Recently on our divorce forum a user asked, “I have been married for twenty years. My husband just came home and told me he wants a divorce. I am at a loss. Can you give me some practical advice about the divorce issues I need to consider?”
Spousal support or alimony is governed by state laws. Specific information about your state’s laws can be found in your state’s statutes. States may grant spousal support upon the dissolution of a marriage or during the legal separation of a couple after one party requests spousal support by petitioning the court. Recently on our legal forum a user asked, “When does the court grant spousal support after a divorce?”
What is meant by the term relative income and how does that factor into spousal support and alimony payments?
Whether you are dealing with a divorce for the first time or facing a modification years after a judgment, you should understand how courts determine the amount of spousal support or alimony that the other spouse is obligated to pay. In California, for instance, spousal support orders are based on a number of factors set forth in California Family Code Section 4320. Basically, the Court considers the marriage’s standard of living, the parties’ relative income, and need for support. Unlike with child support, a change in circumstances alone is not sufficient to later request modification of an order. The spouse seeking modification must show either that their reasonable needs were never met by the initial order or that their needs have increased because they are no longer able to support themselves. This means that one has to show that the amount of spousal support one was receiving was not enough at the beginning or that it is no longer enough now that one’s needs have increased.
So what the heck is relative income anyway? Let’s explain it like this:
Comparing two spouses, who earns more or who has a better-paid job? Is that the spouse that earns more? Or is that the spouse who works less? Let’s be scientific about it, or at least mathematical. In first place comes the level of income as a measure how well paid the job is. This is called absolute income. If Bob monthly earns $2600 and Sue earns $3000, it is obvious that Sue earns more and has a better paid job. Sue’s absolute income is higher than Bob’s. But if Bob works 40 hours per week and Sue is working 50 hours per week, it appears that Bob is earning more per hour. Bob is earning $16.50 while Jane is earning $15. This means that Bob’s Relative income is higher than Sue’s.
So, it’s that relative income that is used to assess quality of life, and thus spousal support. In states like New Mexico, for instance, the rule of thumb is no spousal support unless one spouse makes at least 67 percent more than the other. (This is the “30-50” rule: 30% of the higher income compared to 50% of the lower income.)
It’s not just salary that makes up relative income. There can be other factors. Often there are complex issues in determining a spouse’s correct income for the purposes of calculating support. A spouse may be working less diligently or not working at all to deflate or decrease their income, in order to try and escape spousal support payments. In other cases, a spouse may be receiving job benefits such as a company car which should be treated as income, or may be operating their own business and running personal expenses through the business to decrease apparent income.
Spousal support is based on the premise that both spouses have an absolute obligation to support each other during their marriage and spousal support is the extension of that obligation after separation or divorce. States like Nevada have relatively vague statutes regarding spousal support and simply list factors that the judge should consider in determining the amount. These factors include but are not limited to: length of marriage, health of the parties, age of parties, relative income, and future financial prospects. Spousal support is a challenging aspect of family law. Particularly in cases where there are extenuating circumstances, you have the right to a qualified attorney to allow your voice to be heard by the court. This website is a great resource for you to help find a legal expert in this area, in your state.
When spouses separate , the court sets the amount of financial assistance to be paid to a spouse in need by the other spouse. The objective is to maintain the family’s standard of living to the extent possible until the divorce. Spousal support orders are in nearly every case based on court-approved schedules or guidelines, and can vary from state to state. A local divorce attorney can be of great assistance in understanding these schedules, or sometimes called calculators.
The available income of the paying spouse limits the amount the court can order. Struggling to maintain two households on the income previously needed for only one often means there’s not enough money at the end of the month to pay all the bills. The most important considerations about maintaining a standard of living are providing adequate food and shelter. Spousal support schedules are used to quickly and objectively determine the amount that should be paid.
Some prudent advice when facing the possibility of paying spousal support is to get your finances in order first. Avoid taking out new loans, pay off bills as far in advance of the separation as possible. Setting up the family budget sensibly will help meet cash needs during the divorce process and lower the permanent support orders, once all the factors of finances are considered.
If you foresee that you will need support as a result of a divorce, examine your existing situation to make sure you aren’t neglecting valid needs. Your checking account and other records like credit card statements will show what you spend monthly on food, housing, clothing and other necessities. This will ensure you won’t get stuck with a low support order because your spouse proves it doesn’t take as much as you claim to maintain the household. The support receiver has the burden of proving that more is needed, and how much the other spouse has to pay.
