In a groundbreaking 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 determined that federal law permits the use of Social Security money for alimony payments from one ex-spouse to another. Typically, alimony is paid to an ex-spouse after a divorce when one partner has a significantly lower or no income.
The case centered on a provision in federal law stating that Social Security benefits cannot be “transferable” or “assignable.” However, another legal provision requires that Social Security benefits can be considered as income for alimony payments.
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How Social Security benefits can be utilized in divorce settlements
Judge David H. Yun clarified that judges may “consider Social Security retirement benefits, as well as other non-assignable federal benefits, in awarding maintenance or child support, even in circumstances where the order effectively results in an indirect assignment of those benefits.”
This ruling signifies a significant shift in how Social Security benefits can be utilized in divorce settlements, potentially affecting countless individuals navigating the complexities of financial support post-divorce.
Understanding Alimony: A Historical Perspective
Alimony has traditionally been a way to support ex-partners who have a significant income disparity. Typically, the higher earner provides financial support to the lower earner after a divorce. This often occurs when the lower earner has sacrificed their career to take care of children or to maintain the household in ways that don’t directly generate income.
A Case Study from Colorado
Let’s dive into a specific case from Colorado. Riley McClure was paying his ex-wife a monthly alimony of $2,500. When McClure retired and began receiving Social Security benefits, he hoped to reduce his alimony payments. However, he was required to use his Social Security income to continue covering his spousal maintenance fees.
The Legal Battle
McClure argued that this requirement violated federal law. However, the Court of Appeals ruled that it’s permissible to include Social Security income when calculating the financial obligations one spouse owes another after a divorce.
The ruling highlights the complexities of alimony and underscores the importance of understanding how retirement benefits can impact spousal support obligations.
In a surprising twist, past legal decisions have at least partially supported the notion of using Social Security for making alimony payments. Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, shared with Newsweek, “This is especially true in situations where a judge feels an ex-spouse should continue to make payments, but because they qualify for Social Security, the amount of those payments is reduced.”