Month: September 2023

Forgive and Forget: Condonation in North Carolina

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Judges have a good deal of leeway in deciding what to do about marital fault and defenses when they are proven in court. Traditional sex roles are rapidly changing in some ways but not in others, and judges react differently to the behavior that constitutes marital fault. Some think fault is very important, but others do not. Marital fault relates to alimony, not equitable distribution, which is the division of marital property.

What Are the Marital Fault Grounds?

A spouse commits marital fault if he or she abandons the family, commits adultery, “maliciously turns the other out of doors” or “by cruel or barbarous treatment endangers the life of the other.” If a spouse “becomes an excessive user of alcohol or drugs so as to render the condition of the other spouse intolerable and the life of that spouse burdensome” that is also marital fault. The last ground of marital fault, known as indignities, is a catchall for bad behavior generally. It occurs when a spouse “offers such indignities to the person of the other as to render his or her condition intolerable and life burdensome.” NC Gen. Stat. §50-7.

Consequences of Marital Fault

Marital fault is not a requirement for alimony. But if someone commits marital fault, the judge can financially penalize the person receiving or paying support. In cases of adultery, the financially-dependent spouse who cheated cannot receive alimony, and the supporting spouse who is the bread-winner must pay alimony if he or she cheats. The policy is based on the historical tradition of an innocent dependent spouse who was left financially stranded by the other, who left for greener pastures with another romantic interest, for example.

What is a Defense to Marital Fault?

A defense means that you can be shielded from the consequences the marital fault that you committed. A defense excuses the bad behavior (i.e., the marital fault) and gives the spouse at fault a “clean slate” legally. From our example above, if you are an adulterous supporting spouse without the legal defense of condonation, you are automatically required to pay alimony. The only remaining questions at the point is the amount of alimony to be paid, and for how long.

The Defense of Condonation

Condonation, condoning bad behavior, is as a defense to a spouse’s marital fault. Black’s Law Dictionary defines condonation as “conditional remission or forgiveness, by one of the married parties. . . the condition being that the offense shall not be repeated.” If you forgive your spouse for having an affair, for example, you do so on the condition that he or she never cheat again. Critics of condonation argue that it discourages reconciliation because the victim of the fault can be penalized for trying to save the relationship. On the other hand, the policy makes sense when you consider a 25-year-marriage, and the prospect of arguing about an affair that happened 21 years ago. Although the law delves into the reason for the separation, it does not delve into the marriage.

How Do You Prove Condonation?

To have the benefit of the forgiveness, the condonation defense, the spouse at fault must first prove that the innocent spouse knew that the misconduct occurred. It isn’t enough that he or she suspected the misconduct happened. The second requirement of condonation is to show that the innocent spouse voluntarily chooses to continue or resume the marital relationship. This is shown in one of two ways. A spouse can directly communicate forgiveness, such as writing a letter or sending an e-mail. Or, forgiveness can be shown when the innocent spouse voluntary engages in sexual intercourse after knowing about the marital fault. But isolated acts of sexual intercourse are not enough to give a spouse the defense of condonation.

Recent Condonation Case

On December 18, 2018, the NC Court of Appeals made a ruling about marital fault and defenses to it in Gilmartin v. Gilmartin. The husband had an addiction to pornography and communicated with women online. Multiple times, he denied doing these things. When his wife discovered that he was in fact doing these things again, he admitted doing them and promised her that he would go to counseling. He continued the behavior and stopped going to counseling. When he argued that she had condoned his behavior, the Court of Appeals agreed with the trial court, that she did not condone his “continuing ‘use of pornography and online sexual solicitations’ because Husband ‘deceiv[ed]’ her into believing he had ceased the behavior.” Without knowing about the behavior, she couldn’t forgive him for it.

Can We Close the Courtroom When I Testify?