You and your divorce attorney should review the temporary support schedules of your state well in advance to be prepared for the amount the court is likely to order. While they provide a quick and uniform answer, since generally only net income is considered and expenses ignored unless in certain special categories. Net income is defined as gross income less mandatory deductions for items such as taxes and retirement. It’s like adding excess withholding for taxes and voluntary deductions to your take-home pay. It’s important to remember that adjustments to the family budget will change the amount of temporary support if the court will allow you to show the full amount is not needed, or is not enough, due to special circumstances.
Spousal support guidelines vary by state, but generally include the following factors: the length of the marriage, the age and health of each partner, the standard of living established during the marriage, each partner’s current level of income and earning potential, non-paid service preformed for the marriage , the sacrifices one spouse made so the other could further education, training, or their career, and other factors. In 29 states spousal support guidelines also allow fault to be considered with regards to eligibility for spousal support. If the lower income spouse committed adultery or some other marital wrong, they may be disqualified from spousal support privileges.
Alimony, or spousal support payments, is taxable income for the recipient and is a tax deduction for the payer.
You must report alimony you received on Form 1040 Line 11 on the federal tax return, and alimony paid is reported on Form 1040, Line 31. You must report the full amount of alimony or separate maintenance you received during the year. Do not report any amounts received for child support, because child support is non-taxable income. Your ex-spouse must report alimony paid along with your Social Security Number to the Internal Revenue Service, or IRS. Payment of taxes on alimony is a serious business.
If you fail to report alimony on your tax return, that will very likely result in an IRS audit. Since alimony paid is a tax deduction for the person paying you the alimony, it is highly probable that the IRS will find out how much alimony you received, and audit your tax return. The IRS says, “If you are the spouse or former spouse who is receiving the alimony, you must report the full amount as income on line 11 of Form 1040. If you do not give your social security number to your spouse or former spouse who is making the alimony payments, you may have to pay a $50 penalty.”
Federal law states alimony is tax deductible as long as you meet the following six requirements:
- You and your spouse or former spouse do not file a joint return with each other,
- You pay in cash (including checks or money orders),
- The divorce or separation instrument does not say that the payment is not alimony,
- If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment,
- You have no liability to make any payment (in cash or property) after the death of your spouse or former spouse; and
- Your payment is not treated as child support.
According to IRS guidelines, amounts paid under divorce or separate maintenance decrees or written separation agreements entered into between you and your spouse or former spouse will be considered alimony and taxable if:
- You and your spouse or former spouse do not file a joint return with each other
- You pay in cash (including checks or money orders)
- The payment is received by (or on behalf of) your spouse or former spouse
- The divorce or separate maintenance decree or written separation agreement does not say that the payment is not alimony
- If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment
- You have no liability to make the payment (in cash or property) after the death of your spouse or former spouse, and
- Your payment is not treated as child support or a property settlement
Not all payments under a divorce or separation instrument are alimony. Alimony does not include:
- Child support
- Noncash property settlements
- Payments that are your spouse’s part of community property income
- Payments to keep up the payer’s property, or
- Use of the payer’s property
The IRS allows that you may deduct from your income the amount of alimony or separate maintenance you paid, but you must include in income the amount of alimony or separate maintenance you received. Child support is never deductible. If your decree of divorce or separate maintenance provides for alimony and child support – and you pay less than the total required – the payments apply first to child support. Any remaining amount is considered alimony.
In this blog space, I have been examining alimony and the alimony reform movement in the United States. What about other states that don’t have alimony, such as Texas? How does post-divorce spousal support work there?
In the Lone Star State, spouses can agree on contractual alimony, also referred to as maintenance. Divorce court–ordered alimony is only applied in limited circumstances in Texas. To be considered for alimony, a recent conviction or deferred adjudication resulting from a criminal family violence matter has to exist, or the couple has to have been married over ten years. The court may order spousal maintenance or spousal support for a spouse if the other spouse was convicted for family violence within two years before the date the petition for divorce was filed. In ten year old and older marriages, the divorce court may then award alimony (spousal maintenance or spousal support) in an amount necessary to meet the receiving spouse’s reasonable minimal needs. This spousal support payment amount can last for up to three years, or in situations where the receiving spouse suffers from a disability, for as long as the disability remains. It is not permanent alimony like we’ve seen in Massachusetts or Florida or New Jersey or Oregon – states I wrote about in earlier blogs on alimony reform.
While not alimony per se, Texas family and divorce courts may also award temporary spousal support or spousal maintenence while a divorce case is pending, or in legalese, during its pendency. Courts in Texas generally award temporary spousal support to ensure that current bills are paid while the divorce proceeding is pending.
