If your spouse has been ordered to pay alimony, whether rehabilitative or for the remainder of your life, you will likely come to depend on those maintenance payments for your livelihood. So what happens if your former spouse passes away or becomes financially insolvent and is no longer able to make the payments?
Unfortunately, this is not an uncommon situation, especially in a difficult economy such as that which we are in now. This is why many Georgia family law experts recommend divorcing couples to establish an alimony and maintenance trust instead of relying on standard monthly payments. In such a trust, the payor spouse will transfer assets or property into a trust account. Then, the income generated by that account will be used to make spousal maintenance payments to the recipient spouse.
Alimony trusts are especially beneficial for spouses who own small businesses. The payor spouse will not have to sell part of his or her interest in the business in order to make a lump sum or monthly alimony payments, and the recipient will not be at risk of losing those payments if the business fails and the payor spouse goes into debt. If that occurs, or if the payor becomes unable to make payments for any other reason, the recipient will continue to receive the income from the trust.
There are several additional benefits to an alimony trust. First, a neutral trustee will be designated to oversee the trust, which means that the payor and recipient will not have to directly communicate with one another if they don’t want to. Second, when the maintenance period ends or the recipient passes away, the remaining trust income can go to the couple’s children to provide them with additional financial security.
Source: Forbes, “What is an Alimony Trust and Why NBA Ex-Wives Might Wish They Had One,” Jeff Landers, Nov. 8, 2011