Fair spousal support

trying to get a better understanding of what would be a "Fair" spousal support. Trying to jointly decide seperation of wealth.

Divorcing after 25 years.
Wife suggestion: I keep current house (worth aprox $300K and fully paid off but 20 years old and needing repairs). She takes another house I just refurbished plus I buy $15K appliances/furniture. (aprox value $215k).. In her words - that we would consider that an even trade. (this house also fully paid off)
I've agreed to give her 1/2 of my 401k.. (110K to her)
Youngest son (18) has moved into "Her house" with her.
She claims to have no interest in my "toys" (harley, tools, old car in restoration stages, guns, etc.. total value aprox $25K to $30K) She says those are mine - that I worked hard for them and should keep them.

I make on average $140k per year pre-tax (commission). She makes aprox $15k working part time (about 20 hrs per week).
This was a mutually decided divorce, love gone from marriage, we stuck it out for the kids for the past several years.. her thing was that she wanted to be on her own, make her own decisions, make her own way. but now she wants $2,000 (after taxes) for spousal support on top of 1/2 the 401K and the paid off house I agreed to give her. and she wants it for "life" (she claims to have no interest in EVER getting remarried.

any Ideas what the courts would decide for spousal support $$ and for how long? I'm trying to be fair and so she is trying as well - but she has a tendency to get angry and start wanting more. Just want to make sure I'm making good financial decisions.

Thanks

I would certainly not agree to life-time alimony. Depending on the field in which she works, she may or may not be able to find full-time work. You may consider suggesting that you will pay alimony while she goes to school to gain skills to make her more employable, and then for an additional year or two to allow her to get on her feet.

Also, be sure to include that either remarriage or cohabitation will result in SS ending.

You have to provide your state - that question is there for a reason. Spousal support varies GREATLY from one state to another.

Keep in mind that spousal support and property division are separate. Marital property will be divided (typically at close to 50:50) without any regard to the length of the marriage. So the proposed property division is pretty fair to you - you're getting over half of the assets and there's no debt.

In addition to the name of your state, what are your ages?

I don't like alimony 'for life'. It's really not fair when you consider that eventually you'll be 75 and have little or no income. I would suggest that EVEN IF YOU'RE IN A STATE WHERE LIFETIME ALIMONY IS POSSIBLE (again, not certain yet) you consider a plan where alimony continue until she reaches normal retirement age (as defined by IRS based on her birthdate).

How do you plan to calculate $2,000 after taxes? That's a big problem - and could change from year to year. You don't know what her actual tax rate is until after the year is over. You would be better off to pick a number and pay that amount. It would be taxable to her and deductible to you if it meets the other IRS requirements.

additional info

Thanks for your replys.
State = Ohio
my age 46
her age 43.
She works in High school cafeteria and has the ability to get more hours. Opportunity to get full time is very good within school system. She is very highly though of within the school and has passed on opportunities to become head of the citywide cafeteria system because she did'nt want full time (at that time)
thanks again for the advice.

dmichaels078 said:

She works in High school cafeteria and has the ability to get more hours. Opportunity to get full time is very good within school system. She is very highly though of within the school and has passed on opportunities to become head of the citywide cafeteria system because she did'nt want full time (at that time)
thanks again for the advice.

Click to expand...

I really wouldn't count on that at this point in time. Every school district I know is in a real cash crunch and letting staff go across the board.

dmichaels078 said:

Thanks for your replys.
State = Ohio
my age 46
her age 43.
She works in High school cafeteria and has the ability to get more hours. Opportunity to get full time is very good within school system. She is very highly though of within the school and has passed on opportunities to become head of the citywide cafeteria system because she did'nt want full time (at that time)
thanks again for the advice.

Click to expand...

Here are the rules for Ohio:
Lawriter - ORC - 3105.18 Awarding spousal support - modification of spousal support.

Ohiogal will probably have some better information about Ohio, but I would venture that lifetime alimony is very unlikely. The number of $2,000 per month doesn't seem out of line at all, particularly considering that she's getting a house that's fully paid for. It might be off a bit, though.

