Page 13

Birmingham Bar Association Bulletin

Alimony vant evidence and a number of equitable factors identified in Subsection (d), a few of which are the party’s own individual assets, martial property being received or awarded to the party, liabilities following the distribution of marital property, the party’s wage-earning capacity, taking into account age, health, education and work experience of the party, as well as others. Section 3-2-57 (b) (1) provides that “unless the court expressly finds that rehabilitative alimony is not feasible, the court shall award rehabilitative alimony to the party for a limited duration, not to exceed five years, absent extraordinary circumstances, of an amount to enable the party to acquire the ability to preserve, to the extent possible, the economic status quo of the parties as it existed during the marriage.” When rehabilitation is not feasible, good faith attempts to rehabilitate fail, or good faith rehabilitation enables a party to partially acquire the ability to preserve the economic status quo of the parties during the marriage, §30-2-57 (b)(2) provides that the court shall award the party periodic installments of alimony for a duration and amount to allow the party to preserve the economic status quo of the parties. Moreover, §30-2-57 (c) requires a court to reserve the issue of alimony in certain situations. When a party has demonstrated a lack of means to acquire ability to preserve the status quo of the parties during the marriage; however, the other party has a present inability to supply those means, the court “shall” reserve jurisdiction to award rehabilitative or periodic alimony. If there is no award or reservation of alimony, the court shall permanently lose jurisdiction to subsequently make an award of rehabilitative or periodic alimony. One very significant provision can be found in §30-2-57 (g). There has never been a statutory limit on the award of periodic alimony until now. This Subsection states that unless the court makes a finding that a deviation from time limits is equitably required, a person shall not be eligible for periodic alimony for a period not to exceed the length of the marriage as of the filing of the complaint. The only exception to this limitation is that if the parties have been married for twenty (20) years or longer, there shall be no time limit as to his or her eligibility. In addition to these state statues, 2017 also gave us a very significant change in periodic alimony as it pertains to the income tax effect of periodic alimony. The inclusion of alimony for the purposes of federal income taxation can be found at 26 U.S.C. §71. Payments have been deductible from income by the payor under I.R.C. §215 and includable in income of the payee under I.R.C. §71. These sections were repealed by the recent tax bill submitted to and subsequently signed by President Trump in late December 2017. The effect of the repeal is really straight forward. If any divorce or separation instrument executed after December 31, 2018 includes provisions for alimony, the alimony will not be deductible by the payor or taxable to the recipient. The bill also provides that this change also applies to “any divorce or separation instrument executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.” In other words, with existing agreements that are modified after December 31, 2018, the parties may expressly choose to adopt this new rule. If they do not, alimony agreements entered into before December 31, 2018 but modified after will continue to be deductible by the payor and taxable to the recipient. The applicable section for state income taxation is §40-18-14 Code of Alabama (1975), wherein it specifically states in subsection (1) that the term “gross income as used herein also includes alimony and separate maintenance payments to the extent they are includable in gross income for federal income tax purposes under 26 U.S.C. §71. Therefore, with the recent repeal of the provisions of the Internal Revenue Code, state law will also be subject to the proceeding directives. These state and federal changes are significant. The state statutes apply to any action filed on or after January 1, 2018. The federal income tax changes apply to judgments/ orders signed after December 31, 2018. G Rick Fernambucq, Contributor Birmingham Bar Bulletin/ Spring 2018 13


Birmingham Bar Association Bulletin
To see the actual publication please follow the link above