If you are going through a divorce, one of the things you are probably most concerned about is how Alimony is calculated in Pennsylvania. In this week’s Divorce Academy video, Kevin explains the basics of how spousal support, alimony pendente lite (APL) and alimony are calculated in Pennsylvania, how long it might last, and how you might avoid paying it (sort of).
Hi everyone. Welcome to Divorce Academy. Today’s topic is How Alimony Is Calculated in Pennsylvania.
And that is a hot topic. It is probably the most searched topic on our website. And that’s why I’ve got it up here in flames. I also have it in flames because most people hate to pay alimony. It is not something that they want to do. It’s probably the number one thing that our clients complain about.
But we’re here today to teach you a little bit about how its calculated in Pennsylvania. So today we’re going to cover the types of alimony, who has to pay it, what the formula is, and finally how you might be able to get out of it … not really but there is a chance you can do what we call “the buyout.”
The first thing to know is that there are three types of alimony in Pennsylvania.
There is Spousal Support, which is support paid to your spouse before the divorce is filed. Maybe your husband or wife moved out. They want support. That’s going to be Spousal Support.
Then there’s Alimony Pendente Lite, which is alimony while the divorce is pending.
Finally, there is Alimony, which is post-divorce support.
The first two are calculated pursuant to a formula in Pennsylvania. The formula is pretty simple. It is 40% of the difference between the net incomes of the parties. That’s the formula for alimony pendente lite (APL) or Spousal Support. It’s 30% of the difference if there’s also child support, and I’ll explain the formula in just a second.
Over here I did some examples to give you an idea of how it works.
I had a lower-earning spouse earning a gross of $50,000 per year, and a higher-earning spouse earning a gross amount of $100,000 per year. They’re doing pretty well. That the kind of typical scenario we would see during mediation here at SnapDivorce®.
From those, I got a net for the lower income spouse at $40,000 and a net of $70,000 per year for the higher income spouse. That leaves a monthly net of $3,333 and $5,833.
If there are no children involved, the formula, again, is 40% of the difference. So, you take away from $5,833, $3,333. That leaves a difference of $2,500. X 40% equals $1,000 per month. So that would be the amount of APL or Spousal Support payable.
If there are children, the formula is a little bit different. I made up a scenario where the couple had two children. Based on the same income I estimated child support would be about $1,241 per month. So, to calculate APL or Spousal Support in this scenario, first you take the higher earning income spouse’s net of $5,833. You subtract child support of $1,241. And then you subtract the lower earning spouse’s monthly net of $3,333. That leaves a difference of $1,259. Multiplied by 30% equals $377 per month in APL or Spousal Support. You add that to the child support and the total monthly amount would be $1,618.
So fairly simple. That’s how Spousal Support and APL are calculated.
The only exception would be is if the higher earning spouse had primary physical custody of the children, meaning the higher earning spouse had more than 50% of the overnights with the children. In that case APL and Spousal Support would be calculated at the 40% rate first, then child support would be calculated and then there would be an offset. But that’s a little too much to cover in this video.
So that leaves Alimony, which is the post-divorce support you pay to a spouse. Now, Alimony in Pennsylvania is calculated pursuant to a set of factors instead of a formula. I’ve got the factors laid out here. We’ve got the earnings and earning capacities of the parties. The ages and health. The sources of income. The expectancies — that might be like someone is going to inherit money. The length of the marriage. The contributions to the marriage of the parties. The standard of living during the marriage. The education of the parties. The assets of the parties — and that would include: What did they get out of the divorce? Do they have separate assets? The relative needs of the parties — so they would look at what each parties has to pay for in mortgage or rent; what are their monthly bills? Do they have credit card debt?
The last one is marital misconduct. That is the big one that always comes up. Most people come in and they like to talk about what they think their spouse did wrong . . . my wife’s a drunk, my husband had an affair . . . I shouldn’t have to pay alimony. The reality is the courts are not going to care about that. In pretty much every marriage, spouses have complaints about each other. The courts don’t want to litigate that sort of thing in a hearing. They see it as a waste of time. So, forget about marital misconduct. They really don’t take that into consideration.
The big ones are the earing capacities – is there a big earning disparity, the length of the marriage, and the assets of the parties, and the needs.
Now, theoretically, that is what they are supposed to take into consideration. In Bucks County, where we do a lot of our work, they actually just use the formula. They’re not supposed to do it, but they’ll just use the 40/30% formula. In other counties where we practice a lot – Philadelphia, Montgomery County – they’ll actually look at the factors and do an analysis.
Interestingly, in the cases I’ve been involved in, it’s come out to be pretty much the same amount as the formula once you add it up and multiply out the years alimony. So, the formula works pretty well even for alimony.
The next big question is how long am I going to have to pay it. People hear alimony they’ve got this idea of some rich old guy who is paying his wife who wears furs alimony for the rest of her life. Kind of a nightmare scenario. But that is really not reality in Pennsylvania. It’s very unusual that you have a lifetime alimony award.
Again, in Bucks County where we do a lot of our work, the rule of thumb is one year of alimony. really one year of support . . . for every three years of marriage. So, if you have a nine-year marriage you’d be looking at three years of support. And that would include if you paid alimony pendente lite or spousal support and then alimony on top of that, the whole term would go for about three years in that scenario.
Again, in Philadelphia and Montgomery County really more of a factor-based analysis. It actually comes out fairly similar to the amount of money you pay. I was involved in one case that had a fairly long term of alimony, but it was a lot less. When I multiplied it out it came out to be the same amount of money overall that would have been awarded in Bucks County.
The last piece of the puzzle that everyone wants to know about is, hey, how can I get out of paying alimony? There’s not too many ways. One would be to die, but obviously that’s not an ideal scenario. Other than that, there’s not too much you can do to get out of alimony.
What you can do, and a lot of people like to do this, is you can buy out the term of alimony. So, how does that work? Once you’ve negotiated or come to a resolution about how much it’s going to be and how long it’s going to be, it’s just a simple multiplication problem.
I came up with a scenario where alimony was going to last for four years at a thousand a month. And so, I just multiplied 48 months by $1,000 and came up with $48,000. And that would be the base buyout amount of alimony. Typically, the parties will agree to some sort of discount factor for the time value of money and for the risk factor of something happening that would change the amount. So, in that case maybe a fair buyout would be $40-45,000.
Typically, the way that would work is if there were other assets in the case, the person paying alimony would end up transferring $40,000 from some other account or pay some more money to buy out the house or whatever the scenario might be.
So, that is how Alimony is calculated in Pennsylvania. I hope this is helpful, and I’ll look forward to seeing you next time on Divorce Academy.