Does a Prenup Protect You From Alimony?
More than a few spouses have been caught off guard when a divorce court judge declined to enforce the alimony provisions in their prenuptial agreements. The fact remains that a well-drafted prenup can provide a roadmap to address alimony issues apart from the vagaries of different states’ laws that would otherwise control those calculations.
When it is done correctly, a prenup can either protect a spouse from alimony or limit those payments and provide objective criteria under which alimony obligations will end.
The New York and New Jersey family law attorneys at Kantrowitz, Goldhamer & Graifman represent individuals who are entering into marriage to draft and negotiate prenuptial agreements that serve both parties’ interests. Understanding how a prenup might affect alimony is one of the keys to preparing a sound and intelligent agreement.
Alimony is an evolving concept.
The earliest references to alimony date back almost 4,000 years, when the husband in a marriage relationship was the sole owner of all property. When a married couple divorced, courts would order alimony payments to assure the wife that she would have sufficient income to pay for the necessities in her life.
In modern times, when both spouses might have equal earning power, a divorce court might perceive alimony payments as being punishing or unnecessary, particularly if the spouse who would receive those payments is employed and has a means of financial support. That court will approve alimony payments under certain conditions:
- If the divorcing couple has young children and a spouse needs to stay at home, thus preventing him or her from earning a salary;
- If a spouse would be left destitute without some form of support; or
- If non-payment of alimony is deemed to be unfair, for example, where one spouse was forced to forego opportunities in order to support the other spouse, who then increased his or her earning power with the other spouse’s assistance.
Prenups add structure to alimony.
If married partners do not address prospective alimony issues in a prenuptial agreement, a divorce court will apply its state’s laws to determine the amount and duration of alimony payments. The court will consider factors such as how long the couple was married, the relative employability, earning power and financial status of each spouse, their age and general health, the fairness of payments, and (in some states) a spouse’s conduct while the marriage was still intact.
These factors give the court significant discretion. A prenuptial agreement can shift the balance of that discretion to the divorcing couple, which can then establish an agreed-upon structure for spousal support payments. Possible structures include:
- Rehabilitative support that lasts as long as is necessary for a spouse to become self-supporting;
- Temporary support that ends on a specific date, and that is designed to carry a lower-earning spouse through the divorce proceedings;
- Lump-sum payments in lieu of regular monthly alimony; and
- Regular permanent payments that end, for example, only when the recipient of those payments remarries or passes away.
Under the correct conditions and with proper disclosures and considerations of each party’s circumstances, a prenup might also completely eliminate the prospect of alimony. The best way to ensure that a divorce court will enforce a no-alimony clause in a prenup is to retain an experienced family law attorney to draft and negotiate the agreement.
Do not confuse child support and alimony payments.
A divorce court will rarely allow a noncustodial parent to avoid child support payments. Those payments are calculated on the basis of a child’s need for food, clothing, shelter, and education, and are wholly separate and apart from spousal support or alimony payments.
A prenup provision that seeks to waive a parent’s child support obligations will draw extra scrutiny from a divorce court and may call into question other provisions in a prenuptial agreement.
The income tax treatment of alimony payments has undergone a dramatic change.
For couples who finalized their divorce before 2019, alimony payments are deductible against the income of the alimony payor, and those payments are taxable as income of the recipient. For divorces that are finalized in 2019 and beyond, the payor will no longer be able to deduct the value of alimony payments from his or her gross income and those payments will not be taxed as income of the recipient. This change in the tax laws may well have an impact on how prospective alimony payments are structured in a prenup.
Please call the New York and New Jersey prenuptial agreement lawyers at Kantrowitz, Goldhamer & Graifman for help using a prenup agreement for protection from alimony.