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Nobody enjoys court, especially when it involves testifying about personal things such as infidelity in an alimony case or allegations of substance abuse in a child custody trial. Do you have the right to ask the judge to clear the courtroom, closing the trial to everyone except the parties to the lawsuit or their witnesses? Probably not. It is quite rare for a judge in NC to have a proceeding in “closed court.”

The General Rule

In North Carolina family law cases, the general rule is that trials are conducted in “open court.” This means all members of the public have the right to be present in the courtroom during trials, subject to safety concerns such as exceeding the fire marshal’s maximum occupancy in the courtroom. Article 1, Sec. 18 of the Constitution of North Carolina clearly states “All courts shall be open. . .” While people might think of the press being allowed to be present in the courtroom during trials, the right also applies to family law trials. In NC courts, you generally don’t have a right to privacy.

Exceptions to the Rule?

In France v. France, 209 NC App. 406 (2011), the NC Court of Appeals rejected the argument that there was a constitutional right to privacy in custody cases because children are involved. The Court ruled that the constitutional rights of the public to open court proceedings outweighed any privacy rights of the parties. The Court made some exceptions to the general rule, mainly for children in  adoption proceedings or “where a child is testifying about alleged abuse that child has suffered. . .” which would certainly involve testimony of rape, molestation or incest. France at page 417. When you file a family law case such as child custody or alimony, the lawsuit is generated by a document called a complaint, which is filed at the court-house. The on-going documents that are filed in the case, such as counterclaims or motions, are also public record.

Why Does Court Take So Long?

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It’s no secret that cases take a long time to go through court, especially if you are the person who is asking the court to do something, like order support to be paid. In a nutshell, there are too few judges, a problem that is compounded by the scheduling of judges and attorneys. Our state is burdened with many more cases than available judges to hear them. There are ongoing cuts in the judicial system’s budget. Beyond that, family law cases such as child custody, child support, alimony and equitable distribution take time to prepare. There are numerous “housekeeping” events scheduled around the actual cases, requiring thirty minutes or an hour.

Only a small number of cases actually reach the courtroom, but the cases that do can take a long time to be presented.  A custody case or equitable distribution case may take a week or longer in court if there are numerous witness or exhibits.  Real life also slows down the process, such as someone being ill that day or the air conditioning in the courthouse breaking down in July.

Cases that settle “on the courthouse steps” at the last-minute might be scheduled for three days, all of which may be wasted if there aren’t any cases that can be heard quickly with last-minute notice.  Even if a client can get there on short notice, trying to fill the court time left available is hard because of judge and attorney schedules. Certain judges have to hear certain cases, and some cases require a judge from another county because a litigant is an attorney or courthouse employee or regular witness such as a social worker or police officer. Emergency cases in family court, such as emergency custody, require the schedules to be further adjusted.

All About Adultery in North Carolina (Part 2 of 2)

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Duty of Third Party to Warn Spouse of STD

If a husband or wife passes a sexually transmitted disease (STD) to the other spouse as a result of his or her adultery, the innocent spouse may with a civil suit for financial damages against the man or woman who passed the STD to the husband or wife. To successfully prove a claim for negligent infliction of an STD, the victim spouse must prove the source of the STD, and that the infected person knew or should have known he or she was infected with venereal disease. Because it is foreseeable that the two spouses would have intercourse, the infected person has a legal duty to abstain from sexual contact, or at least a legal duty to warn the innocent spouse.

Criminal Conversation

The term criminal conversation (CC) is somewhat misleading. Although it sounds like a crime, it is not. Instead, CC is a civil lawsuit for money damages. A married person may file a claim for CC against the third-party who had sexual intercourse with his or her spouse. CC holds that third-party financially accountable to the husband or wife for interference with his or her marital conjugal relationship, which is protected by law. Although the unfaithful spouse is not on the hook for financial damages, he or she generally testifies in a jury trial about the acts that took place. Alienation of affections is a completely different lawsuit that addresses alienating or stealing the spouse, regardless of whether there was sexual intercourse. CC is exclusively based on sexual intercourse.

