Summary of North Carolina Alimony Law

Alimony (also known as spousal support) is the court-ordered financial support of one spouse by the other spouse as part of a legal separation or divorce.

In North Carolina, alimony is not mandatory in a divorce or legal separation. A court may decide not to grant alimony or to limit the amount and duration of alimony depending on the ability of both parties to provide for their own needs.

Alimony is granted only where one spouse is substantially dependant on the other spouse or substantially in need of support, or where the payor spouse was at fault in the breakup of the marriage.

To be “substantially dependant,” a spouse must be actually dependant on the other in order to maintain the standard of living to which the spouses became accustomed in the last several years prior to the date of separation.

To be “substantially in need of support,” a recipient spouse would have to be unable to maintain the standard of living to which the spouses became accustomed without financial contribution from the other spouse.

Factors Affecting the Amount and Duration of Alimony

Alimony may be awarded for an indefinite amount of time or for a limited term. In determining the duration and amount of alimony, courts look at a variety of factors in North Carolina, including (but not limited to):

• 1. The marital misconduct of either of the spouses;
• 2. The relative earnings and earning capacities of the spouses;
• 3. The ages and the physical, mental, and emotional conditions of the spouses;
• 4. The amount and sources of earned and unearned income of both spouses, including, but not limited to, earnings, dividends, and benefits such as medical, retirement, insurance, social security, or others;
• 5. The duration of the marriage;
• 6. The contribution by one spouse to the education, training, or increased earning power of the other spouse;
• 7. The extent to which the earning power, expenses, or financial obligations of a spouse will be affected by reason of serving as the custodian of a minor child;
• 8. The standard of living of the spouses established during the marriage;
• 9. The relative education of the spouses and the time necessary to acquire sufficient education or training to enable the spouse seeking alimony to find employment to meet his or her reasonable economic needs;
• 10. The relative assets and liabilities of the spouses and the relative debt service requirements of the spouses, including legal obligations of support;
• 11. The property brought to the marriage by either spouse;
• 12. The contribution of a spouse as homemaker;
• 13. The relative needs of the spouses;
• 14. The federal, State, and local tax ramifications of the alimony award;
• 15. Any other factor relating to the economic circumstances of the parties that the court finds to be just and proper;
• 16. The fact that income received by either party was previously considered by the court in determining the value of a marital or divisible asset in an equitable distribution of the parties’ marital or divisible property.

Modifying Orders for Spousal Support

If alimony has been awarded for an indefinite period of time and not as a specific amount of money or in a lump sum, then a court may increase or decrease the amount of money paid as alimony.

To do so, one of the spouses must show a “substantial change in circumstances” from those that existed at the time of the original court order setting the amount of alimony. Examples of a “substantial change in circumstances” could include changes in earning capacity, expenses, income or assets of one of the former spouses.

When do Alimony Payments End?

In general, alimony that has been granted for an indefinite period of time terminates when either party dies or when the recipient spouse remarries. In some cases, alimony can end if the recipient spouse continuously cohabitates with another person and that other person provides some degree of support to the recipient spouses.

Tax Consequences of Alimony

It is important to understand that there may be tax implications for individuals who pay or receive alimony. According to Section 71 of the Internal Revenue Code, alimony must be included in the recipient’s gross income and can be excluded from the payer’s gross income.

However, it is critical that payments actually qualify as alimony under the law. To qualify as alimony (also according to Section 71 of the Internal Revenue Code), payments must generally meet five conditions:

• (1) The payment is be a cash payment (such as a check or money order)
• (2) The payment is received by (or on behalf of) a spouse under a “divorce or separation instrument”
• (3) The divorce or separation instrument does not designate the payment as a payment which is not includible in gross cross income as alimony and not allowable as a deduction for the payee spouse (under Section 215 of the Internal Revenue Code).
• (4) The payer and payee are not members of the same household at the time payments are made
• (5) There is no liability to make payments after the death of the recipient spouse