“Alimony is alive and well in North Carolina. People assume it’s a thing of the past”
Lee Rosen, Founder of Rosen Law Firm
Where Did “Alimony” Come From?
In a divorce proceeding, the court generally considers five major issues: grounds for divorce, property division, custody/visitation, child support, and alimony.
Four of these five issues make intuitive sense. The ordinary man or woman understands why a divorce court must verify that proper grounds for divorce exist; determine which property shall go to which spouse; determine custody of the children; and allocate funds for their support. Indeed, these are tasks which unmarried couples often perform themselves, without immediate court assistance, upon breakup of a relationship.
In today’s world, there is no intuitive sense behind the fifth issue: alimony. Some time ago, this was not true; the ordinary person did understand what it was and why it was required. Divorce was based on fault, women could not support themselves; thus, when the marriage broke down because of the husband’s fault, the wife needed lifelong support or she would face starvation. Perhaps this understanding of alimony support still exists in cases where divorce occurs after a traditional long term marriage in which the wife did not work. But many marriages today are not long-term, and very few women are entirely removed from the work force. By and large, the marriages of our grandfathers and grandmothers do not exist today.
As economic, social and cultural factors have changed the financial fabric of marriage, we have lost our understanding of the purpose of alimony. Around the country, some courts and commentators, and even a few legislatures, have reasoned that since women now work, alimony should be drastically curtailed or even abolished. Most states have not taken such a drastic step, and so alimony stumbles along, based upon habit and precedent as much as logic, as part of the modern divorce case. We have difficulty explaining its precise purpose; yet at some level we are reluctant to get rid of it. In short, commentators agree that the law of alimony is in the midst of an identity crisis.
As recently as 40 years ago, divorce and alimony were fairly well understood. Society expected that people would marry in their youth, and remain married until death. The courts and, indeed, the law as a whole were determined to make this view of marriage a reality. They did so by imposing upon every marriage an implied term of permanency. When a marriage really and truly broke down, that permanency provision had been breached. It was therefore the law’s duty to seek out and punish the guilty party.
Pursuant to this view, the first task of the court hearing a divorce case was to determine who was “guilty.” If no one was guilty, then there was no legitimate reason to end the marriage at all. The parties were told to leave the courtroom, still married, and live together and husband and wife. If both spouses were guilty, then they deserved each other, and the same result obtained.
Most commonly, the courts found one party alone to be guilty. If that party was the wife, she was cast out from the marriage and left to survive on her own, with no legally-required support at all. That was a harsh result, for women generally had little or no earning capacity. But the wife brought the problem on herself by her own misconduct, and the law had little sympathy for her position.
When the guilty party was the husband, punishment required something more forceful than mere inaction. That is where alimony entered the picture. Since women usually did not and often could not find employment, the innocent wife had a much higher standard of living while married to the husband than she could ever obtain on her own. The marriage had to end because of the husband’s misconduct, but the marriage equitably should continue, as the law believed all marriages were by nature intended to be permanent. Thus, where other factors were equal, the wife was entitled to the benefit of her bargain-the standard of living she enjoyed during the marriage. Since she could not reach that standard on her own, she needed a financial supplement, a weekly or monthly payment sufficient to permit her standard of living to remain unchanged by the divorce. That supplement was what the common law meant when it spoke of alimony.
In the middle part of the twentieth century, two social changes wrought havoc upon the policy basis behind the traditional rules of alimony. First, separation and divorce lost much of their unfavorable stigma. The reasons for this change are best examined by stating the proposition conversely: society became less attracted to the notion of universal and permanent marriage. Second, and equally importantly, women began moving into the workplace in increasing numbers. These rents in the social and financial fabric of marriage could not be ignored.
The first attempt at “reform” was the Uniform Marriage and Divorce Act. (North Carolina has not adopted this Act.) The alimony provision of the UMDA provided that alimony could be awarded only if party seeking support “lacks sufficient property to provide for his reasonable needs,” and “is unable to support himself through appropriate employment.” By stressing that property division is the primary method of support, this language suggests that support is not necessary where a reasonable amount of property is awarded to each spouse. (To stress the complete break with older notions of alimony, the UMDA renamed alimony “maintenance.”)
