Judy A. Oxford, Attorney at Law
Contact The Firm 615-791-8511

Williamson County Divorce Law Blog

Income tax aspects of alimony in Tennessee

When the subject of alimony arises in a Tennessee divorce, the divorcing spouses usually focus only on one of two questions: "How much must I pay" or "How much do I get"? Only rarely do divorcing spouses consider the impact of federal income taxes on the payment or receipt of alimony. In this post, we will cover the essential tax consequences of alimony payments.

As a general rule, alimony payments must be included in the gross income of the party who receives the payments, and the payments may be deducted from the income of the spouse who is required to make them. Alimony payments must satisfy the following requirements to be deductible:

  • The parties cannot file a joint tax return
  • Payments must be in cash
  • The payment must be received by or on behalf of the former spouse
  • The divorce or separate maintenance decree cannot say that the payments are not alimony
  • The former spouses cannot be members of the same household
  • The payment is not treated as either child support or part of a property settlement

Handling high asset divorces in Williamson County

If a divorcing couple cannot decide between themselves on how to divide their assets, Tennessee law requires that those assets be divided "fairly," that is, in a manner that the judge finds best serves the post-divorce interests of each parent. If the couple has minor children, the best interests of these children must also be taken into account. If a couple has accumulated significant assets during the marriage, or if each party had a high net worth prior to their marriage, the division of property can be especially challenging.

The complexity of the assets owned by a wealthy couple can make a fair division very difficult. A knowledgeable and experienced attorney will understand how to untangle the web of ownership that may use corporations, limited liability partnerships, offshore accounts, trust funds and the many other ways that property can be held by U. S. citizens. If money has been invested for a long time in a successful enterprise, the determination of value for the enterprise can require the use of accountants and property appraisers.

How QDROs divide retirement plan benefits in Tennessee divorces

One of the most complex property division issues in a divorces is allocating benefits from the retirement plan of one or both spouses. The question becomes especially difficult if both spouses have been employed and have contributed to their respective retirement plans or if one spouse has an especially lucrative plan compared to the other spouse. One method of resolving these questions is the entry in the divorce court of a Qualified Domestic Relations Order, commonly called a QDRO (pronounced "quad-ro").

QDROs were created by Congress' enactment of the Employee Retirement Income Security Act of 1974 ("ERISA"). As defined in the statute, a QDRO "creates or recognizes the right of an alternate payee's right to receive all or a portion of the benefits payable with respect to a participant under a plan." In plain English, a QDRO is a court order that requires the payment of a specific portion of retirement plan benefits to the divorced spouse of the plan's beneficiary.

Circumstances in which there can be alimony modification

For those paying and receiving alimony in Tennessee, it is important to understand how the process works and what circumstances can lead to the termination or modification of the award. The law states that the following circumstances can result in alimony ending or being modified: death or remarriage of the recipient; cohabitation on the part of the receiving spouse; and agreement of the parties to make a change in the payments or stop them entirely. First, certain legal terms that can be confusing must be understood. "In future" means in the future. "In solido" means a lump sum or definite amount.

If the spouse who is receiving alimony remarries or dies, then the in future payments will terminate immediately. The recipient spouse is required to inform the paying spouse as soon as he or she is married. A failure to do so allows the paying spouse to recover what is paid after the marriage. If the paying spouse dies, the payments will also stop. With alimony in solido, the payments will not stop when the recipient remarries or the payer dies. Rehabilitative alimony will terminate upon the recipient's or payer's death unless there is a specific statement in the agreement that it should continue. Transitional alimony is either paid in a lump sum or over installments and cannot be paid unless the marriage lasted for more than five years. It will end upon the death of the recipient or payer.

What is a parenting plan in Tennessee?

Resolving issues of child custody can be one of the most vexing issues in a divorce. The Tennessee legislature has attempted to alleviate parents' concerns in this area by requiring either the divorcing couple or the court to devise temporary and permanent parenting plans. Both kinds of plans are intended to eliminate or sharply reduce battles over child custody.

As the name suggests, a temporary parenting plan is intended to provide for the children's care and support while the parents attempt to settle issues such as alimony and property division. If the parties are unable to agree to a temporary parenting plan, either one may ask the court to order dispute resolution. If only one parent submits a proposed temporary parenting plan, that party may ask the court to issue an order adopting that plan, provided that the court finds that the plan serves the best interests of the children.

