What Are the Sources of Alimony in Alabama?

Alabama courts have consistently held that determining the appropriate amount of alimony to order in divorce is a three-step process:

  1. deciding whether the recipient spouse needs it;
  2. deciding whether the paying spouse can afford to pay it;
  3. evaluating any equitable principles that should cause it to be increased or decreased.

When it comes to that middle factor, whether the paying spouse can afford to pay alimony, the courts have consistently disregarded retirement plans from which the paying spouse is not already receiving benefits, even if the paying spouse has reached normal retirement age and is simply choosing not to receive benefits.

This is and always has been regrettable and weak policy. If a person has every right to receive a retirement benefit without actuarial adjustment and is simply letting the money sit there as a financial technique, the retirement account has become analogous to a savings account. To disregard it is to engage in a fiction that enables paying spouses to live lean just long enough to get divorced and then later to live it up while their divorced spouse suffers. Nevertheless, the principle is what it is.

The current case, Meehan v Meehan, Case No. 2150734 (Ala. Civ. App. May 12, 2017), gives us an excellent illustration of what does and does not count as a valid source for the payment of alimony. The husband had built houses for a living and was apparently quite good at it, earning $231,000 during 2013. But he had recently retired, and his income dropped to $65,000.

In connection with his retirement, the husband had created a revocable trust in his name as a planning tool “for the purpose of ensuring that all five of his children were taken care of after his death.” It’s not clear how much money the husband deposited in this trust. The husband had about $860,000 in two retirement accounts but was not withdrawing money from them at the time of trial.

The trial court ordered the husband to pay the wife $5,000 per month in alimony for five years and $2,500 after that until her death, remarriage, or cohabitation. This even though the husband claimed his income was only $4,800 per month. The husband appealed.

The appeals court accepted the husband’s argument that his retirement plans were off limits, but it rejected his argument that the revocable trust was also unavailable. In doing so, it mentioned that the husband had withdrawn $50,000 from one of the accounts in the trust after setting it up.

“The husband testified that he had used those funds to pay for taxes, insurance, and maintenance on [marital property] . . . Therefore, the trial court could have found that the husband regularly used the funds from the long-term-care account and that those funds were a source of income for the purpose of determining the award of periodic alimony.”

The appeals court also mentioned the trial court’s stated observation in open court that it doubted the husband’s version of the husband’s financial situation.

 

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