Alimony in Tennessee: State law and federal tax considerations

Those going through a divorce may have some questions about alimony. This piece provides some foundational information.

Tennessee state law allows for the payment of alimony, also known as spousal support. Lawmakers recognized that the parties within a marital relationship often take different roles. It is common for one party to the marriage to focus on professional development while the other focuses on the personal side of the marriage. This can include a focus on the care and raising of children. This arrangement can result in a loss of professional aspirations for the party that took on the personal side of the marriage relationship.

As such, state law allows for payments from one spouse to the other depending on the circumstances of the parties. The court has authority to choose various payment options as it deems fit, including monthly, semimonthly or weekly installments.

There are generally three forms of alimony:

  • Periodic alimony. Also known as alimony in futuro, periodic alimony results in payments on a long-term basis.
  • Transitional alimony. This form of spousal support results in a set payment for a determinate period of time. Transitional alimony helps the party receiving payment in the transition from marital to single life.
  • Alimony in solido. Also known as lump sum alimony, alimony in solido is often made in one large payment.

A separate class of spousal support, referred to as rehabilitative alimony, is also an option. This form of spousal support is structured to help the receiving party reach an earning capacity that would allow for a style of life that would be reasonably comparable to the standard of living enjoyed during the marriage. In some cases, the court may award rehabilitative alimony along with alimony in futuro to bridge any economic gap that remains even after economic rehabilitation is complete. The court will consider this option if it is not possible for the party to achieve an earning capacity that would result in the same standard of living enjoyed during the marriage.

The court determines the initial award after consideration of a number of factors. These factors can include the value of the property owned by the couple, the standard of living while married, the length of the marriage, health of each party, the employability of each party and the marital conduct of each party during the marriage as well as child custody arrangements.

A failure to make required payments can result in a levy of the property of the responsible party. The court also has the ability to modify spousal support payments.

It is also important to note that recent changes to tax law will directly impact alimony awards. The Tax Cuts and Jobs Act passed at the end of 2017 included a provision regarding alimony. Until December 31 of 2018, alimony payments are tax deductible under the old law. This changes in 2019. At that time, alimony is no longer tax deductible. This will result in a greater tax cost to the party making the alimony payment.

This is just one of the many considerations to take into account when drafting a divorce settlement agreement. A failure to take other factors that can impact the divorce into consideration before finalizing the divorce can result in surprises once the divorce is finalized. You can mitigate these risks by seeking legal counsel.