Alimony in Tennessee: who gets it and how much?

In a Tennessee divorce, spousal maintenance - or alimony, as it is commonly called - can be one of the most difficult issues in a divorce. Tennessee law gives the court broad discretion to determine which spouse is entitled to alimony and how much the other spouse must pay. Alimony is used by the courts to protect against the financial hardship that divorce can cause.

The general rule is very broad: "...the court may award alimony to be paid by one spouse to or for the benefit of the other, or out of either spouse's property, according to the nature of the case and the circumstances of the parties." An award of alimony usually depends upon the financial situations of each of the divorcing spouses. The legislature has decreed that if a spouse has experienced "economic detriment for the benefit of the marriage," the court may award alimony to ensure that this spouse enjoys the same standard of living after the divorce as he or she did during the marriage. A court may order "rehabilitative alimony" to allow the spouse who leaves the marriage with a reduced income to seek education or training that will contribute to an improved financial situation and a standard of living roughly equal to the standard enjoyed during the marriage.

Prenuptial agreements in Tennessee

Persons of substantial wealth who are contemplating marriage often wonder what might happen to their assets if the marriage should end in divorce. Tennessee has laws which can answer this question, but often, the parties themselves can provide a solution that meets their respective situations -- a premarital or prenuptial agreement.

A prenuptial agreement is a contract between persons contemplating marriage that specifies how assets that were owned by each of them prior to the marriage will be divided if they should decide to get divorced. Any such agreement will be enforced by Tennessee courts if it was "entered into freely, knowledgeably and in good faith and without exertion of duress or undue influence upon either spouse." A significant advantage of using a prenuptial agreement is the avoidance of disputes about the valuation of assets, especially unique assets such as works of art and antiques.

Domestic assault and restraining orders in Tennessee

Domestic violence is usually considered a violent act, or threat of a violent act, directed toward a family member or a person in a close relationship with the person making the threat. In Tennessee, the legal term is "domestic assault," and it is defined as an act that intentionally or recklessly injures, or causes reasonable fear of bodily injury or offensive physical contact, that is directed toward a current or former spouse, a cohabitant, a dating or sexual partner, blood or adoptive relatives, current or former relatives by marriage and adult or minor children of such people. Cases of domestic violence arise from many circumstances, such as divorce, child custody disputes, a broken romance and many others.

Many people attempt to protect themselves from domestic assault by obtaining a protection order, which is an order issued by the court directing the person against whom the order is directed to stay a prescribed distance away from the person who obtained the order. Such orders are issued to prevent continuing verbal or physical abuse, stalking or other actions that cause people to fear for their safety.

Determining child custody in Tennessee divorces

The first concern of most parents in Tennessee when they and their spouse have decided to end their marriage is custody of the children. As we noted in a prior post, Tennessee courts want the parents to reach an agreement about child custody and child support -- as well as all other issues in the divorce. If couples cannot reach an agreement about child custody, or if such an agreement is deemed unreasonable or unenforceable for any reason, the courts will intervene.

Tennessee adopted the Uniform Child Custody Act in 1979, and its rules are similar to those in many other states. The overriding principle is that the custody determination must serve the best interests of the child. The Child Custody Act list a number of factors that must be considered by the court, including the nature of the child's relationship with each parent, the parents' individual ability to prove love and support to the child and the ability of each parent to provide financial support. This is only a partial list, and other factors may play a role depending upon the family's situation. If the child is 12-years-old or older, the child's reasonable preference for one parent or the other may be taken into account.

Parents' backgrounds may be issue in child custody disputes

The recent deaths of two young children in Tennessee have raised concerns about the lack of communication between the Tennessee Department of Children's Services and the court system during proceedings to determine child custody. At the present time, no legislation exists which requires DCS to share information in its possession about past or potential domestic abuse with juvenile courts.

In the most recent of the cases, custody of a 3-year-old boy was awarded to his father. The boy died while in his father's custody, and the father has been charged with first degree murder and aggravated child abuse. The court was unaware that the father was a convicted felon who twice pled guilty to statutory rape and who had a lengthy criminal record.

Learn How We Can Help

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Map Location

Attorney At Law
400 Sugartree Lane, Suite 520
Franklin, TN 37064

Phone: 615-791-8511
Fax: 615-791-1346
Map & Directions