This “reform” freed the law of alimony from the outdated notion that alimony is punishment for marital misconduct. This “reform,” however, did not provide a clear rationale for alimony, and it suggested that “reasonable need” was never present if employment was available. By so doing, it changed the law applicable to that set of spouses most in need of alimony: dependent spouses in long marriages. The effect was to penalize dependent spouses who gave up career possibilities to stay home with children or otherwise benefit the family.
To make a bad situation even worse, state court decisions in the 1970s and 1980s tended to overestimate the employability of women. Judges appeared to reason that because women could in theory qualify for any job in the nation, any individual woman could therefore find employment at a reasonable salary within a short period of time. They held, in the language of the comment to the UMDA maintenance provision, that there was no need for alimony if spouse seeking support was able to obtain employment appropriate to his or her skills-regardless of the level of earnings available through that employment.
Because of these flaws, many states resisted the “reform” of the UMDA. Alimony legislation since the early 1990s has been mainly a response to widespread criticism of support awards during the previous two decades, especially after longer marriages. This legislation constitutes the “new wave” of alimony reform. By expanding the list of factors which the court must consider in awarding support, and by requiring the court to make findings explaining the reasoning behind its award, the new legislation encourages courts to base their support awards more upon the facts of the case and less upon broad assumptions. (To emphasize the new nature of alimony, these statutes generally eschew the term alimony, and substitute “spousal support.”)
Nowhere is this change more evident than in the increasing use of vocational experts to measure earning capacity. This change, more than any other, lies at the heart of new wave reform. Traditional alimony law was wrong to assume that women were close to unemployable; but the first “reform” in the law was equally wrong to assume that the theoretically unlimited employability of women translated into timely and sufficient employment of any specific former wife. The employability of any spouse, either husband or wife, is a question of fact and not law, and a question upon which experts can speak with much more authority than legislators or judges. By basing assessments of employability upon evidentiary facts and expert testimony, the courts can avoid the broad justified assumptions in both directions present in former case law. The vocational expert plays the same role in the law of spousal support as the valuation expert plays in the law of property division.
How Does North Carolina Fit Into This Scheme of Reform?
North Carolina enacted its current alimony statute in 1995 as part of the “new wave” of reform – recognizing that old alimony rules did not fit new economic realities, but at the same time acknowledging that some spouses remain economically dependent.
According to Nancy E. LeCroy writing in the North Carolina Law Review in 1996, in addition to making several alterations of the existing alimony statute, the new legislation repealed certain provisions of the former statute and replaced them with three new sections. The first, North Carolina General Statute section 50-16.1A, is the new definitional section of the alimony statute, which retains most of the old definitions with some alterations and additions. The second new provision is section 50- 16.2A, which creates an entirely new category, “post-separation support.” Under section 50-16.1A(4), “post-separation support” is defined as “spousal support to be paid until the earlier of either the date specified in the order of post-separation support, or an order awarding or denying alimony.” This new type of support effectively replaces the old “alimony pendente lite” that was used prior to the new legislation to achieve essentially the same result.
The third and final new provision, section 50-16.3A of the North Carolina General Statutes, significantly rewrote and revised the rules for the entitlement, amount, and duration of alimony awards.
The North Carolina statute does not recognize the concept popular in other states of “rehabilitative alimony,” that is, alimony to a spouse to allow him or her to get back on his or her feet. Rather, alimony may be awarded only to spouse who is actually substantially dependent upon supportive spouse or is substantially in need of support and/or the supporting spouse was at fault in break-up of marriage.
What Does the North Carolina Alimony Statute Provide?
Who can get alimony?
First, in order for the court to award alimony, the court must find one spouse is “dependent.” The statute provides:
The court shall award alimony to the dependent spouse upon a finding that one spouse is a dependent spouse, that the other spouse is a supporting spouse, and that an award of alimony is equitable after considering all relevant factors, including those set out in subsection (b) of this section.
