In a landmark decision, a court has ruled that Social Security payments can now be used as alimony between divorced partners. This month, the Colorado Court of Appeals ruled that federal law allows Social Security money to be used for alimony payments from one ex-spouse to the other. Typically, alimony is paid to an ex-spouse after a divorce when one partner has significantly lower income or no income at all.
The case revolved around a provision in federal law that states that Social security benefits cannot be “transferable” or “assignable.” However, another provision of the law requires that Social Security benefits can be considered income for child support payments.
How social security benefits can be taken into account in divorce settlements
Judge David H. Yun clarified that judges “may also take into account Social Security retirement benefits and other non-transferable government benefits in determining alimony or child support payments, even if the order effectively results in an indirect assignment of those benefits.”
This ruling represents a significant shift in how Social Security benefits may be considered in divorce settlements and has the potential to impact countless individuals navigating the complexities of post-divorce financial support.
Understanding Alimony: A Historical Perspective
Alimony has traditionally been a way to support former partners whose incomes differ significantly. Typically, the higher-earning spouse will provide financial support to the lower-earning spouse after a divorce. This often occurs when the lower-earning spouse has given up their career to care for the children or manage the household in a way that does not generate direct income.
A case study from Colorado
Let's look at a specific case from Colorado. Riley McClure was paying his ex-wife $2,500 a month in alimony. When McClure retired and began collecting Social Security benefits, he hoped to reduce his alimony payments. However, he had to use his Social Security benefits to continue paying spousal support.
The legal dispute
McClure argued that this requirement violated federal law, but the appeals court ruled that it was permissible to include Social Security benefits when calculating one spouse's financial obligations to the other after a divorce.
The ruling highlights the complexity of maintenance law and underscores the importance of understanding how retirement benefits can affect the obligation to support one's spouse.
In a surprising twist, previous court decisions have at least partially supported the idea of using Social Security for alimony payments. Alex Beene, a financial literacy lecturer at the University of Tennessee at Martin, told Newsweek, “This is especially true in situations where a judge believes a former spouse should continue to make payments, but the amount of those payments is reduced because they are eligible for Social Security.”
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