Divorce from Bed and Board

North Carolina recognizes a fault-based claim called divorce from bed and board (DBB), and one of the grounds for it is adultery. A decree for a DBB does not a “divorce” the husband and wife allowing them to remarry. It is a court decree that declares the spouses to be officially separated. This keeps a spouse from committing abandonment if he or she wants to separate. Instead, if a spouse successfully obtains a DBB, the spouse who committed adultery loses spousal rights to certain inheritance rights, including intestate succession, which is the right to inherit if the other spouse dies without a will. Also lost is the right to take an “elective share” of the deceased spouse’s estate if the deceased spouse tried to “disinherit” him or her, as well as the right to administer that spouse’s estate as an executor or executrix.

Criminal Law

Although it is almost certainly unconstitutional, one criminal statute that is still on the books makes voluntary adultery a crime. NC Gen. Stat. §14-184 is captioned Fornication and Adultery. The statute makes it a Class 2 misdemeanor “[i]f any man and woman, not being married to each other, shall lewdly and lasciviously associate, bed and cohabit together . . .” In cases for alienation of affections and criminal conversation, parties frequently used this criminal law to protect themselves from testifying. Because adultery was a crime, a person who was sued for it could plead the Fifth Amendment to avoid incriminating himself or herself. Doing so in a civil case allows the judge or jury to assume the person did commit adultery.

All About Adultery in North Carolina (Part 1 of 2)

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Merriam Webster defines adulterate as a verb, an act “to corrupt, debase, or make impure by the addition of a foreign or inferior substance or element.” North Carolina alimony laws don’t call it adultery. Instead, adultery as used in alimony cases is a form of marital misconduct called “illicit sexual behavior.” The definition is “acts of sexual or deviate sexual intercourse, deviate sexual acts, or sexual acts defined in NC Gen. Stat. §14-27.20(4), voluntarily engaged in by a spouse with someone other than the other spouse.” NC Gen. Stat. §50-16.3A. People have argued about which acts between the spouse and third-party meet the definition of illicit sexual behavior. In 2011, a wife unsuccessfully argued that her behavior didn’t meet the standard of illicit sexual behavior because the man she had been with wasn’t able to complete the act they had started but were unable to finish. Romulus v. Romulus (2011). The Romulus case gives an exhaustive list of definitions (starting on page 47) of various acts.

Adultery and Alimony

In North Carolina, divorce is a “no fault” process based on a full year of separation between a husband and wife. However, we strongly cling to fault in our alimony laws. For many reasons, alimony can be awarded based only on finances, meaning incomes and reasonable living expenses. But if the supporting spouse commits adultery, he or she automatically has to pay alimony. The reverse is also true. The dependent spouse automatically loses alimony if he or she cheats. Other types of marital fault are only factors the judge must consider, and they don’t demand a particular result as adultery does. If both spouses have cheated, the judge then denies or awards alimony in his or her discretion “after consideration of all of the circumstances.” NC Gen. Stat. §50-16.3A.

How Do You Prove Adultery?

Adultery is almost always a circumstantial case. After all, most spouses aren’t advertising their infidelity. It is rarely proven by direct evidence. Therefore, our law resorts to a standard called the “inclination and opportunity doctrine.” Owens v. Owens, 28 NC App 713 (1976). This means the spouse alleging adultery must prove two things. First, was there an opportunity for the spouse and third-party to be together in privacy? Second, if they had the opportunity to be together, were they inclined (likely) to have sex? Like any other disputed fact, witnesses may testify about the opportunity, and/or whether the spouse and third-party were inclined to cheat. Other evidence might include a secret credit card account statement reflecting hotel charges or discovered e-mails/texts between the lovers. Family law cases are bench trials, cases heard by a judge. One of the few exceptions to that rule is marital misconduct, including illicit sexual behavior. A jury can render a verdict on whether the spouse committed marital misconduct. NC Gen. Stat. §50-16.3A.

