Divorce is sad on many levels, but that doesn’t mean it needs to tragically affect your finances. If you’re considering divorce, you’ll need to make sure that you know the laws of your state so you can successfully navigate the process of dissolving your marriage without destroying the assets you currently have. This guide will take Alabama residents through the major parts of divorce laws in the Cotton State so you can plan properly. If you’re thinking about divorce, consider working with a financial advisor.
How to File for Divorce in Alabama
To get a divorce in Alabama, one spouse must be a resident of the state for at least six months. There are additional requirements to get an uncontested divorce, which will be discussed below.
Grounds for Divorce
Alabama has both no-fault and fault divorces. A no-fault divorce is the simplest one, and can be filed for grounds of “irretrievable breakdown of the marriage” or “incompatibility.” A fault divorce, on the other hand, is when one spouse wants to break up the marriage and have the divorce be due to the other partner’s actions. Grounds for a fault divorce Alabama are as follows:
- An incurably incapacitated spouse when the marriage occurred
- Habitual drunkenness
- Abandonment for at least 12 months
- Mental illness causing one spouse to be institutionalized for at least five straight years
- Imprisonment for at least two years with a sentence of at lest seven years
- Crime against nature, human or beast before or after the marriage
- Wife was pregnant at the time of the marriage and didn’t disclose this to her spouse
Process to Divorce
If both parties agree on both a divorce and specific terms, they can file for an uncontested divorce. To start this process, one party files for a no-fault divorce and the other agrees. You’ll have to file in the county you live in, and each county may have unique requirements, so check with your county’s court.
Before it can be finalized, both parties must agree to terms on major issues like dividing property, child custody, any effects of one spouse remarrying and alimony. If everything is in order, the judge will grant the divorce as soon as 30 days pass.
If both parties cannot agree on divorce terms, you’ll have to get a contested divorce. For this, an attorney must represent your interests. The first step is for one spouse to file for divorce and have the other served with papers. This can be done via mail, by the county sheriff or by a process server. The receiving spouse then has 30 days to respond.
Next, there is a discovery process where all relevant documents and information – around financials, for instance – are shared with the parties. After discovery, the two parties will try to come to a settlement. This is normally done out of court, and sometimes involves an independent mediator. If a settlement can’t be found, the case will go to trial where the judge will hear evidence and witnesses before making a ruling on all major matters.
How to Split Up Assets During a Divorce in Alabama
Most property a couple comes to own during the marriage is considered marital property. The only property considered separate – and therefore not subject to the judges ruling as part of a divorce ruling – is anything obtained before the marriage or anything that was inherited or received as a gift.
Likewise, property that’s part of a legal document, like a prenuptial agreement, is separate property. For other complex property situations, an appraiser or a certified public accountant (CPA) can help evaluate assets, such as retirement accounts.
How to Divide Property in Alabama After a Divorce
The best and cheapest way to divide property, including pension assets, after a divorce in Alabama is to do it with your spouse and not involve the court at all. If that can’t work, a mediated settlement is the next option. If that doesn’t work, the judge will divide the property in question for the couple.
Alabama is an equitable distribution state, so the judge gets to determine who gets what based on what he or she believes is fair. That of course won’t always mean a 50/50 split, though. Various factors, including how long the couple has been married, are considered.
How to Manage Child Support and Alimony Under Alabama Divorce Laws
Alabama uses the “Income Share Model” to determine child support. This means the court determines how much the family would spend on the children if the parents were together. That amount is then split based on the individual income of both parents, meaning the parent with highest income pays more.
The custody arrangement will also impact payment. More specifically, only a noncustodial parent will pay support, as the court assumes the parent with custody is using their money directly on the child. A divorce settlement can also include what happens to minor children should one of the divorcing spouses die.
Alimony is a bit less formulaic. First, one spouse may be ordered to pay alimony to the other during the duration of the divorce. There is also rehabilitative alimony in which one spouse must pay the other payments for a set period of time, while the supported spouse gets job training or otherwise works to become self-sufficient.
A recent Alabama law limits the time period for alimony to five years. That is, unless the judge finds that one spouse can’t become self-sufficient. Should that occur, alimony can last for as long as the marriage did.
401(k) and IRA and Divorce in Alabama
If you have a workplace retirement plan like a 401(k), you might end up splitting the funds, either by agreement or on an order from the judge. If so, the court will issue a Qualified Domestic Relations Order (QDRO), which will allow you to withdraw funds without incurring the usual taxes and penalties.
An IRA doesn’t require a QDRO, as it is a separate personal account. However, the divorce order will have to have specific instructions to waive the fees and taxes.
Divorce and Estate Planning in Alabama
Though a couple may have previously established an estate plan, it should be revisited if they get divorced. For instance, both probably want to change who inherits their property if they pass away. An attorney can help set up the necessary trusts to pass assets on to minor children, if needed.
Also, make sure to change the designated inheritor for retirement accounts and any other financial accounts. If you filed any advance directives or powers of attorney during the marriage, make sure to change them unless you want your ex-spouse to make medical decisions for you.
Finally, if you have children, come up with a plan that is satisfactory to everyone to cover the possible situation in which both ex-spouses pass away.
Alabama has both fault and no-fault divorce. If both spouses agree on how to proceed with the divorce, a no-fault divorce can be filed uncontested and the whole thing can be wrapped up fairly quickly and inexpensively. If not, there is mediation.
Should neither of those solutions be possible, a trial will be necessary. Then, a judge will be tasked with deciding on issues related to assets, child custody, federal, state and local taxes and alimony.
Financial Planning Tips
- No matter how your marriage is going, a financial advisor can help you create a financial plan for your needs and goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Alabama is a state with relatively low income tax and effective property tax rates. The state sales tax is also low, but local rates can quite high in some cities. Use SmartAsset’s free and easy income tax calculator to gauge what you might owe.
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