Should I accept a percentage of my alimony as stock and what are the tax implications?

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Should I accept a percentage of my alimony as stock and what are the tax implications?

My soon to be ex-husband wants to pay alimony to me as approximately $800 per month in cash and 3 separate payments over 18 months of $5500 in stock as he is an employee of a company and gets rewarded in bonuses which would constitute approximately half of my settlement. What are the tax implications for me? Is it wise for me to accept this?

Asked on July 24, 2012 under Family Law, California

Answers:

Cameron Norris, Esq. / Law Office of Gary W. Norris

Answered 8 years ago | Contributor

You would have to pay taxes on the sale of the stock, which could drastically reduce what you actually collect.  Also, there may be fees associated with the sale of the stock and the stock value itself may go up or down. 

I would be uncomfortable allowing any client to receive stock in lieu of normal support payments.  You should also have an attorney run the numbers and make sure that what he is proposing is enough money.  The greater disparity in income between you two, the more he is obligated to pay.  In addition, if the marriage is for less than 10 years in duration, then he would normally be obligated to pay for a term equal to half the length of the marriage.  If you were married for ten years or more, then he is obligated to pay support indefinitely, but you must make reasonable efforts to become self-supporting, if possible. 

On a side note, if he makes more money than you, it is also possible to have the court make him pay for your attorneys fees.

You should really speak with an attorney before you sign anything.  If you are in the Ventura County area, I would love to work with you.

Best of luck.


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