Uh Oh . . . Did You Condone It?

One defense to alimony is condonation. As the name suggests, it means all is forgiven . . . and it gives a bit of a clean slate to the cheating spouse. If the innocent spouse discovers an affair and continues to stay in the marriage, the law gives the cheating spouse a second chance. After the second chance is given, if the parties separate for some other reason later, the court may consider the affair in deciding how long alimony should be paid and in what amount. In other words, someone doesn’t automatically win or lose an alimony case because of the affair. How does the law define “staying in the marriage” and condoning the cheater? In short, the court assumes condonation has occurred if the spouses voluntarily have intercourse after knowing about the affair. Malloy v. Malloy, 33 NC App. 56 (1977). One side effect of condonation is that the spouse who would’ve automatically won the alimony case is essentially punished for trying to make the marriage work.

Marital Fault

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Although the role of marital fault has been narrowed a great deal over recent years, it is still quite alive and kicking. Fault is not a factor in the divorce itself, but it does come into play with other claims that are filed with the divorce. NC acts of marital fault are listed by statute, as well as case law, decided by the North Carolina Court of Appeals.

Adultery

The deal-breaker in cases that consider marital fault is adultery but under certain exceptions, the spouse who commits fault may be given a clean slate so to speak. There are random defenses to these fault claims, but they are beyond the scope of this article. Based on my observations over the years, adultery is by far the most litigated fault ground. It is designated by statute as “illicit sexual behavior” and it “means acts of sexual or deviate sexual intercourse, deviate sexual acts, or sexual acts defined in [rape laws], voluntarily engaged in by a spouse with someone other than the other spouse.” Adultery is rarely proven by a “smoking gun” complete with photos or videos, as we see on television. In real life, adultery is proven with different types of evidence, including testimony of witnesses. Alimony may be proven with a collection of evidence, taken as a whole, not just one item of evidence.

Other Acts of Marital Fault

Other acts of marital fault include maliciously turning the other spouse outdoors, and treating him or her cruelly or barbarously endangering his or her life. Also considered marital fault is a spouse being an “excessive user of alcohol or drugs” when it makes the other person’s life intolerable. Closely related to that ground is another bad behavior: “involuntary separation of the spouses in consequence of a criminal act committed.” In other words, this refers to a spouse who is incarcerated. Although the law includes “reckless spending of the income of either party, or the destruction, waste, diversion, or concealment of assets,” as marital fault, it can be difficult to show the other person’s intent as it relates to their money management.

Indignities

Marital fault includes “other such indignities to the person of the other as to render his or her condition intolerable and life burdensome.” This quaintly worded bad behavior requires more than a single time or two, which the law deems a “course of conduct.” Our courts do not tell us exactly which bad behavior is included under this definition, preferring instead to consider it on a case by case basis. Many behaviors may qualify as marital fault. One North Carolina case says behavior included in the term “indignities” includes “unmerited reproach, studied neglect, abusive language, and other manifestations of settled hate and estrangement.” However, indignities can consist of willful failure to provide necessary subsistence according to one’s means and condition. Like the reckless spending fault, this one may be difficult to unravel because people manage their finances in many different ways.

Abandonment

In short, abandonment is a marital fault consisting of one spouse leaving the other spouse without justification. One creative attorney just made up a new fault ground in 1987, and named it “constructive” abandonment. It stuck, and the NC Court of Appeals has recognized it as marital fault. Any time the law needs to prevent some injustice from happening, it may choose to essentially pretend a certain thing exists, and they say it is “constructive.” As used here, constructive abandonment means that even if the spouses are both at home and no one physically abandoned the home, the court may choose to treat a spouse as abandoning the home anyway if the behavior was bad enough.

