What Is Fair When It Comes to Alimony?

What Is Fair When It Comes to Alimony?

By Mary Salisbury On 03/29/2022

Public policy as it relates to alimony or spousal support is to follow laws seen to be fair to both spouses. However, what is “fair” is subjective and public policy often does not align with what may be seen as fair by divorcing spouses. Younger couples who have similar incomes may view alimony differently than older generations where it was the often the norm for the woman to either earn less (because of career choice or working part-time) or stay at home and care for the children full-time. Also, although alimony is not supposed to be gender-biased, there often is a different perceived fairness for alimony when there is a higher wage-earning spouse who cheats versus a lower wage-earning spouse who cheats, and whether the cheater is male or female.

There are three formulas purporting to be “fair” amounts. However, these formulas are not used in North Carolina courts where I work.  The amount, duration and manner of payment of alimony is determined on a case-by-case basis, based on the circumstances of the case.  https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/BySection/Chapter_50/GS_50-16.3A.pdf

The American Academy of Matrimonial Lawyers provides a formula they deem nationally applicable, calculated as 30% of the payor’s gross income minus 20% of the payee’s gross income (with the payee’s total income including alimony not to exceed 40% of the combined gross income of both the payor and payee).  Also considered a fair formula is the “1/3, 1/3, 1/3” formula, where you add both spouse’s income, divide by three, and then subtract the lower income from that amount. If the amount is greater than zero, that is the amount of alimony that should be paid. Finally, there is the Ginsburg formula, where the payor’s income after the payment of alimony should equal the total of the payor’s income and the payee’s income divided by 1.8.  Or, in other words, alimony equals the payor’s income minus that amount.

Then there is the question of how long it should be paid. 

In my opinion, using any of the above three formulas, or any other formula for that matter, without first analyzing need vs ability to pay, is a disservice.  How income and expenses will affect the long-term net worth of both spouses should be examined.  Detailed budgets, not just based on what is happening today but based on how assets are divided (and how much capital results from that) should be prepared, including future expectations regarding income.  My analysis might show that based on a given settlement proposal, one spouse may have to dip into his or her half of assets to make ends meet and his or her net worth and capital will decline rather than increase.  This is incredibly enlightening, particularly in long-term marriages, and makes negotiations easier when one spouse will clearly have far more net worth at retirement than the other.   Many of my clients have been in long-term (20 plus year) marriages, are over 50, and cannot afford to make financial mistakes in their divorce.  

Using a formula is too quick and dirty and every couple or family has different circumstances and perceived ideas of fairness.  Perhaps running the formulas as a baseline then comparing each formula’s outcome to the needs vs. ability to pay analysis is a starting point.  Through mediation, the couples can then discuss their thoughts on what they think is fair.

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