By agreements, I am talking about things ranging from promises to give him/her the landscape painting to promises for support payments for “all” his/her living expenses.

If you have any pre-attorney agreements with your spouse, check with your attorney in your first meeting. Be clear about the agreements and what you think both you and your spouse said at the time. Be clear about your current intentions.

• How will this be handled in my divorce case?
• I didn’t agree to this, I just kept my mouth shut and now he/she is forcing this on me.
• He/she promised to pay alimony for life. Can I really get that?
• Can he/she really get credit for giving me something now that he/she already gave me as a gift years ago?
• Is this agreement wiped out because we now have attorneys involved?
• Can I make him/her honor this agreement now that we have started the legal part of this divorce?

In collaborative divorce cases there is a method to talk nicely about these expectations. I have been involved in these discussions dozens of times. It is best to get this resolved up front. Don’t hide from these issues. If you want to keep your costs down and get out as quickly as you can, be assertive about clearing the air on these old agreements.

I would like to hear about any broken agreements that you have experienced in divorce.

He and his attorney told Angie and her attorney that the alimony in his offer is non-taxable. Angie would get to keep the entire lump sum and none of it would be taxable. Great. Angie considered the lump sum in relation to her cash needs. Looks good.

But, when the agreement was typed up for signatures, it said that Angie was getting her lump sum alimony money from Herman’s IRA account. Herman was going to transfer that IRA money to Angie. He was not going to withdraw it, pay the income tax due and then hand it to Angie. That meant Angie would have to pay income taxes on her alimony when she withdraws it from the IRA.  When I point this out to her, she and her attorney are no longer happy.

Surprises are not fun in divorce proceedings. Angie and her attorney started packing their stuff, ready to walk out.

I sat down with Herman and his attorney to try to figure out how he could give Angie a lump sum that will not be taxable to her. After all, he had offered that to her.

He didn’t want to part with any of his cash-in-bank. So, we scoured his IRA and discovered that it included a large chunk of post-tax contributions. This meant that Herman could use the post-tax contribution money for the lump sum alimony. Angie would not have to pay income tax on the alimony money she withdraws from the IRA. Angie and her attorney were back to happy.

Income taxes are hidden in all kinds of places. Be careful.

In order for this to work, the alimony must qualify as alimony.

The payments must be in cash, checks or money orders. If payments are to a third party (stated to be such in the divorce decree), the payments can be considered alimony if they otherwise qualify for alimony.

Payments must be required by the decree or separation agreement.

The decree cannot designate the alimony payments as “not alimony”.

Spouses can not be members of the same household (much as they may want to be).

Alimony payments cannot be treated as child support.

Alimony payor is not liable to make payments after the recipient’s death.

Payor and recipient cannot file a joint tax return.