See: NC Gen. Stat. 52-B, NC Gen Stat. 50-7, NC Gen Stat. 50-16.1A, Evans v. Evans, 169 NC App 358 (2005), and Ellinwood v. Ellinwood, 88 N.C. App. 119 (1987)

The Great Treasure Hunt: Hidden Income

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Child support and alimony cases are based on the incomes of the parties so it is important to leave no stone unturned, even if one of you has no income. North Carolina law usually counts all kinds of compensation as income, although there are some exceptions.

What Are We Looking For?

Income is not defined by salary alone. Especially with large employers or self-employed individuals, there are “hidden” forms of compensation. There are two basic kinds of income in family law. Earned income is based on employment (salaries, wages, commissions, bonuses, dividends, severance pay, etc.) and unearned income includes everything else. Examples of unearned income include ownership or operation of a business, rents received from rental property, retirement or pensions, interest, trusts, annuities, capital gains, certain Social Security benefits, worker’s compensation benefits, unemployment insurance benefits, disability pay and insurance benefits, gifts, prizes and alimony or maintenance received from persons other than the parties to the instant action (from the NC Child Support Guidelines).

The Evidence: Tax Records

Courts first look at tax returns, which hold important clues about income. Most people know the W-2 statements include wages, tips and compensation as shown in box 1, which are taxed. But not everyone realizes box 3 of a W-2 statement reflects the social security wages, including income that isn’t taxed. If the amount of social security wages is larger, it should be used. Why? Because the larger amount includes tax deferred benefits. The most common example is an employee’s choice to make contributions to a 401(k) plan. Otherwise, several thousand dollars of income is easily missed. If someone has a 1099 tax statement, it means there is “miscellaneous income” such as money paid to that person for services as an independent contractor. A 1099-R statement is issued when a person collects retirement from pensions, annuities, retirement or profit-sharing plans, IRAs, insurance contracts, etc. Social security is shown on a SSA-1099 tax statement, which might be missed because sometimes it is taxed, and sometimes not. All of these tax statements, not just the tax returns themselves, indicate income for purposes of child support or alimony.

The Evidence: Pay Statements

While tax returns and tax statements give us a good starting point, they don’t tell the whole story. Certain benefits are disguised because they are voluntarily payroll “deducted” from someone’s pay. However, many of those deductions represent compensation the employee chooses to divert, so they are really income. This is because they are tax-free, tax-exempt or pre-tax benefits, so they won’t appear on the W-2 statement at all. One common example of a pre-tax payroll-deducted benefit is an employee’s payment for health, vision, and/or dental insurance. Those payments are made by the employee from his or her pay but because they are not taxed, they generally won’t be included on the W-2. Tax-exempt benefits include military disability payments and most military allowances, such as BAH and BAS, which usually aren’t even shown on the tax return. This is why it is a good idea to get the final pay statement or other statement that shows all compensation, taxed or not taxed, as of December 31st.

The Evidence: Self-Employment Business Expenses

The scope of this subject is too broad for this article but the general overview involves income disguised as business expenses. If these appear on the tax returns, most of the time they won’t be detailed enough to properly identify them without further investigation. Loans from the business to the business owner can be big-ticket forms of income even though they appear to be debts. Other “business expenses” include fringe benefits like free housing and company-payment of cell phones, health insurance, or credit cards. Some companies pay not only vehicle payments but gas and insurance. Typical travel expenses (or reimbursement of expenses) such as lodging, mileage and food also frequently masquerade as business expenses. While these expenses may be perfectly legitimate for IRS purposes, judges in family court will usually include them as income to the extent it is appropriate under the circumstances. The NC Child Support Guidelines count these benefits as income to the business owner by the company are considered income if they are significant and reduce personal living expenses.

What Do Judges Consider in Alimony Cases?

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The factors guide judges in reminding them of the most important things. Either spouse may seek alimony if he or she earns less than the other in North Carolina, although there’s no specific dollar amount that determines by how much less. While we have guidelines in child support cases that compute an amount based on incomes and certain child-related expenses, we don’t have anything of that nature for alimony. Each party prepares a budget as a trial exhibit, which includes income and living expenses. If the judge awards it, the amount of alimony and how long it will be paid is discretionary.