To be “actually substantially dependent,” and thus entitled to alimony, a spouse must have an actual dependence on the other in order to maintain the standard of living to which he or she became accustomed during the last several years prior to the spouses’ separation. To be “substantially in need of support” means that the dependent spouse would be unable to maintain his or her accustomed standard of living established prior to separation without financial contribution from the other.
Not willing to completely break with tradition, the statute also provides that a dependent spouse who committed an “illicit sexual act” during the marriage shall not receive alimony, and a supporting spouse who committed an “illicit sexual act” during marriage shall pay alimony. (If both committed such an act, then the discretion of the court determines whether a spouse shall receive alimony; if such an act was condoned, it is though the act did not take place.) Conventional notions of “guilt” survive.
How long does alimony last?
The duration of the award may be for a specified or for an indefinite term.
What factors determine the duration and amount?
The statute lists sixteen factors for the court to consider:
(1) The marital misconduct of either of the spouses. Nothing herein shall prevent a court from considering incidents of post date-of-separation marital misconduct as corroborating evidence supporting other evidence that marital misconduct occurred during the marriage and prior to date of separation;
(2) The relative earnings and earning capacities of the spouses;
(3) The ages and the physical, mental, and emotional conditions of the spouses;
(4) The amount and sources of earned and unearned income of both spouses, including, but not limited to, earnings, dividends, and benefits such as medical, retirement, insurance, social security, or others;
(5) The duration of the marriage;
(6) The contribution by one spouse to the education, training, or increased earning power of the other spouse;
(7) The extent to which the earning power, expenses, or financial obligations of a spouse will be affected by reason of serving as the custodian of a minor child;
(8) The standard of living of the spouses established during the marriage;
(9) The relative education of the spouses and the time necessary to acquire sufficient education or training to enable the spouse seeking alimony to find employment to meet his or her reasonable economic needs;
(10) The relative assets and liabilities of the spouses and the relative debt service requirements of the spouses, including legal obligations of support;
(11) The property brought to the marriage by either spouse;
(12) The contribution of a spouse as homemaker;
(13) The relative needs of the spouses;
(14) The federal, State, and local tax ramifications of the alimony award;
(15) Any other factor relating to the economic circumstances of the parties that the court finds to be just and proper;
(16) The fact that income received by either party was previously considered by the court in determining the value of a marital or divisible asset in an equitable distribution of the parties’ marital or divisible property.
The list of factors contained in the statute is not meant to be exhaustive, since the overriding principle in cases determining the correctness of alimony is fairness to all parties. And though the statute does not state that any one factor is more important than any other, the recent case law stresses property, earnings, earning capacity, and the accustomed standard of living of parties. One recent case also stressed the role of caretaker to the marital children. At the least, the trial court must at least make findings sufficiently specific to indicate that the trial judge properly considered each of the factors for a determination of an alimony award,
Parties to a divorce must remember that the determination of alimony is a matter left to the wide discretion of the judge based on his or her notion of “fairness.” One recent case said that in determining amount of alimony, consideration must be given to the needs of the dependent spouse, but the estates and earnings of both spouses must be considered. “It is a question of fairness and justice to all parties.”
How are “earnings and earning capacities” figured?
The trial court must consider a party’s total income, undiminished by savings contributions. This includes investment income, severance pay, gifts, and any source of “funds” available for support.
The court must also consider a party’s “earning capacity.” This means the amount a person can earn using his or her best efforts to earn income commensurate with his or her skills and education. The purpose of this section is to prevent obligors from quitting his or her job and claiming an inability to pay, and to prevent obligees from likewise quitting his or her job and claiming dependence on that basis.
How do taxes figure into this?
