Many people come to my office with the understanding that there is “no such thing” as alimony in Texas. That is sort of true. In Texas, a judge cannot award “alimony,” which is a concept from the federal tax code, but a judge can order one spouse to pay the other what is known in the Texas Family Code as “spousal maintenance.” What is the difference between the two?
In short, spousal maintenance is a monthly payment that may be awarded upon divorce to a spouse who lacks sufficient property or income to meet her or his “minimum reasonable needs.” The paying ex-spouse may not deduct these payments from income and therefore pays income taxes on those amounts. The ex-spouse receives the funds with no obligation to pay income taxes on those amounts.
For a judge to order spousal maintenance in a divorce case, there must be some basis in the applicable statute to support to grant it. A spouse may be awarded spousal maintenance when the following conditions are met:
- Marriage has lasted at least 10 years and spouse lacks the ability to earn an income to meet minimum reasonable needs
- Spouse is unable to earn a sufficient income due to incapacitating physical or mental disability
- Spouse is the custodian of a child of the marriage who requires substantial care and personal supervision due to a physical or mental disability and such care prevents the spouse from earning an income to meet minimum reasonable needs
- Spouse or child was the victim of family violence while divorce was pending or within 2 years before divorce action was filed
One of the most common questions people ask is: What are minimum reasonable needs? It is a great question – and one that is difficult to answer. “Minimum reasonable needs” are determined on a case-by-case basis so that what may be minimum reasonable needs for one person are completely different for another. Although not the only basis for determining “minimum reasonable needs,” a good place to start is by putting together a post-divorce budget based on past history but also accounting for any changes in the living situation resulting from the divorce.
The related analysis is whether the ex-spouse can earn enough income to pay for those needs in addition to his (or her) own. In this context, income includes not only any money earned from employment, but also other sources of income, such as rental income or retirement distributions. A person’s own separate property assets can also be considered, especially if those assets can be easily liquidated. The same holds true for property awarded to that spouse as part of the divorce. For example, a spouse may be awarded enough from a brokerage account or other investments that the spouse can convert to cash from which to pay living expenses.
Of course, what everyone really wants to know is: how much and for how long. How much and how long depend on a number of considerations: the ability to meet one’s own minimum reasonable needs, education and employment skills, duration of the marriage, child support payments being made and resulting impact on both parties, any acts of concealment or fraud, age and employability of the spouse seeking maintenance, contribution by one spouse to the education or training of the other spouse, contributions as a homemaker, marital misconduct, and property brought to the marriage. How to weigh each of these considerations in the overall analysis is somewhat subjective.
If spousal maintenance is ordered after divorce, there is a cap on the monthly payment – the lesser of $5,000 or 20% of the paying spouse’s average monthly gross income. This is different from child support, which is calculated based on net income. As for duration, there is a cap on that as well. Except in limited circumstances, the maximum number of years for which maintenance may be ordered is determined by the length of the marriage:
- 5 years if the maintenance results from a situation of family violence during the divorce case or two years prior to filing
- 5 years if married 10 years to not more than 20 years
- 7 years if married 20 years to not more than 30 years
- 10 years if married at least 30 years
Spousal maintenance payments can and do end. The payments automatically terminate when the party receiving the maintenance dies or remarries. The court may also terminate the order if the party receiving the funds is living with someone with whom that party has a dating or romantic relationship. Spousal maintenance can also be later modified if there has been a “material and substantial change in circumstances” of one of the parties. And finally, importantly, a court may enforce an order for spousal maintenance by means of contempt – which could mean jail time for the party obligated but failing to pay.
Alimony is also a monthly payment to an ex-spouse, but it is defined by the federal tax code. Since it is a matter of federal law, Texas state judges who rule on divorce matters cannot order alimony. Therefore, agreed alimony becomes a contract between divorcing spouses. Functionally, alimony is similar to spousal maintenance in that it is a monthly payment from one ex-spouse to the other. The primary difference is that liability on the income taxes is shifted from one ex-spouse to the other. However, due to the December 2017 tax reforms, this tax shifting option will end for divorcing couples finalizing their divorces on or after January 1, 2019.
Rhonda Cleaves is a Collaborative Divorce Attorney in Plano who practices primarily in Collin, Dallas and Denton counties.