Alimony Factors: Incomes/Benefits

NC judges must consider a list of factors in alimony cases. The first factor to consider is how much income each spouse has, and sometimes what a spouse has the capacity to earn. Also considered is unearned income, which is not shown on a W-2 statement, such as dividends, rents, retirement payments, disability, social security payments and employment benefits such as medical insurance (and/or dental and vision insurance), retirement benefits, and marital property and debts.

Alimony Factors: Each Person’s Situation

The court considers each spouse’s individual circumstance, education, age, physical and mental abilities, and emotional conditions. For example, a 25-year-old spouse and a 60-year-old spouse will be treated differently based on medical conditions and the ability to work. Their needs and expectations, such as the anticipated date of retirement or going back to school, also vary. Marital misconduct of either spouse may also be considered.

Alimony Factors: History of the Marriage

The court also looks at the standard of living that the parties established during the marriage. How long the parties were married and the contribution by one spouse to the education, training, or increased earning power of the other spouse are other factors. One party might have kept the home-fires burning for the last ten years, caring for the children while the other devoted his or her energy to obtaining a degree or advance in a profession, improving the family income. In fact, the statute also requires the judge to consider the “extent to which the earning power, expenses, or financial obligations of a spouse will be affected by reason of serving as the custodian of a minor child.”

Alimony Factors: Miscellaneous

The court looks at family obligations, such as paying child support for children with another parent, or alimony to a former spouse. Courts usually have the trial for equitable distribution (the division of marital property and debt) before the alimony trial. This is because the judge will look at who kept which assets, and who is responsible for various marital bills, which is important when determining each party’s reasonable expenses. If someone brought assets into the marriage, the court has the right to consider. The federal, state, and local tax ramifications of the alimony award are legitimate factors for the judge to weigh in making an alimony award.

The factors are meant to guide judges in reminding them of the most important things to think about when deciding what to order in alimony cases. The flexibility is there but just in case, the statute also tells judges that they are free to consider “Any other factor relating to the economic circumstances of the parties that the court finds to be just and proper.” NC Gen. Stat. §50-16.3A.

Have You Reconciled With Your Ex?

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Besides obtaining a divorce, the date a couple separates can have a significant impact on equitable distribution of marital assets and debts, child support and alimony. When a married couple decides to call it quits, there is some date they separated.  But when is it? The answer is not always as simple as it sounds. There is a myth that people can’t be separated for purposes of divorce until they have something on paper. That is not the case. In North Carolina, if parties stop living together, and at least one intends the separation to be permanent, they are separated. Physically living apart is a requirement, however. Living in the same home in different rooms or out-buildings such as the garage or “man cave” is usually not enough. Despite what was portrayed in the War of the Roses movie when one duct taped a line down one-half of the house, you can’t do it that way here if your goal is to seek a divorce.

The State Policy

From the viewpoint of the public policy behind this one year waiting period, marriages should be fostered and divorce should be discouraged to some extent.  A waiting period gives spouses time to cool off after a major dispute. The courts would no doubt be much busier if there was no waiting period and either party could apply for a divorce on Monday morning after a fight on Friday night. There is debate about whether the year-long waiting period prevents divorces, thereby preserving marriages. The requirement that at least one of the parties intend for the separation to be permanent makes sense when you think about happily married people who are physically separated because of military service or because one of them spends an extended period of time in the hospital, for example.

What If We Try to Work Things Out?