Under federal and state income tax law, alimony is deductible by the payor spouse and reportable as income to the dependent spouse, provided that the following criteria are met: (1) the payments are in cash and not in kind; (2) the payments are made incident to divorce or to a separation agreement; (3) the parties have not designated the payments as non-alimony; (4) the parties are not living in the same household; and (5) the payor has no liability for payment after the death of the payee spouse. While the parties may privately agree that the tax deduction and the taxable income aspects of federal alimony law shall not apply, the parties may not by private stipulation create “alimony payments” that do not meet the five federal criteria and yet attempt to obtain the tax deduction for the payor.
How is alimony paid?
An award of alimony may include, in addition to a sum of money in lump sum and/or periodic payments, transfer of title or possession of personal property and an interest in property, a security interest in or possession of real property. Both periodic and lump sum payments may be for a limited, specified term. In fixing the amount of alimony, the court must consider all the factors enumerated in G.S. 50-16.5: “Alimony shall be in such amount as the circumstances render necessary, having due regard to the estates, earnings, earning capacity, condition, accustomed standard of living of the parties, and other facts of the particular case.”
When does alimony terminate?
The court can order alimony for a definite period, thereby providing a definite termination date. Certain events will also cause alimony to terminate. Chief among these are the remarriage of the dependent spouse or the continued cohabitation of the dependent spouse with a person to such a degree that the supported spouse’s expenses are lessened, and the death of either party.
An important exception exists to the rule that alimony terminates on the remarriage of the dependent spouse. Sometimes parties enter into a global settlement agreement, fixing their property rights and spousal support rights. When the provisions of the property division and the alimony are “integrated,” that is dependent on each other, then the alimony provision cannot be terminated on remarriage. For example, a wife might give up a valuable property right in exchange for the stream of income that alimony provides. That stream of income cannot then be terminated on remarriage, because it was a bargained for right.
Can alimony be modified?
Alimony that is not lump-sum, that is for a definite amount for a definite period, can be modified upon a showing of a “substantial change in circumstances.” This means a change in circumstances from those that existed at the time of the original order to the time of the petition for a modification. This would include a change in income or assets of either party, a change in earning capacity (e.g., a new graduate degree), or an unanticipated change in expenses. (A dependent spouse cannot, however, deliberately increase expenses and run up bills in an effort to increase alimony.)
Alimony that is part of an integrated property settlement agreement cannot be modified, because it is a bargained for right.
Can the parties agree on alimony instead of having the court decide it?
The law encourages parties to come to an agreement regarding their rights and obligations instead of leaving that to the court. Thus, the parties can agree to all the possible terms of alimony: the right to receive it, for how long, for how much, when it can be modified, when it terminates.
When parties decide to fix the alimony obligation by agreement, the agreement must be untainted by fraud, must be in all respects fair, reasonable, and just, and must have been entered into without coercion or the exercise of undue influence, and with full knowledge of all the circumstances, conditions, and rights of the contracting parties.
How are alimony orders enforced?
North Carolina General Statutes § 50-16.7 provides that alimony can be paid by a lump sum payment, periodic payments, income withholding, or by transfer of title or possession of personal property or any interest therein, or a security interest in or possession of real property, as the court may order in its discretion.
The court may require the supporting spouse to secure the payment of alimony or post-separation support so ordered by means of a bond, mortgage, or deed of trust, or any other means ordinarily used to secure an obligation to pay money or transfer property, or by requiring the supporting spouse to execute an assignment of wages, salary, or other income due or to become due.
The remedies of arrest and bail, attachment and garnishment, injunction, receivership, criminal contempt, civil contempt, execution, income withholding, and remedies available to creditors are available in actions for alimony. A judgment for alimony, however, is not be a lien against real property unless the judgment expressly so provides, sets out the amount of the lien in a sum certain, and adequately describes the real property affected; but past-due periodic payments may by motion in the cause or by a separate action be reduced to judgment which shall be a lien as other judgments.
The revision of the North Carolina statute in 1995 was step towards the UMDA’s idea of non-support for those who can support themselves. The North Carolina statute, however, retains traditional notions of fault and providing for dependent spouses after long marriages. With these principles in mind, it probably far better for parties to negotiate property and alimony awards than to leave it to the wide discretion of the judge.