Spousal maintenance provides a spouse with periodic payments from the former spouse’s future income that continues after the divorce.
The spouse who is seeking spousal maintenance must show that he or she lacks sufficient resources to provide for his or her minimal reasonable needs. The spouse seeking future support must show that employment is difficult to maintain or gainful employment is not possible because of a physical or mental disability. Spousal maintenance may be ordered if a child has a disability that prevents the spouse from being employed outside the home. The courts may order spousal support if a spouse clearly lacks ability in the work place.
Factors that determine eligibility for a spouse to receive support in Texas are numerous, but the main factors the courts look to are these five:
- All the financial resources of the spouse seeking support;
- Education and employment skills, time necessary for education or vocational training;
- Duration of the marriage;
- Age, employment history, earning ability, as well as the emotional and physical well being of the spouse; and
- The efforts of the spouse seeking spousal maintenance to obtain suitable employment.
Driven like many other grassroots groups across the country by a desire to change antiquated alimony laws in their states, a Pacific Northwest group has raised their banner to change the way post divorce alimony support is dished out, to align the law with societal changes. The call for alimony reform goes on.
Oregon Alimony Reform, or OAR, was formed “to promote respect, independence and equity for the parties of divorce,” reads the group’s home page. “The goal of OAR is to reform and modernize alimony laws in Oregon.” Like counterparts in Massachusetts, Florida and New Jersey, the Oregon group says the alimony payer should not have a “permanent or indefinite duty to maintain a former spouse’s chosen standard of living,” but the spousal support paid to an ex-spouse should be reasonable, equitable and most importantly…limited. Alimony payments for spousal support should not be “till death do us part.”
Oregon is among 14 states that have seen alimony advocacy groups created to push alimony reform. As we covered in earlier blogs on this website about alimony reform, in 2011, Massachusetts implemented sweeping alimony reforms, Florida’s House Judiciary Committee overwhelmingly approved the drafting of a new alimony bill and New Jersey’s Judiciary Committee voted in favor of an alimony reform bill. Spousal support is viewed differently there now.
Changes in Oregon alimony law OAR advocates are:
- Limiting the duration of alimony payments to a reasonable period of time
- Excluding the income of a payer’s romantic partners and future spouses in determining alimony amounts
- Ending alimony payments on remarriage or cohabitation of the receiving spouse
- Limits on the maximum amounts of alimony payable
- Automatic termination of alimony payments upon good-faith retirement
- A streamlined process for modifications when the payer suffers a decline in income
“OAR and its many supporters have identified the urgent need for an equitable alimony calculator, similar to the child support model,” the website reads. “This will give divorcing parties clarity, predictability and reasonable alimony amounts. As it stands now, alimony awards vary wildly from case to case and from county to county in Oregon. In addition, even if the payer is unable to make the alimony payment because of a decline in income, and regardless of whether the recipient actually needs the payment, modifications are expensive and hard to obtain.”
As found in Massachusetts and Florida, the divorce courts in Oregon award indefinite alimony, meaning the duration is not defined, as opposed to permanent, as in other states. “While this supposedly modifiable,” OAR said, “history has shown that modification and termination is difficult, time consuming and costly.”
OAR cites a recent Oregon divorce case as an example of alimony run amok.
“An ex-husband earning $13,000 per month and paying $2050 per month in spousal support requested modification on losing his job after his severance pay ran out. At the time he was receiving just $1800 in unemployment benefit. At court the judge lowered the spousal support payment to $1550 plus $200 child support, leaving his ex-wife, earning $4000 per month, with $5550 per month and the ex-husband with $50. Why should someone with an income of $1800 pay someone with an income of $4000? Enforcing alimony limits would avoid this injustice.”
Like their sister groups, OAR wants alimony laws in their state to come into step with the times. The wheels of justice turn slowly, but at least they’re turing, they say.
“Today’s injustice is justified on past injustices,” OAR said.
Two things in life are certain – death and taxes. But what about alimony?
In some states, a divorce court could award a spouse permanent alimony, or permanent periodic alimony, meaning the award of payment continues until the death of either spouse or the remarriage of the receiving spouse. In this sense, permanent alimony does not go on forever, but can be a great obstacle to divorced spouses that want to remarry because of the financial burden to provide indefinite support to their exes.
Permanent periodic alimony or permanent alimony is based on one spouse’s need for support, and the other’s ability to pay. The ability of a spouse to pay is based upon their present earnings, not on future earnings potential. Just like child support, alimony is often paid through divorce court ordered paycheck deductions.
