What Divorcees of High Earners Should Know about Alimony

What Divorcees of High Earners Should Know about Alimony by Fabienne Swartz

{3:50 minutes to read} When a lesser monied spouse divorces a high-earning spouse, they will likely get $150,000 a year or more in alimony.

These lesser monied spouses may not be able to start work right away. They need to heal and settle; it’s a process that can take the better part of a year or longer. When they go back to work, they probably won’t make the same level of salary as they did before the marriage. Things have changed since they were last in the workforce. By a fair estimate, they might make $50,000–$80,000, even after having completed continuing education.

Lesser monied spouses are advised by financial planners to ideally save 10–20% of the alimony and child support they receive each month. Alimony usually lasts only a few years, and they’ll want to build a reserve for when it ends, in case their income is not sufficient to cover their standard of living.

However, when someone gets a divorce, they will already be cutting back on their lifestyle. How much more can they reduce it? At some point, they may need to look at earning extra income…and as the saying goes, to become truly wealthy, “your money has to work for you while you sleep.”

One means to that end is to rent out an extra bedroom. Many professionals who are traveling or vacationing are looking for a room in a nice house. They might stay for weeks or even months at a time. Just a few weeks is not a problem; the problem occurs when it is 6 months or more. New York is expensive, renting rooms is the only option available to many.

Here’s the catch: you cannot do this if you have a cohabitation clause in your divorce contract—depending on how restrictive it is. Cohabitation clauses vary from place to place. In New York, if you have an unrelated adult living with you, that may trigger the cohabitation clause. This applies to any adult not related to you, regardless of your relationship to them, which could result in your alimony being adversely affected.

The purpose of such a clause is to prevent a situation where someone’s new partner is living with them. In New York, this is true regardless of whether the new partner is contributing to the living expenses of the recipient of the alimony—making it difficult for the lesser monied spouse to make use of one of their best assets for income: their house.

Alimony can be vital to the process of settling into a new life after a marriage ends, but one must be aware of the risks involved with decisions made while receiving it. For more information, please contact me here.

Fabienne Swartz JD (Belgium) CDFATM
Certified Divorce Financial AnalystTM
www.financially-strong.com
500 Mamaroneck Av.
Suite 320
Harrison, NY 10528
(914) 798-6940

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