Benefits with HII

Child and Spousal Support

Spousal Support (Alimony)

If you have been married for a significant amount of time and your spouse has been economically dependent on you, if you divorce, you can expect the judge to order you to pay some type of spousal support or alimony. A common scenario where spousal support is awarded is when one spouse decides to stay at home to raise the children while the other earns an income. Usually, short-term marriages (lasting less than 10 years) or those in which the spouse' earnings were similar won't result in a spousal support payment. When spousal support is ordered, you will have to pay a certain amount each month until one of the following things happens:

• A judge sets a date when the payments end, and that date arrives—Each state will have its own rules on length, but spousal support is considered to be rehabilitative. This means that spousal support will be ordered for as long as necessary for the recipient spouse to become self-supporting.
• The former spouse remarries or moves in with a new partner
• Your children no longer need a full-time parent at home
• Your former spouse has not made a reasonable effort to become self-supporting, and a judge has determined this
• A significant event, like retirement, occurs in the life of the one making spousal support payments, and a judge decides to alter the payment
• One of you dies

You and your spouse can try to negotiate your own terms, but if an agreement cannot be made you can expect the court to set the terms for you. It will also be important to realize that payments could be for life if the recipient is ill and unable to rejoin the workforce. This could be common for an elderly couple.

Spousal support orders are less common today than in years past, but that doesn't mean you won't have to pay. Each situation is different, and several factors are considered when determining if spousal support will be awarded. Each state also has its own laws on spousal support, so you may want to become familiar with those in advance.

If you are thinking you may receive spousal support, you should begin to consider your capacity to earn income, how much your spouse earns, and your standard of living during the marriage. For example, you may have been a part-time employee while in the marriage but have the capacity to be working full-time. The courts will take this into consideration when deciding the amount of your spousal support payment.

Budgeting for Spousal Support

If you are required to pay spousal support, sometimes it can be a significant expense for you. Once you know what the payment will be, it would be wise to revisit your budget and update it so that your spousal support payment is now a category in your monthly expenses. You may have to cut back on some of your other monthly expenses in order to make the payment. Be sure to make it a top priority. If you fail to pay, the courts may take action to get you to pay up. It is also something that cannot typically be discharged in bankruptcy. Spousal support can be a tax deduction for the person who is paying it. The person who receives it will have to include that as taxable income.

If you are the recipient of spousal support, be sure to not consider this as fun money. It is important that your current income plus your spousal support can cover your basic living expenses. Any money you have left over could be used to pay down debts, establish an emergency savings fund, or be used for other financial goals you might have. Keep in mind that in most cases spousal support is not meant to last forever, so make sure that this is something you are not planning to have in your life indefinitely.

Child Support

If you have a child with another person and the other parent is the custodial parent of the child, then you may receive a court order to pay child support. A custodial parent will be the one who has primary physical custody of the child and is mainly responsible for the day-to-day care of the child. There can be cases where the parents have joint custody. Typically the parent who has a higher income will still need to send some type of child support to the parent who earns less. If neither parent has custody, the courts may require that both parents send child support to a third party who is caring for the child.

Each state has its own guidelines on how to calculate what the child support payment will be. The guidelines are typically based off on income and expenses of the parents. Child support that is issued in one state may be drastically different from support issued in another state, even though the situation is identical. Some states will allow their judges to have more power when calculating the payment, and some states won't grant them much power at all. Typically, child support should be covering the following:

• Basic necessities like food, clothing, shelter, and so on
• Medical care
• Out-of-pocket medical expenses like copays, deductibles, and surgery costs
• Educational expenses like school fees, supplies, books, and so on
• Child care
• Transportation costs
• Basic entertainment
• Extracurricular activities like clubs or sports
• College expenses

Budgeting for Child Support

If you are required to pay child support, it can be a significant expense for you. Once you know what the payment will be, it would be wise to revisit your budget and update it so that your child support payment is now a category in your monthly expenses. You may have to cut back on some of your other monthly expenses in order to make the payment. You will usually be responsible for child support until the child turns 18.

Be sure to make it a top priority. If you fail to pay child support the courts may take actions to get you to pay up. It is also something that cannot typically be discharged in bankruptcy. If you are the recipient of child support, be sure to use this money for the child-related expenses seen above. It may be a good idea to put some of that money into a separate savings account for emergencies, like any unexpected medical costs, and expenses that don't happen each month, like sports fees.

Child support is tax-free for federal income tax purposes. Neither the recipient nor the child will have to pay taxes on it. The parent responsible for making the child support payments will not be able to deduct that money from his or her taxes, unlike spousal support.