Divorce is probably not an easy subject to confront in regular conversations. Writing about it is all the more difficult. But increasingly, many couples are parting ways. While some couples are financially well-off to take care of themselves, others need to be financially compensated. Alimony is a financial respite for the not-so-endowed spouse. And choosing the best compensation structures is a critical financial decision.
What is alimony?
Alimony is a monetary compensation granted to the spouse who is unable to support himself/herself. However, this compensation depends on matrimonial laws and varies across religions.
For instance, the Hindu Marriage Act, 1955, is applicable to all marriage- and divorce-related matters of Hindus, Jains, Sikhs and Buddhists. While the Shariat Law and the Dissolution of Muslim Act, 1937, are applicable to Muslim marriages, the Indian Christian Marriage Act, 1872, and the amended Indian Divorce Act apply to Christians, and for Parsis, it’s the Parsi Marriage and Divorce Act.
Apart from these religion-based laws, there are civil laws like the Special Marriage Act, 1954, and the Foreign Marriage Act, 1969, which are largely used for inter-religious or inter-caste marriages and divorces. Interestingly, it’s not women who always receive the alimony.
There is a provision that a working wife should offer an alimony or monthly maintenance to a non-working/unemployed husband. However, in other matrimonial laws, it’s usually the wife who claims compensation.
Kinds of monetary compensation
Alimony could be offered in two ways. It can either be a maintenance during the time of court proceedings or a permanent maintenance/lumpsum compensation after the legal separation. The lumpsum payment is usually referred to as the alimony. The spouse has the choice to go for either lumpsum payment or a fixed monthly payment, depending on the requirements.
How is alimony decided?
The court decides on the amount of alimony/maintenance after looking at factors like husband’s income and property, the woman’s income and property and the divorced individual’s financial needs. The court could also look at external factors such as inflation while deciding on the alimony amount. However, it is the applicant who has to prove her/his spouse’s net worth, which, in turn, will decide the amount of alimony/maintenance.
Explains Neeraj Shah, a Mumbai-based lawyer who specialises in family court and divorce laws, “One of the main issues we encounter in such divorce cases is lack of transparency. A wife is often clueless about her husband’s net worth. This is more common when the woman is a home maker. The husband usually routes most of his investment-related letters, cheques and even bills to his office address. This makes it difficult for a woman to calculate the appropriate alimony or a monthly maintenance amount.”
Once the court passes the order, the husband has to pay a lumpsum or a monthly amount till the wife remarries. The husband can request to stop or reduce the outgo, if the wife manages to get another source of income, adds Mr Shah. Often, a wife can gauge her husband’s net worth by looking at his income tax returns, credit card and other utility bills like the mobile, share certificates and other investments, lifestyle and wealth (if any) inherited from his family. Otherwise, it will be difficult to arrive at an appropriate alimony/maintenance amount as it will be difficult to find how much the husband earns.
“It is essential to collect all these details as the existing legal stipulation does not prescribe any floor limit on alimony. It’s very subjective today, and the spouse has to do the homework before computing compensation. The individual has to be doubly careful, especially if the spouse is a businessperson or has huge unaccounted salary,” says Jignesh Kalotia, another Mumbai-based lawyer.
There is no fixed rule or formula to calculate the alimony. However, if both husband and wife are working, then the maintenance paid to the wife may vary in the range of one-third and one-fifth of the joint income of both spouses. That has been the trend, adds Mr Kalotia. Calculating alimony also factors in the lawyers’ fee. The fees can vary from Rs 20,000 to Rs 2 lakh for the whole case taken together. Some lawyers also charge for every hearing, which could again fall in the range of Rs 2,000 to Rs 25,000. The fees depend on the case or petition, number of hearings and seniority of the lawyer.
In the end, tackling divorce is a daunting task without doubt. But following a systematic process to handle finances post-separation could help smoothen some of the rough edges.
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