Alimony Calculation & Analysis
Nevada law bases alimony on several “factors” set out in NRS 125.150(1), with the primary guidance provided by that statute is that alimony should be “just and equitable.” This makes alimony one of the most unpredictable areas of family law. A Judge has a lot of discretion as to how he weighs the factors. And a creative attorney can craft arguments in support or defense of an alimony claim under the statutory factors.
There are 11 factors that a Court is required to consider when determining an alimony award:
- The financial condition of each spouse.
- The nature and value of the respective property of each spouse.
- The contribution of each spouse to any property held by the spouses pursuant to NRS 123.030.
- The duration of marriage.
- The income, earning capacity, age and health of each spouse.
- The standard of living during the marriage.
- The career before the marriage of the spouse who would receive the alimony.
- The existence of specialized education or training or the level of marketable skills attained by each spouse during the marriage.
- The contribution of each spouse as homemaker.
- The award of property granted by the court in the divorce, other than child support and alimony, to the spouse who would receive the alimony.
- The physical and mental condition of each party as it relates to the financial condition, health, and ability to work of that spouse.
These factors are not in any particular order and case law does not provide the Judge much guidance how to interpret each of these factors. This is another reason alimony awards are so unpredictable.
Nevada Law provides for four general categories of alimony or spousal support that can be awarded:
- Temporary Spousal Support – Sums awarded from one spouse to another prior to divorce (while the case is pending resolution).
- Permanent Alimony – Alimony for which no expiration date is provided. This is often referred to as lifetime alimony.
- Temporary Alimony – Alimony with a set end date. This is the most common form of alimony.
- Rehabilitative Alimony – Alimony for the specific purpose of the receiving spouse obtaining training or education relating to a job, profession, or career.
Most commonly, alimony payments would be as a monthly amount for a period of time. Thus the question is: how much and how long? However, under certain circumstances, such as when one party is wealthy, old, and sick, the Court should consider the possibility of lump sum alimony.1
Alimony is taxable to the payee, and tax deductible to the payor. Because of this, there are numerous tax ramifications regarding the structuring of a global property settlement that includes alimony. Family Law Solutions can help parties reach the most mutually beneficial settlement structures to maximize the value of one party’s, or both parties’, actual benefit from the deal.
There are additional restrictions on alimony award structures, including the IRS’ Alimony Recapture rules which places certain safeguards in place to make it more difficult for parties to structure an alimony award in a tax-deductible manner.
Alimony Calculation (Tonopah) – $500 flat fee
In 1994, the Nevada Supreme Court noted that the Nevada Legislature had failed to set forth an objective standard for determining appropriate alimony awards.2
As a result, the State Bar Family Law section took 20-years-worth of alimony decisions, to create a comprehensive formula which took into consideration as much of those results as possible—assigning mathematical weight to various factors.
The formula derived from this research and these meetings is called the “Tonopah Formula”. While this formula has not been adopted as the law on alimony, it allows the Court to see an objective, math-based, review of what type of alimony award may be in line with past precedent. Many Judges notoriously use the Tonopah Formula as an alimony guideline. There are a few Tonopah Formula variations based on the parties’ circumstances.
Family Law Solutions can prepare a Tonopah Alimony Calculation, which may be very useful in either lessening or increasing alimony expectations and preparing an alimony case for settlement or litigation.
Alimony Factor Analysis – $1,500 flat fee
In addition to a Tonopah Calculation, Family Law Solutions can also do a full analysis of the factors the Court uses to determine an alimony amount, and frame those factors in the best possible light.
The alimony analysis includes a complete expense breakdown and factors in the obligor’s ability to pay with the obligee’s need.
1 Schwartz v. Schwartz, 126 Nev. Adv. Op. No. 8 (2010).
2 Gardner v. Gardner, 881 P.2d 645 (1994).
Temporary Spousal Support Analysis – $1,000 flat fee
The Court factors in parties’ income, deductions, and non-discretionary expenses and uses those numbers to reach a temporary support award amount that tends to be used for the entirety of the proceedings. Proceedings can drag on for several months to several years, thus temporary orders can add up to a lot of money. Maximizing (or minimizing) these awards can garner or save thousands of dollars.
Family Law Solutions can either frame this analysis in one party’s best possible light, or reach a neutral evaluation of what a proper amount may be so the parties do not have to spend large sums of money briefing and arguing this in front of the Judge.
Present Value of Alimony Calculations – Hourly
Sometimes, rather than paying out alimony over a longer period in monthly intervals, parties would prefer to handle alimony as a “lump sum” amount; meaning that alimony would be made in one payment, or a much shorter series of payments.
To determine what an appropriate lump sum alimony amount is, it can be very useful to calculate the present value of a monthly alimony payment amount. The value of money changes over time and there are many calculations to consider when assessing a lump sum amount of money in hand now versus extended payments over time.
Family Law Solutions can calculate the present value of any periodic payment, including alimony. Additionally, this calculation can be done in reverse. If a party has an expectation for an approximate dollar amount in present value, Family Law Solutions can calculate the monthly payment necessary to achieve that result.
Alimony as Part of a Comprehensive Settlement Analysis – $300.00 per hour
A properly structured financial settlement can save both parties a lot of money in terms of taxes and future expenses. Alimony is a big part of that puzzle. Family Law Solutions is can help parties find an optimal structure that serves all parties’ interests.