Viable Ways to Ensure Ongoing Alimony Payments
Alimony is often a source of contention in any divorce. On one hand, the obligor may feel resentment at having to pay his or her ex spouse money simply because they got a divorce. On the other hand, the recipient may feel embarrassed at having to accept payments from his or her former spouse. However, alimony is awarded because the recipient spouse needs it to maintain a comfortable and secure lifestyle. Without continuous alimony payments, the recipient might find him or herself unable to pay their bills or provide for the basic necessities of life. In fact, this thought leaves many alimony recipients on edge much of the time, worried that if something were to happen to the obligor and they were unable to make their payments, they would be left without that source of supplemental income.
If you receive alimony and count on it to meet your financial obligations each month, you understand the feeling. Fortunately, there are a few ways that you can secure ongoing alimony payments, even if the obligor is unable to work due to disability or even death.
Alimony insurance works very much like normal life insurance or disability insurance does, except the beneficiary is the former spouse. If you want to ensure ongoing payments in the event of your former spouse’s disability or death, you would need to pay a premium to the insurance provider. However, in order to be eligible for alimony insurance, your former spouse would have to agree to it, and subject him or herself to a physical as well. It would also need to be written into the divorce agreement that you and your former spouse agree to insure alimony payments.
The pitfalls with alimony insurance is that it is expensive, and the monthly premiums would be deducted from your alimony payments each month. If you do not end up needing it, all that money is essentially wasted. However, some alimony insurance plans allow your ex-spouse to gain back the premiums paid in the event that you die before ever needing to utilize the insurance.
Additionally, alimony insurance is taxed until your former spouse becomes disabled or passes away. At that point, the insurance proceeds will be tax-free income.
An alimony trust is a trust established to ensure that the recipient spouse continues to receive alimony beyond the lifetime of the obligor spouse. Where as alimony insurance requires the payment of a premium in order to protect future alimony payments, a trust is an arrangement in which property is transferred to a former spouse as a source of support following a divorce. The obligor spouse is required to transfer investments and other assets that generate income into a trust for his or her former spouse to use in the event of the obligor’s passing.
One other alternative to consider is an annuity. When the payer and recipient choose this option, the payer will purchase an immediate annuity, which pays the recipient the fixed amount each month. By purchasing an annuity, the obligor is essentially signing a contract with the insurance company that guarantees the recipient will receive his or her alimony check each month. The insurance company will pay the recipient spouse each month, thereby eliminating the need for the obligor to ever have to write a check.
The problem with annuities is that most people cannot afford to fork over the entire amount of alimony owed all at once. Additionally, by purchasing an annuity, you are entrusting a huge sum of money into the insurance company’s hands, and counting on the fact that they have the finances to continue operating until the period of alimony ends, or until the recipient passes away. If the insurance company defaults, all that money may be lost.
Consult a Boca Raton Alimony and Spousal Support Attorney
At the Law Offices of Schwartz | White, our Boca Raton alimony and spousal support lawyers will help you explore your options when it comes to ensuring ongoing alimony post divorce. To consult with one of our family law attorneys today regarding your future support, call 561.391.9943.