That was the question in a recent case where an Alabama couple was divorced in 2013 with a settlement agreement reached by the parties. The divorce provided that the husband was to pay to the wife $500 each month for eight years as alimony in gross. In addition, the judge ordered the husband to maintain his current life insurance policy with the wife named as the irrevocable beneficiary for eight years.
In June 2016, the wife filed a petition alleging that the husband failed to pay alimony and had failed to maintain the life-insurance policy as required by the divorce judgment. The wife wanted to have the husband held in contempt for his failure to comply with the divorce judgment. She asked the court to order her ex to pay the delinquent alimony.
The husband denied any wrongdoing, and he later counterclaimed seeking to reduce or eliminate his alimony obligation because he argued it was periodic alimony. He said that his alimony obligation ended because the wife remarried. The wife maintained that the husband’s alimony obligation hadn’t terminated upon her remarriage because it was alimony in gross, or a property settlement, rather than periodic alimony.
The trial court conducted a hearing and found that the alimony award and the provision requiring the husband to maintain the life-insurance policy were awards of alimony in gross that couldn’t be modified. The husband appealed.
Periodic Alimony vs. Alimony in Gross
Presiding Judge William C. Thompson wrote the opinion of the Alabama Court of Civil Appeals. He explained that alimony in gross is considered compensation for the recipient spouse’s marital rights and may also represent “a division of the fruits of the marriage where liquidation of a couple’s jointly owned assets is not practicable.” An alimony-in-gross award must satisfy two requirements:
- the time of payment and the amount must be certain; and
- the right to alimony must be vested.
Alimony in gross must also be payable out of the present estate of the paying spouse as it exists at the time of the divorce. In other words, alimony in gross is a form of property settlement, and is typically not modifiable.
Periodic alimony, the judge explained, is an allowance for the future support of the recipient spouse payable from the current earnings of the paying spouse. It’s designed to support the former dependent spouse and enable him or her, to the extent possible, to maintain the status that the couple enjoyed during the marriage—until that spouse is self-supporting or maintaining a lifestyle similar to they had during the marriage.
Periodic alimony is modifiable based upon changes in the parties’ financial conditions or needs. These include things like an increase in the need of the recipient spouse, a decrease in the income of the paying spouse, or an increase in the income of the recipient spouse. The paying spouse’s duty to pay periodic alimony may be ended by petition and proof that the recipient spouse has remarried or is cohabiting.
In this case, the wife testified that she understood the alimony award to be one for alimony in gross, and she believed that her right to enforce that obligation would not be affected by her remarriage. She testified that she was unaware whether the alimony had been listed as income on her tax returns and that she was unaware of the tax implications that arise depending on whether an alimony obligation is one for periodic alimony or alimony in gross. The husband testified that he had believed that the obligation was one for periodic alimony and that he had deducted his payments of that obligation on his tax returns.
On appeal, the husband argued that the evidence, particularly the evidence regarding how the parties treated the alimony on their respective income-tax returns, showed that the trial court erred in determining that the alimony obligation in the parties’ divorce judgment was alimony in gross.
The Alabama Supreme Court has held that “[w]hen the type of award or awards intended is not particularly specified, the source of payment and the purpose are of prime importance.” Here, the trial court found that the type of award was specified in the divorce judgment… it said that it was alimony in gross. The trial court found that the award satisfied the two-part test because the time and amount of the payments were certain and the wife’s right to receive the payments was vested because there was no specification that the payments could be modified.
Because of the specific alimony language in the parties’ divorce judgment, the Court of Appeals found the husband failed to show that the trial court erred in determining that that award was alimony in gross. Therefore, the award was non-modifiable and due to be enforced. The trial court’s decision for the wife was affirmed. Andrews v. Andrews, 2017 Ala. Civ. App. LEXIS 244 (Ala. Civ. App. December 15, 2017).
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