Does an Inheritance Impact Alimony Payments?

Alimony, or spousal support, can be an important financial aspect of divorce in Alabama. It’s vital to understand how the alimony payments may be affected if the ex-spouse inherits a significant sum. In some cases, the inheritance may not make any difference to the pre-determined amount of alimony payments. But this will depend on when the inheritance was received, how was it set up, and how the funds were used.

It is vital to choose a family law attorney who is sufficiently experienced in dealing with such cases if you or the other party have received or are expecting to inherit a sizeable sum. The laws regarding inherited assets in Alabama are complex. It will require a skilled divorce attorney in Alabama to ensure that your legal rights are protected.

Spousal Maintenance or Alimony Under Alabama Law

Alimony or spousal maintenance refers to a court order that requires one former spouse to make regular payments to the other during and/or after divorce. Maintenance can be ordered as part of a temporary support order for helping the dependent spouse transition into an independent lifestyle, or as part of the final support order during final divorce settlement proceedings.

Alimony payments are either ordered by the court or agreed upon by the parties during divorce negotiations when one spouse is financially dependent on the other. Several factors are considered by the court in determining and awarding spousal maintenance. Inheritance acquired after divorce can play an integral role in the alimony payments whether you are on the paying end or the receiving end.

If the recipient of spousal support payments receives an inheritance, this is construed as a substantial change in their circumstances. The other spouse can move the court to reduce alimony payments. Depending on individual circumstances, the court may find that the recipient doesn’t need the same amount of spousal support as before. In this situation, the alimony payments would get reduced by the amount received as an inheritance.

When was the Inheritance Received?

There is no doubt about how the alimony will be affected if the inheritance is received after the divorce is finalized. It’s highly likely that the paying spouse will move to reduce the alimony payment. It is important to understand that inheritance is not considered to be community property when dividing assets. There are two ways alimony payments are impacted by inheritance while the divorce is ongoing.

Inheritance is expected

An expected inheritance cannot be taken into account while deciding alimony awards. This is because there is no guarantee that the inheritance will be received. The person planning on bequeathing the inheritance may deplete their assets, require expensive life of care, or simply change their mind. There can always be a falling out between family members that causes the will to be changed. The spouse meant to receive an inheritance may get a lower amount or be disinherited entirely.

Inheritance is received

The alimony award can be affected if the person has already received the inheritance. This is whether the divorce is finalized or not. Inheritance, especially when a substantial amount, can produce ongoing income. This income can be used for meeting the overall expenses of the spouse. In case the inheritance is received by a lower-earning spouse, they would have the money required to be self-supportive.

Hence, they won’t need as much alimony. This can go the other way as well. If the higher-earning spouse receives an inheritance before the divorce is finalized, it would be added to their financial potential. They would be asked to pay more to the lower-earning spouse by way of a higher alimony award.

Receiving an inheritance could trigger a modification of the alimony award if you are currently divorced and receiving alimony payments. It is possible that you may not be seen as a dependent spouse depending on the size of the inheritance.

Conversely, if you are currently responsible for paying alimony awards and you receive an inheritance, it’s highly possible that your ex may ask for an increase in alimony payments. Moreover, an increase in spousal support is possible only if they can demonstrate additional financial need.

Protecting Inheritance During a Divorce

An inheritance is treated as a separate asset as long as it is not commingled. This means the inheritance money should not be used for acquiring marital assets or supporting the other spouse. Making investments in the other spouse’s name or holding investments jointly using the inheritance money is another way of commingling assets.

You can protect your inheritance by setting it up as a trust for “health, maintenance, and support.” Such trusts protect the person inheriting the amount by not allowing a creditor to sue the receiver for the inherited money. This type of trust can prevent alimony payments from being affected, especially if the trustee is instructed to not make any distributions.

Get a Seasoned Divorce and Alimony Attorney on Your Side

The diligent and resourceful Alabama divorce and alimony lawyers at Smith Law Firm can help if you are worried about how an inheritance will impact the spousal support payments. We can inform you about all available legal options and help protect your rights. Schedule your free and confidential consultation with us today. Call 334-702-1744 or write to us online.