Our Orange County Alimony Attorneys Answer Common Spousal Support Questions

In California, spousal support (or “alimony”) is a potential factor in all divorces. However, establishing an appropriate alimony award is particularly important for high-net-worth spouses. Whether you are worried about paying a significant amount of your income to your former spouse or you need to obtain alimony in order to preserve your standard of living after your marriage ends, you need to make informed and strategic decisions, and you need to work with an experienced Orange County alimony attorney.

Since there is no set formula for calculating alimony in California, understanding spouses’ rights in this area can be challenging—especially when there is a lot of money on the table. Here are answers to some of the questions we frequently receive from high-net-worth spouses:

Are Divorcing Spouses Required to Split Their Income 50-50?

No, this is a common misconception about the divorce process in California. While divorcing spouses must divide their marital assets equally, this rule does not apply to their future income. Instead, spouses’ alimony allegations are determined based on a list of statutory factors outlined in Section 4320 of the California Family Code. In general, when it comes to alimony, the focus is not on equality, but rather a careful balancing of factors aimed at achieving “substantial justice for the parties.”

Will I Be Required to Pay Spousal Maintenance If My Spouse Has Never Worked?

Probably. The situation in which one spouse works while the other stays home to take care of the house or raise the couple’s children is a classic type of scenario in which an award of alimony will typically be justified. Again, however, the amount that you will be required to pay will depend on various factors, and there should generally be an expectation that your spouse will work to become self-supporting in the future (unless he or she is of or approaching retirement age).

If My Spouse Stopped Working to Raise Our Child, Will He or She be Required to Work After Our Marriage Ends?

Possibly. The court has the ability to consider each party’s earning capacity, taking into account their ability (e.g. education, experience) and opportunity (the job market).

Are Alimony Payments in California Tax-Deductible?

Alimony payments are no longer tax-deductible under federal law for orders entered after December 31, 2018. This was the case for decades; but, under the Tax Cuts and Jobs Act of 2017, the tax rules for alimony have been reversed. Under the current law, spousal support payments are not tax-deductible for the payor, and the recipient does not need to report alimony payments as taxable income on his or her federal returns. However, the old rule continues to apply for California state income tax purposes, and for orders made prior to December 31, 2018 and modifications of such orders.

Contact an Orange County Alimony Attorney at Seastrom Tuttle Murphy Dockstader

If you have more questions about alimony and would like to speak with an attorney in Irvine, please contact us to arrange a confidential initial consultation. Call 949-474-0800 to schedule an appointment, or tell us how to reach you and we will be in touch shortly. 

Common Questions About Spousal Support in a High-Asset Orange County Divorce

How does the marital standard of living work when the household spent far less than it earned?

This is the recurring fight in high-income cases. The marital standard of living describes the lifestyle the parties actually lived during marriage, not the lifestyle their income could have supported. Where a household earned two million dollars a year and spent four hundred thousand, the supported spouse will argue the standard should reflect the earning power and the paying spouse will argue it reflects what was actually spent. The proof is documentary, built from years of bank and card records rather than from testimony about how the family lived, and the side that does that work carefully tends to control the number.

Is spousal support capped at some point regardless of income?

There is no statutory cap, but there is a practical ceiling. Support is measured against need judged by the marital standard of living, so once an order fully funds that standard, additional income on the paying side does not automatically produce additional support. How far that principle carries in a given case is argued in both directions, and which argument is available to either spouse depends heavily on whether the marital standard of living has been established with real evidence. Without that record the discussion tends to drift toward a percentage of income, which is not the measure the statute sets.

How is support handled when income comes from a business rather than a paycheck?

Income available for support from a closely held business is not the same as the owner’s W-2 or the K-1 taxable figure. It is built by a forensic accountant from the entity’s records, adding back personal expenses run through the company, normalizing owner compensation, and adjusting for depreciation and retained earnings the owner controls. Where the business is also being valued for property division, the two exercises interact, and the same earnings stream cannot be double counted as both an asset and support income. Coordinating those positions is a large part of the work in owner cases.

Can spousal support be bought out in a lump sum?

Yes, by agreement. The parties can convert future support into a lump sum or an offsetting allocation of assets, and can agree the amount is non-modifiable and non-terminable. That is often attractive in high-asset cases because it ends the ongoing financial relationship, removes the risk of future modification proceedings, and can be structured around the tax and liquidity picture. It also forecloses adjustment if circumstances change, so the discount rate and the assumptions behind the number deserve close attention before the trade is made.

About the Firm

Seastrom Tuttle Murphy Dockstader is a family law firm in Irvine representing clients throughout Orange County, and in Los Angeles County. The firm practices family law exclusively. Its attorneys include Fellows of the American Academy of Matrimonial Lawyers and of the International Academy of Family Lawyers, and attorneys certified as specialists in family law by the State Bar of California Board of Legal Specialization. Call 949.474.0800 to discuss a high-asset spousal support matter with the firm.