Question: My husband, 60, and I, 54, are separating and trying to resolve our financial lives. Our son has been educated and is self-sufficient. Our initial plan is for me to keep our home (which has no mortgage), the majority of the contents, my 401 (k) and pension, and 30 percent of his 401(k), which is roughly $200,000. We both work, and I earn about $5,000 per year less than I need to support myself. When I retire in ten years and begin taking withdrawals and get Social Security, we figure I will still need about $10,000 more each year to pay my living expenses.

My husband will retire in five years and does not want to obligate himself to pay alimony that will reduce his retirement. In addition to the assets we acquired during the marriage that he will keep -- the balance of his 401(k) and his pension -- he has a stock portfolio with a value of $400,000 that was given to him by his parents over the past 25 years. His parents paid about $10,000 for this stock, which has done very well and pays him an average of $7,000 per year in dividends. He doesn’t want to sell it, and wants to leave this stock to our son. How can I get the additional money I will need without my husband having to go into his assets?

Answer: It appears that you and your husband have taken a rational approach to attempting to resolve your differences and, for that, you should be congratulated.

A risk of agreeing to pay traditional periodic alimony is that, depending on the language of the agreement, your husband’s obligation could be subject to increases if conditions change. Although we understand your husband’s desire when he dies to pass the stock on to your son, this isn’t a good economic decision given the fact that your husband is averaging only $7,000 from a $400,000 asset – not taking into consideration, of course, the capital appreciation.

If he would consider using part of his low-basis stock to deliver income to you, he wouldn’t be required to dip into his retirement income and wouldn’t have the risk of continuing alimony. This can be accomplished, we believe, by using a charitable remainder annuity trust -- sometimes called an “income maximization trust” – with you as the beneficiary.

Unlike selling part of the stock and paying state and federal capital gains taxes of roughly 20 percent, your husband’s contribution to the charitable trust would result in no capital gains taxes, and he would receive a charitable deduction that would offset some of his income taxes for up to five years, depending on his tax situation. You would be able to draw $10,000 per year from the trust for the rest of your life and would be taxed on the distributions to you. At your death, the funds remaining in the trust will pass to the one or more charitable organizations that your husband chooses.

He could choose to use a similar trust for himself and, instead of transferring stock at his death to your son, could purchase a life insurance policy with your son as beneficiary that would be tax-free. This is an example of using an estate-planning technique to solve a difficult marital settlement issue. You and your husband should consider discussing this with seasoned professionals. Don’t try to do this yourself.