An award of alimony is not necessarily a permanent obligation or a guarantee of future income.  Instead, under Pennsylvania’s statues, it can be ended or modified whenever:

• A substantial and continuing change in circumstance occurs; or

• The recipient marries or “cohabits” with a member of the opposite sex; or

• The recipient or the payor dies.

The death of the spouse paying alimony or the spouse receiving alimony are obvious end points for alimony.  So is re-marriage.  Changed circumstances and “cohabitation,” however, are not so easy to prove or disprove.

To end or modify an award of alimony when circumstances change or cohabitation occurs, the courts look at each specific situation.  One of the most common circumstances for a termination or change in the amount of alimony is a change in the employment or earning capacity of the paying or the receiving spouse.  For example, if the receiving spouse alimony has an accident or is diagnosed with a medical condition that severely limits their ability to support themselves, courts will consider whether the amount of alimony should be increased to keep the receiving spouse supported at the same standard of living.  On the other hand, if the paying spouse gets a significantly better job and the original award of alimony and marital property was not enough to provide the receiving spouse with the standard of living they had during the marriage, the courts may increase the amount of alimony.  Similarly, if the paying spouse suffers a significant and permanent loss of employment or a disabling medical condition occurs, then the court may decrease the amount of alimony.  There are many other changes in circumstances that could cause the termination, reduction, or increase in the amount of alimony.  The main factor for a court is whether change in circumstances is substantial and continuing. 

Pennsylvania law does address one specific kind of change in circumstances: “cohabitation” with a member of the opposite sex, who is not a family relative.  A family relative is someone, who is within the degrees of “consanguinity” of the recipient ex-spouse.  Consanguinity simply means the same blood.  For Pennsylvania, relatives from parents, to children, siblings, first cousins, their children, grandchildren, nieces, nephews, aunts, and uncles are all considered within your consanguinity.  If the receiving spouse lives with one of these family members during or after the divorce, the obligation to pay alimony and the ability to receive alimony will continue. 

However, when they move in with someone, who is not a relative and they live together as spouses would, then the obligation to pay alimony and the ability to receive alimony ends.  Cohabitation is defined as “financial, social, and sexual interdependence.”  Proving or disproving a claim that an ex-spouse is cohabiting is the challenge. 

Courts look at the total circumstances to decide whether someone is cohabiting.  Some of the significant facts showing this interdependence are: whether the ex-spouse and the paramour share the same home and bedroom; whether they contribute together to the household expenses, such as rent or mortgage payments, utilities, groceries, car payments, or insurance; and, whether they have joint bank or credit card accounts.  Other facts include how they present themselves to the world – as partners or merely housemates.  There is no limit to the relevant facts of cohabitation, except the investigative power of the parties and their attorneys.

In the end, it does not matter if the spouse co-habits before, during, or after the divorce proceedings.  Alimony will terminate whenever cohabitation occurs, even if it starts and ends during the divorce proceedings.

Your agreement to pay or receive alimony will override Pennsylvania’s statues.  In other words, you and your spouse can agree that neither death, re-marriage, change of circumstances, or cohabitation will end or change the payment of alimony.  You can also agree that particular changes, such as a significant raise, could reduce the amount of alimony on some percentage basis.  The key to any award or agreement for alimony is planning for your future.  If you are the paying spouse, then terminating or reducing alimony by agreement is in your best interests.  If you are the receiving spouse, making sure that alimony will continue to be paid regardless of events in the life of the paying spouse is vitally important.  Receiving spouses can could protect their future alimony payments by requiring the paying spouse to maintain life or disability insurance for their benefit.  A good attorney will help you to find a solution that fits your divorce or advocate for you if you cannot resolve the claim for alimony by agreement.

If you think that your circumstances justify a change in alimony or you have any questions about alimony, please contact Gregory J. Spadea, Esquire, at the Law Offices of Spadea & Associates for a free 20-minute consultation at 610-521-0604.

When divorce occurs, one ex-spouse is often obligated to make continuing payments to the other spouse. However for the payments to be deducted by the payer, they must meet the tax-law definition of alimony. For any particular payment to qualify as deductible alimony for federal income tax purposes and meet the tax law definition of alimony, all the following requirements must be met:
1. The payment must be made pursuant to a written divorce decree or separation agreement such as a temporary support order. Note that payments made in advance of signing a written divorce or separation agreement or before the effective date of a court order or decree cannot be deductible alimony. Such payments are considered voluntary and are therefore nondeductible. The same is true for payment of amounts in excess of what is required under a written divorce decree or separation agreement.

2. The payment must be to or on behalf of a spouse or ex-spouse. Therefore, Payments to third parties, such as attorneys and mortgage companies, are okay if made on behalf of a spouse or ex-spouse and pursuant to a divorce decree or separation agreement.

3. The divorce decree or separation agreement must state the payments are alimony.

4. After divorce or legal separation (meaning the couple is considered divorced for federal income tax purposes), the ex-spouses cannot live in the same household or file a joint return for the year they separated or thereafter.

5. The payment must be made in cash or cash equivalent such as check or money order.

6. The payment cannot be fixed or deemed child support in the divorce decree.

Fixed child support simply refers to amounts designated as such in the divorce or separation agreement,

so it’s easy to identify. Payments are considered to be deemed child support if they are terminated or reduced by any of the following so-called contingencies relating to a child:

a. Attaining the age 18, or the local age of majority.
b. Death.
c. Marriage.
d. Completion of schooling.
e. Leaving the ex-spouse’s household.
f. Attaining a specified income level.

7. The payer’s return is required to include the recipient’s social security number.

8. The obligation to make payments (other than payment of delinquent amounts) must cease if the recipient party dies. If the divorce decree is unclear about whether or not payments must continue, state law controls. If under state law, the payer must continue to make payments after the recipient’s death, the payments cannot be alimony. Therefore, to avoid problems, the divorce decree should always explicitly stipulate whether a payment obligation continues to exist after the death of the recipient party. Failing this test is probably the most common cause for lost alimony deductions.

9. There is also an IRS rule that states if alimony payments decrease by more than
$15,000 per year between years 1 and 2, or years 2 and 3, then part of the payments will not qualify for a tax deduction to the payor (and hence will not be taxable to the payee.) In other words, if alimony payments total more than $15,000 per year then they must last more than one year and cannot be reduced too quickly. The reason for this is because the IRS sees this as a property settlement, not alimony. Because of this rule replacing all monthly payments with a lump sum “alimony” payment that is paid all in one year will often cause a trigger of this recapture rule, since alimony will go down to $0 in year 2.

Keep in mind the Tax Cuts Jobs Act repealed the deduction for alimony paid and the corresponding inclusion of alimony in income by the recipient. The provision is effective for any divorce or separation agreement executed after December 31, 2018, or for any divorce or separation agreement executed on or before December 31, 2018, and modified after that date, if the modification expressly provides that the amendments made by this provision apply to such modification. Thus, alimony paid under a separation agreement entered into prior to the effective date is generally grandfathered.

It is very important to consult a tax attorney like Gregory J. Spadea before signing the marital settlement agreement. You can reach him at the Law Offices of Spadea & Associates, LLC in Ridley Park at 610-521-0604.