Another question in determining whether you are separated for the purpose of divorce is whether you have made any efforts to reconcile. If a couple reconciles, meaning they return to the husband and wife relationship they had before the separation, they are no longer separated. If they reconcile and later decide to separate again, the one year wait begins from that second date of separation. Years ago, the one year period of separation required to seek a divorce would start over if the parties had intercourse.  Now, the law says that an isolated act of intercourse will not start the clock over again but beyond that, it is not always clear at what point they reconciled or separated. Reconciliation and making efforts to work things out can lead to one of the spouses moving back into the home, which is almost always viewed as reconciling in legal terms. There is no black and white answer on whether the actions of a couple between those two extremes would require the one year waiting period to begin all over again. The court looks at the circumstances of each case when the date of separation is disputed.

Grey Divorce: Issues For Older Spouses

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Middle-aged and older spouses have the same issues as other couples when they separate and divorce, although they are viewing them from the other direction. They don’t usually have any minor children but they often have substantial assets. People in second or third marriages are more likely to have premarital agreements or “prenups” that dictate what must be done about property and alimony if the couple splits. Another likely scenario of those with silver hair and more than one marriage under their belts is tracing property.  In our state, tracing is used to decide what share of an asset is separate property, and what share, if any, is marital property. This is expensive and time-consuming especially when addressing real estate, investment and retirement accounts. Therefore, this article assumes all assets are marital property and that there is no premarital agreement.

Alimony & Expenses

North Carolina courts must consider the incomes and reasonable expenses of both spouses in alimony cases.  Spouses who are nearing age 65 are facing Medicare and “doughnut hole” insurance instead of private insurance. Medicare could make things better or worse financially when compared with the health, vision and dental insurance offered by a spouse’s employer and whether the employer paid at least part of the premiums. Settlements and court orders for people nearing 65 typically take this into account, changing the amount of support once one or both spouses have Medicare coverage. Older spouses routinely lose loved ones and inherit property. While inheritances are usually considered separate property, assets such as rental property or investments are considered income for purposes of alimony.

Alimony: When Should You Retire?

When alimony is looming, parties may bicker about the reasonable age that the breadwinner or the financially dependent spouse should retire. Although it is extremely rare, I’ve actually had a case in which the judge ruled that the breadwinner couldn’t afford to retire at a certain age.  Of course, he was legally free to retire any time but his alimony was still ordered based on the same income he had from his employment. Judges consider a number of things when deciding if someone should be able to retire for purposes of determining income for an alimony case, including age, health, work history and whether the spouse is genuinely ready to retire or just saying that for court.

Parties might dispute the choice of a retired spouse not to charge adult children for work-related childcare of grandchildren. Spouses can disagree about the timing of a spouse electing to receive Social Security retirement payments, which vary in amount depending on what age the person is. Life insurance becomes more important when dealing with older spouses, particularly if a spouse is depending on alimony that ends if the other spouse dies.  When someone retires, they often lose the term life insurance that is offered by many employers. Another dilemma can arise when the policy was purchased when the insured spouse was young because the cost of buying that protection now would be prohibitively expensive.

Marital Property

Divorcing couples may decide that it makes sense to have one spouse stay in the home and “buyout” the other spouse’s share, which might take less time and involve less risk than trying to sell it.  When there is no mortgage to consider, the cost for that buyout can be too high when there aren’t lots of liquid assets to make up for it. In that event, they will probably end up selling the home and dividing the proceeds, which might raise tax issues if a spouse doesn’t intend to purchase another home with his or her share of the sales proceeds.

Couples who are retired don’t usually have the same opportunity to rebuild financially as those who divorce in their thirties or even forties. So, when pensions or other retirement benefits are the only income besides social security, dividing them equally is a financial hit that can’t easily be absorbed. There are tax penalties for those who take a distribution of money from their retirement before 59.5 years old. On the other hand, when there are IRAs or other accounts that allow owners to choose the dates and amounts of money to withdraw, there might be RMDs (required minimum distributions) of retirement. When spouses have multiple retirement vehicles, some might be taxed differently, such as the Roth IRA versus the traditional IRA. Accordingly, each one has advantages and disadvantages even if they appear to be equal in value. Other benefits might be tax free, such as military disability, which is separate property but counts as income for alimony.