Prenups aren’t just for the Beys and Jays of the world: Alimony Edition

Feb 12, 2021 | Finances, Prenuptial Agreements, Second Marriages

There you are, all decked out in your finest Lululemon, in your city-view apartment, drinking your third espresso, and getting super excited about the prenuptial agreement (prenup) you’ve always wanted since you were little.

You’ve pinned all your inspirations and even organized into sub-boards for different categories for the perfect prenup signing day. You’ve even tagged friends and asked for second opinions on all of the details, like:

What will you and your fiancé wear on your notarizing day?

Should you and yours do a dog clause or a health insurance clause?

Will you do a leg flick when your partner reaches in to sign and say “I do?”

Will you go to dinner directly after to celebrate your “fairness and equality in the eyes of the law?”

There’s so much to LOOK FORWARD TO!

Trust us. We get it.

All kidding aside – at this point in your engagement, you’re probably starting to feel the heat to actually get on with this prenup thing. As the responsible well-informed modern adult that you are, you’ve come to terms with the fact that prenups are not just for the Bey and Jays, Ellen and Portias, or the Duke of Hastings and Daphne Bridgertons of the world.

So it’s time to actually dig your heels in and come to terms with one of the most revised and noted clauses related to prenups: alimony.

What is alimony?

Who pays alimony if we get a divorce?

I make tons of money – does that mean I’ll potentially pay alimony in the event of divorce?

What about infidelity – is my less wealthy spouse entitled to alimony even if he/she cheats on me?

With so much at stake, it’s important to consider and decide if alimony will be waived or enforced, what potential outcomes it could have for you and your partner, and how to make sure that there are no losers in the case that alimony is to come true for you and yours.

What is alimony?

Alimony (pronounced “all my money”) is a payment awarded to a less wealthier spouse upon divorce. This payment originated a very long time ago (back to the Babylonian Code of Hammurabi to be exact for all of our anxious history buffs who need concrete answers) with the intention to return the dowry given upon marriage, award child custody to the ex-wife, and give an allowance to her and the children to sustain a livable way of life post divorce.

If there were not any children within the marriage, the wife would still receive payment in order to maintain some sort of a livable way of life as it was not expected of women to work (and instead stay home for domestic duties like childcare and homemaking).

Fast-forward to modern day, where alimony is still awarded post-divorce and used metaphorically in the same way as it always has been. The obvious major differences now are that:

????  Same sex marriages mean it’s no longer a gender decision on who pays, but instead,                        based on the wealthier spouse vs. the less wealthy spouse

????  Alimony can be waived by both parties or the less wealthy party if less wealthy party agrees in writing to waive

????  There are state guidelines as to how the alimony is calculated to protect the wealthier spouse from being used as a means of income post divorce indefinitely

When drafting your prenup with your partner, really zoom out for a second and ask yourselves “is this something we both believe in?”

Though alimony is traditional and still common practice, it’s just as common for couples to decide together that alimony may not make sense for couples who make relatively same wages.

Perhaps the two of you both make just enough to get by? Does alimony make sense for one of you to compensate the other for a period of time, even if it’s a rough cut percentage that may or may not make an influence in the lifestyle of the “less wealthier” spouse?

Or perhaps the two of you do have a generous wage gap and alimony is not too archaic to be considered.

The most important thing to consider when making this decision is how alimony is calculated and why it could save you (or your partner) from a major financial loss in the future.

How alimony is calculated,  very generally speaking

A baseline fact to remember when discussing alimony is that prenups (in general) are regulated and enforced per state guidelines and caselaw. This means that a Texas couple’s prenup may be deemed fair and enforceable under Texas’ guidelines alone. The rules and requirements for an enforceable prenup in the lone star state may not be the same as the rules for an enforceable prenup in another state (and so on and so forth).

This rule of thumb applies true to alimony as well.

Regardless of the state though, generally speaking, there are two ways that alimony is calculated.

  1. Are there children in the marriage? (Then child support may be calculated first or in conjunction with alimony, and depending on the latter, there is often a cap on alimony amount awarded- again, this depends on the state and we are keeping it general here)
  2. Er nah? (Alimony may be calculated based on state guidelines)

The difference between these scenarios makes a huge difference. Here’s why:

Alimony is most often calculated AFTER child support is calculated. Not always, but often. So if there are children in the marriage, their needs are accompanied for first (in a separate venture as child support cannot be included in a prenup).

Here’s an example:

Jim Halpert a sales rep (making names up out of thin air here here) makes $500,000 a year (ballin!) and has two kids with Pam Beesly, an administrative receptionist, (again, just making up names out of thin air), who makes roughly $35,000 a year. They worked together at a small paper company (let’s just call it, “Dunder Mifflin” in Scranton, PA or something) and they fell in love with each other and lived happily ever after – for a while.

Now, let’s just pretend that happy Jim and Pam have decided to get a divorce (THIS IS ALL PRETEND OK, DON’T FREAK OUT) and since they have kids, the state of RH (we know this isn’t a real state) says that “child support is calculated up to $250k, so alimony will be decided with the remaining balance of the yearly income and capped at a percentage based on the duration of the marriage (duration, aka, how long Jim and Pam were married).

