Equitable Distribution and Alimony
Mississippi is an equitable distribution state. This means regardless of the title to an asset, the Court is charged with the duty of looking at the entire makeup of the marital estate in making a determination as to what a fair property settlement will include. The marital estate is basically everything that is acquired, both assets and liabilities, during the course of a marriage. Property division and alimony are the tools our courts use to accomplish “equitable distribution.”
The first step is the identification of all marital and non-marital property. Non-marital properties are assets brought into a marriage or assets received by gift our inheritance during a marriage. Marital properties are assets accumulated by active efforts during a marriage. Sometimes property that would otherwise be non-marital can lose its non-marital status if it is combined or “commingled” with marital property to the point that you can no longer identify its non-marital characteristics. Non-marital property can also become marital if it is used by the family. We call this the “family use doctrine.” An asset can have both marital and non-marital components, and there is a presumption in favor of marital property.
The second step in property division is to place a value on all assets. Sometimes, this can be as simple as looking at account statements or using free information available on the Internet, but sometimes you must use real estate appraisers or accountants who specialize in valuation. Sometimes we will estimate to save litigation expenses. For property division, we use a fair market value- in other words, the value that a willing person would sell an asset for to a willing buyer if they each know all relevant information about the sale and there is no additional pressure to buy or sell.
After all the assets have been identified and we know what the values of the assets are, a division can be made either by agreement or court order, taking into consideration a group of factors we call the “Ferguson Factors. ” You can read more about these below. It is important to remember that equitable distribution does not mean equal distribution- so you cannot assume that everything will be divided 50/50. In Mississippi, there is the added consideration as to whether or not grounds for divorce exist or there is an agreement to get a divorce. Remember, if you do not have a reason and you do not have an agreement, you do not get a divorce. Sometimes, this will result in property settlements that would otherwise be unfair.
After we have identified, valued and distributed marital assets and liabilities, the last step in equitable distribution is to award alimony, if necessary. If the property division is large, an alimony agreement or award is less likely. Unlike child support, there are no preset guidelines to help attorneys and judges determine alimony.
Alimony comes in several flavors, but the basic characteristic are the amount, duration, modifiability, whether it survives death and/or remarriage and the tax consequences of the award.
Permanent alimony is paid from one spouse to the other and continues until the death of either party or the remarriage of the recipient. It is deductible from the income of the person paying and includable as income to the person receiving it. The factors considered for an alimony award are called the “Armstrong Factors.” You can read more about these below as well, but they are pretty logical things such as the length of the marriage, the income, ages and health of the parties to name a few.
Permanent alimony is by no means extinct, but it is becoming much rarer because we want to reduce permanent sources of potential conflict for people who were once married. If circumstances change, permanent alimony awards can be increased, reduced or eliminated altogether.
Lump Sum alimony is usually used to create a fair or equitable property division. True lump sum alimony is not taxable to the recipient or deductible for the person paying. It is a fixed amount that is not modifiable and is payable regardless of death or remarriage. The most common use of lump sum alimony is to balance equities in property settlements when an asset, such as a business, is not liquid. Lump sum alimony is a tool to create equity.
Rehabilitative alimony is a little newer tool the courts are using to create equity. The idea of rehabilitative alimony is to give a spouse some money for a relatively short duration of time while they are taking the necessary steps to re-enter the workforce. Reimbursement alimony is awarded to a spouse who supported the other through school or whose contribution cannot be recognized through property division. While still very different, reimbursement alimony is more like lump sum alimony and rehab alimony is more like permanent alimony.
Hybrid alimony is probably the most common these days in Mississippi. It is a blending or hybrid of the characteristics of alimony, usually created by smart lawyers or judges trying to accomplish certain goals.
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