Determining Alimony Amounts
Alimony payments are determined during the divorce proceedings and are generally based upon a series of factors set forth in the state's divorce code. A judge will review the financial status of both spouses to determine an alimony award that will both maintain the recipient spouse's pre-divorce lifestyle and fit within the paying spouse's ability to pay. Other factors considered may include the duration of the marriage, employability of both spouses, spouses' ages, health and responsibilities to minor children, contributions each spouse made to the marriage, tax consequences and available income of both spouses.
Inheritance Before Divorce
States use one of two methods when dividing property during divorce. Nonetheless, each method treats inheritances as separate property not subject to division. In "community property" states, marital property is split evenly between spouses. States that practice "equitable distribution" award marital assets in a manner that is fair and just based on the circumstances of the marriage. While an inheritance is not subject to distribution, it is considered by the court when determining each spouse's financial situation. For example, interest earned from a reinvested inheritance is considered part of a spouse's financial picture and may be considered when determining that spouse's need for alimony.
Inheritance After Divorce
If a party receives an inheritance after divorce, the court can, on motion, adjust or terminate alimony payments. Alimony payments are intended to provide support to an ex-spouse with a lower earning potential than the other spouse. If the recipient spouse receives a sizable inheritance, the paying spouse may request a reduction or termination of payments. Likewise, if the paying spouse receives an inheritance, the recipient spouse may petition for an increase in alimony based on the paying spouse's increased ability to pay. In either situation, the court will look for a substantial change in financial circumstances to justify the modification.
Not every jurisdiction has addressed this issue, but those that have hold that an expected inheritance is not appropriate to consider when determining alimony awards. An expected inheritance is an amount of money a party expects to receive upon the death of a benefactor. Ex-spouses have attempted to include this speculative amount in motions to increase alimony and courts have held that it is proper to consider the expected amount, but not to require payments out of that amount until the inheritance is actually received. A motion for modification would be necessary in this situation.