Though Jim is makin’ it rain with $500k per year, the maximum amount considered for child support is $250k, and alimony will be decided with the remaining $250k. Make sense?

For those of you thinking: “Ok cool, that’s a lot of money for a less wealthier spouse and kids, but what about someone who doesn’t make that much money? Like, isn’t it going to be really hard for a not so ‘ballin’ spouse to pay an even more ‘not so ballin’ spouse?

The answer is: absolutely. For clarity, here’s another scenario to consider:

Rachel Green and Ross Geller from the made up state of RH also (again, totally fictitious people that we just babbled out) have been friends for years. They have met through close friends and go by the celebrity couple name “Roshcel.” Rachel, an ambitious fashion executive with plans to take over fashion country in Paris, makes approximately $80,000 a year, while Ross is a paleontologist and makes roughly the same at $65,000 a year.

Even though the two were seriously the cutest couple ever known to mankind, after being married for five years, Rachel “needed a break from Ross” (again totally made up, so just hang in there NO FREAKING OUT), and now they’re ready to get a divorce.

Since there are no kids involved in this marriage, and the two of them did not sign a prenup, then alimony *could* be awarded to Ross (the less wealthy spouse by $15,000/year salary) if the judge deems that necessary, and would come to this conclusion based on the state of RH’s alimony statute. Rachel will have to pay a percentage of the difference incomes for an a percentage of X years (the duration that the two of them were married) (again this depends on the state’s individual statute).

For visual calculators:

???? Amount = [% of difference of incomes (again, in this case we are talking $15k) decided by state guidelines]

????Alimony payment timeline = Amount of time it will be paid based on fictional state’s guidelines [(5 years being how long they were married), and state law will decide the percentage amount and for how long the payments will last]

Referring back to our original “zoom out” question: based on your income situations, and what you plan to do during your marriage, what makes sense for you and your partner?

Do the two of you have a similar situation like Jim and Pam where the income gap is significant and can’t be ignored?

Or are you two more like Rachel and Ross, where your incomes are relatively similar, but perhaps could fluctuate as your marriage grows and your career(s) take off?

Though these two examples have different statues, the one thing they both need to address is whether alimony will or will not be a part of their unforeseeable divorce. Put your thoughts and ideas into writing with a prenup. It will set forth your future in the event that the unforeseeable event of divorce were to occur. Setting expectations early and in stone means creating peace of mind and assurance that no matter what happens, you’ve got it all figured out.

Keep it fair

We get it. Alimony is scary in the fact that it can potentially mean Venmo’ing a less wealthy spouse monthly in the event that divorce occurs (regardless of what triggered this event).

Ask yourselves (you and your partner) are there any guidelines that would deem alimony unfair vs. fair?

For instance, if the less wealthy spouse were to cheat on wealthier spouse, is it fair for wealthier spouse to have to pay less wealthier spouse even if they were the reason that the marriage is dissolving?

Decide these things in a prenup. What would make alimony enforceable between you two?

Whatever you decide, make sure it is fair between the two of you. If one spouse decides to leave their job for the marriage (for duties such as childcare, recovery from an accident and can’t work, unemployment, etc.) how will alimony be awarded to a spouse (in particular for a spouse who gave up income).

Make sure that there are no losers in this game because you two are a couple. You went into this marriage with love and respect for each other, and it’s important to keep that momentum and utilize it to protect your futures (even if it means your futures don’t end up together forever).

No matter what you two decide, document it with a prenup. You’re setting yourself up for success regardless of the outcome.

HelloPrenup is specifically designed to give you flexibility with alimony and come to an agreement that makes sense for both of you. Regardless of your needs and expectations, we provide you with your prenup that is custom tailored to both of your needs and keeps your agreement fair and equal within your state’s guidelines. We even provide you with personalized clauses (like dog clauses, health insurance clauses, confidentiality clauses, etc.) so your prenup is truly yours and not some boilerplate template populated by god-knows-who on the interwebs.

Need help getting started? Send us a message or DM us on social. We are always here. Let us know how we can help.

XO,HP ????

 

This blog is for informational purposes only. HelloPrenup, LLC (“HelloPrenup”) makes no representations as to the accuracy or completeness of any information on this site. HelloPrenup will not be liable for any errors or omissions in this information nor for the availability of this information. These terms and conditions of use are subject to change at any time and without notice. HelloPrenup provides a platform for legal self-help. The information provided by HelloPrenup along with the content on our website related to legal matters (“Information”) is provided for your private use and does not constitute legal advice. We do not review any information you provide us for legal accuracy or sufficiency, draw legal conclusions, provide opinions about your selection of forms, or apply the law to the facts of your situation. If you need legal advice for a specific problem, you should consult with a licensed attorney. Neither HelloPrenup nor any information provided by Hello Prenup is a substitute for legal advice from a qualified attorney licensed to practice in an appropriate jurisdiction.

0 Comments

Submit a Comment

Your email address will not be published.

Recent Posts