Alimony is a spousal support that is tax deductible to the person who makes the payment and taxable income to the person who receives the payment.

In Maryland, the court's determination of a spouse's entitlement to alimony is based on the financial need of the person requesting alimony and the ability of the person who is paying. While there are clear trends and established criteria, an alimony award remains in the sole discretion of the trial judge. The courts have consistently held that the requirement that a person pay alimony is not to be used as punishment for offensive behavior, or as a "life-time" pension for the recipient.

The court has two choices in awarding alimony:

1. Alimony for a limited period of time. Sometimes called "Rehabilitative Alimony"- The purpose of rehabilitative alimony is to enable a spouse to obtain the education, training or entry into a new job which will ultimately enable the spouse to become self-supporting.
2. Indefinite Alimony is a "permanent" payment which lasts for the joint lives of the Husband and Wife, or until the spouse receiving the alimony remarries. Indefinite alimony is subject to modification if either party can show changed circumstances since the original award. Rehabilitative alimony is favored, but the law provides for an award of indefinite alimony where even after the financially dependent spouse obtains employment, the relative income and standards of living of the parties will be so disparate that it would be inequitable. Indefinite alimony is awarded when due to age illness, infirmity or disability, the party seeking indefinite alimony cannot reasonably be expected to make substantial progress toward becoming self-supporting

or

even after the party seeking alimony will have made as much progress toward becoming self-supporting as can reasonably be expected, the respective standards of living of the parties will be unconscionably disparate.

When the court considers whether or not to grant rehabilitative or indefinite alimony, it will consider the following

1. the ability of the person seeking alimony to be wholly or partly self-supporting;
2. the time necessary for party seeking alimony to gain sufficient education or training to enable that party to find suitable employment;
3. the standard of living parties established during their marriage
4. the duration of the maniage;
5. the contributions, monetary and nonmonetary, of each party to the well being of the family;
6. the circumstances that contributed to the estrangement of the parties;
7. the age of each spouse;
8. the physical and mental health and condition of each party;
9. the ability of the party from whom alimony is sought to meet that party's needs while meeting the needs of the party seeking alimony;
10. any agreement between the parties;
11. the financial needs and financial resources of each party including

(i) all income and assets, including property that does not produce income;
(ii) any award made under my the court such as the use and possession of the family home or a monetary award
(iii) the nature and amount of the financial obligations of each party
(iv) right of each party to receive retirement benefits
(v) the effect on medical assistance entitlement.

The Court cannot award a "cost of living" increase in alimony. The Courts are generally aware that the party receiving the alimony will have to pay taxes on the monies received, and that the person making the payment will have a deduction. The parties can agree to a cost of living increase or other changes in the amount and duration of the payment, and the court will adopt that agreement; but, if the parties do not agree, then the court will only look at the need and ability to pay at the time that the case comes before the court for hearing.

There are certain tax planning advantages to attempting to agree to the payment of alimony as part of an overall property settlement. It is important that each client review the tax consequences of any proposed payment with a competent tax advisor. While this office attempts to be informed about the tax issues affecting clients, we are not tax experts and do not prepare client tax returns. Tax advisors can provide substantial assistance in identifying the most tax beneficial way to structure payments between spouses so as to maximize the monies available to the family.

The court may during or at the end of divorce proceedings, allocate between the parties any additional costs of providing hospital, medical or surgical benefits under a group insurance contract or require continuation or reinstatement of such.