During divorce proceedings, the distribution of marital property can either take the form of cash distributions or they will be in the form of property distribution. Only cash distributions are deductible by the payor spouse and taxable to the payee spouse. Property transfers/settlements are not taxable to the payee spouse or deductible by the payor spouse. However, just because the distribution is in cash does not automatically mean it is deductible/taxable. The parties have a choice in how to classify the distribution, whether as taxable/deductible alimony or as a property settlement which is not taxable or deductible.
To treat a distribution as alimony, it is a good idea to make the payments conditional. In other words, the wording of the agreement should include language to the effect that the payments are “subject to death of either spouse, remarriage of the payee spouse or changed economic circumstances.”