support is a very simple concept and that is either you or your spouse may need some additional training to get back on their feet and start earning a reasonable living after the divorce process. If they've been out of the workforce for a period of time, or if you've been out of the workforce for a period of time, it might take one, two, five years to get back on your feet or for your spouse to get back on their feet. And so, in a rehabilitative support model, what often happens is you pay a higher amount of spousal support or receive a higher amount of spousal support for the first few years while that spouse gets their training. So, if they're going to become a paralegal, go back to college, get an advanced degree, some sort of free training, whatever the case may be. Well, you might say, "Well, I'm going to agree to a higher level of support for the first three years that person gets to get back on their feet." And then it's presumed that after those three years, they'll have their certification, they can earn a good living for themselves. And then the support amount declines or goes away or whatever it is that you negotiate. That's what's called rehabilitative support. And it's just there to allow someone to retrain and then start earning funds on their own. So, that's something to think about when it comes to support models. The last two are lump sum and partial lump-sum support. You'll understand lump sum very clearly. A lump sum is paying all the support in one payment, instead of paying it over time or receiving all of your support in one payment, instead of receiving it over time. It's a topic I've discussed on the podcast before. If you haven't gotten the archives with all the podcast episodes, I encourage you to do that. There are some extensive details on how lump sum support can work and ways to negotiate it in that archive of all of the 200 plus podcast episodes, not all of which are public here. But what's important about the lump sum support is let's just say, and I like to use simple numbers, you're going to be paying $1,000 a month for five years, which means you are going to be paying 12,000 a year or 60,000 over five years. A $1,000 a month is what it is. Well, the option is instead of paying 60,000 over five years, what if you just wrote a check for $60,000 and you're done paying support? There is no future support. You're separated from your spouse. You don't have to deal with at least that part of your relationship ever again. Now, conversely, maybe you're on the receiving end. So, you're supposed to get $1,000 a month for five years, so you're supposed to receive $60,000 over five years. Well, maybe you might say, and I'm going to add a wrinkle into this example, you might say, "Well, I want all the money upfront because I don't trust my spouse or I don't want to have to deal with waiting for that monthly $1,000 every month, and I want my money now." So, you might say, "Well, just write me a check for $60,000." But maybe, I don't want to say better yet, but maybe for the sake of negotiation, you're willing to take $55,000 upfront or $50,000 upfront instead of $60,000 over five years. Something that you may want to think about. And so, that would be a lump sum. And so, you get all your money upfront. You might not get the full value, but you get all the money today instead of, or the day your settlement is over or you come to a settlement, rather. You get all the money in one fell swoop, rather than waiting every month for that direct deposit or check to come in the mail. Now, the partial lump sum is also very simple and that is, it's not always financially feasible for people to pay all their support or alimony in a lump sum amount. It just isn't. And sometimes circumstances just won't allow that to happen. And so, what you can do in that situation is you can have what is a partial lump sum. So, let's just say maybe you pay or receive three years upfront and then you get the rest over time, or you pay three years upfront or two years upfront and pay the rest over time. The plus side is you get a chunk of change in the short term if you're on the receiving end. The downside is your monthly payments are going to be lower going forward, but that's not really a downside mathematically. It's just a different way to negotiate the agreement. So, that's something to think about. And then sometimes that works too, where you give someone some and if you're the one paying it, you give someone, your ex-spouse, some starter money, and then they get to do that. And then, in the long run, your payments to them on a monthly basis are much lower. So, something to think about. The reason that a partial lump-sum comes into play is that it's just another tool to have in your toolbox is it may not always be either-or. Sometimes you just can't write a check for a large support amount. It just might not be feasible. So, that's why you might do a partial lump sum. So, something to think about there. So, there are, as I said, different times, types, excuse me, of spousal support to consider. There is temporary support, permanent support. I interjected just what we call support, which is your final agreement, rehabilitative support, or money and more money in the short run for retraining, a lump sum support, and then, of course, a partial lump sum. A lot of different options to think about when you are negotiating a potential spousal support agreement and different options really can apply really well during, rather I should say, different circumstances. And so you should think about what options may make the most sense for you and your circumstance because it's not always set in stone. There's a lot of ability for some creativity when negotiating support agreements and that creativity can help you actually get this divorce done, rather than extending the process out even further, because you're having a hard time coming to the right support agreements and what is financially feasible and acceptable for all parties involved.