I would venture that something like 10 years (using the 1/2 to 1/3 the length of the marriage guide) would be much more reasonable. Maybe starting at something like $2500 (which would actually cost you about $2000 because you could deduct it - and would probably net her about $2200 because of her lower tax bracket) and declining somewhat in later years.

Again, that's only a gut feel - Ohiogal and others will have a better feel for how Ohio will actually do it.

Thanks for the input.. was hoping the $2K was high, but it is - what it is. Hopefully OhioGal will chime in too.

Appreciate your time!

dmichaels078 said:

Thanks for the input.. was hoping the $2K was high, but it is - what it is. Hopefully OhioGal will chime in too.

Appreciate your time!

Click to expand...

I wouldn't be worrying as much about the length as about the time. You could be paying for 30-40 years. You might be better off with a HIGHER amount if you can get a reasonable time limit.

And, realistically, $2 K per month isn't all that much. That's $24 K per year. Your incremental tax rate is probably around 30% including state and federal, so the net cost to you would be $17 K - or about 10% of gross. Sounds like a lot (and it is when you pay it), but it will probably not require huge sacrifices at your income level.

dmichaels078 said:

trying to get a better understanding of what would be a "Fair" spousal support. Trying to jointly decide seperation of wealth.

Divorcing after 25 years.
Wife suggestion: I keep current house (worth aprox $300K and fully paid off but 20 years old and needing repairs). She takes another house I just refurbished plus I buy $15K appliances/furniture. (aprox value $215k).. In her words - that we would consider that an even trade. (this house also fully paid off)
I've agreed to give her 1/2 of my 401k.. (110K to her)
Youngest son (18) has moved into "Her house" with her.
She claims to have no interest in my "toys" (harley, tools, old car in restoration stages, guns, etc.. total value aprox $25K to $30K) She says those are mine - that I worked hard for them and should keep them.

I make on average $140k per year pre-tax (commission). She makes aprox $15k working part time (about 20 hrs per week).
This was a mutually decided divorce, love gone from marriage, we stuck it out for the kids for the past several years.. her thing was that she wanted to be on her own, make her own decisions, make her own way. but now she wants $2,000 (after taxes) for spousal support on top of 1/2 the 401K and the paid off house I agreed to give her. and she wants it for "life" (she claims to have no interest in EVER getting remarried.

any Ideas what the courts would decide for spousal support $$ and for how long? I'm trying to be fair and so she is trying as well - but she has a tendency to get angry and start wanting more. Just want to make sure I'm making good financial decisions.

Thanks

Click to expand...

Ok...here is the deal

She is entitled to 1/2 of the marital assets (assets that accrued during the marriage), and responsible for 1/2 of the marital debts (debts that accrued during the marriage). You are getting 85k more in real estate equity, and another 20-30k for your "toys" That is completely separate from anything else.

So far, what you have described gives you a greater portion of marital assets than her. Therefore its lopsided in your favor.

Spousal support/alimony is a completely separate issue.

You have a 25 year marriage. That is a long term marriage no matter how you look at it. Since you didn't state what state you are in I can only give you very general information.

Its quite possible that a 25 year marriage could produce lifetime alimony. However, you should not automatically agree to that. In fact, you should not agree to/fight hard against, any alimony that goes past normal retirement age. She will be able to claim SS retirement benefits based on your earnings history (without reducing your benefits at all) and she will have the benefit of the 401k money that SHOULD be rolled over into a retirement account for her. It should not be used for anything else.

However you should also fight against lifetime alimony if she is young enough to go to school, get an education, and have a career of her own. If she is 60, its not going to work.

If she is 40, it absolutely could and should work...if she is 50, its also workable, but she might have trouble paying off any student loans before retirement age...therefore it might behoove you agree to subsidize her education, on top of alimony. It might be better to pay some tuition rather than lifetime alimony.

Anyway, these are all things to consider...food for thought.

Also, whether she likes it or not alimony is tax deductible to you and taxable income to her. You are going to be in the 28% marginal tax bracket (federal) once you are single. Therefore you will save 28% plus whatever your state taxes are on every dollar of alimony you pay.