Therein lies the problem – the divorce court has almost unbridled discretion in considering the nature of the permanent alimony payments, as long as it considers factors like the duration of the marriage, the couple’s standard of living during the marriage, the ages, physical and emotional health of the spouses and the financial resources of the spouses, combined and separately. Unless the divorcing couple can arrange support agreements in mediation before the divorce begins, permanent periodic alimony can become a very contentious issue, and horror stories abound.
That’s why there is a groundswell of grassroots movements to reform permanent or permanent periodic alimony laws, known as alimony modification, in the United States, led by states like Florida, Massachusetts, New Jersey and Connecticut. Groups in those states and in other parts of the country contend that times have changed, and the divorce court must change, too. Alimony modification should evolve as society has evolved, they say. It’s not the 1950’s “Father Knows Best” or the 1960’s “Mad Men” eras anymore. More women are in the workforce now and more wives are the chief family breadwinners, making more than their husbands, and unlike before, it’s not just the women that need support from their husbands, but the mirror image.
So, back to the question in the title of this post – is permanent alimony permanent? The answer has to be, slowly but increasingly, no. Alimony modification in the divorce court is underway across America.
Under the prevailing law in most states, permanent alimony can only be reduced or terminated altogether by the divorce court if there is a Lepis, or change of circumstances. That’s the only circumstance for alimony modification. One of the foundations of family law in New Jersey, for instance, is that there must be changed circumstances to justify a permanent alimony modification. There are many cases where a spouse would not satisfy the Lepis requirements to justify a change in permanent alimony or permanent periodic alimony payments. If a spouse can’t satisfy Lepsis they could file an application with the court to reduce or terminate permanent alimony or permanent periodic alimony payments based on the principles of equity and fairness. If some type of life event or events occur to make the enforcement of a property settlement agreement neither fair nor equitable, then a strong argument can be made that it is the responsibility of the court to review the permanent alimony order.
The Second Wives Club says it’s high time for alimony reform.
More moms than ever are paying child support and alimony to their former husbands after a divorce, according to the American Academy of Matrimonial Lawyers (AAML). In a new survey, the AAML states that more than half of all divorce attorneys have noticed a sharp increase in the number of women paying alimony and child support to their ex-husbands after divorce in the past three years, because, the AAML says, 23 percent of all wives earn more income than their husband, and women now hold 51 percent of all managerial and professional jobs.
Alimony was originally intended for women whose husbands left them after a divorce, when women had few career opportunities and almost no civil rights. Fast forward to the present and women are contributing much more to the household income. In a modern twist to the interpretation of current divorce law, women who want to marry men who have been ordered to pay lifetime alimony to their former wife could have their own income counted against them.
The income of new wives of lifetime alimony payers is now considered family income and can be used to recalculate the amount of alimony payable to an ex-wife after a divorce. “Many women in Florida won’t marry their significant others for fear that part of their hard earned income and assets could be used to help support his ex-wife,” said Alan Frisher, a Certified Divorce Financial Analyst and co-director of the group Florida Alimony Reform (FAR), the largest alimony reform group in America, in a press release.
The Florida Second Wives Club, a FAR subgroup, is taking charge in the fight for alimony reform, representatives appearing in media across the Sunshine State. Florida is one of the few states that allows for permanent lifetime alimony, which does not end at retirement, but only ceases upon the death of either party, or remarriage of the recipient. During the 2012 Legislative Session, FAR proposed an overhaul of what it calls Florida’s “antiquated and outdated alimony laws.” The Florida House of Representatives, by a convincing vote of 83-30, passed HB 549 for alimony reform, but the bill died in the Senate. In Massachusetts, where alimony reform was signed into law this past September, the Massachusetts’ Second Wives Club was instrumental in their success.
“I do not see balance where a man can work so hard, a woman can collect a paycheck permanently from him, literally from the sweat of his brow, until the day he dies (and then she benefits from the proceeds of a life insurance policy he must keep for her), while she enjoys what most would consider a care-free existence,” wrote a Florida Second Wives Club member on the FAR website. “Heck, if he has to keep paying her for life, she should be earning her pay by doing his cooking and cleaning. Of course I’m being sarcastic, but I think you understand my point.”
Second Wives Club members say alimony reform is essential to bringing alimony laws in step with modern society, and the institution of marriage itself hangs in the balance for many couples.
“The current Florida laws stand in the way of me being happily married. Instead of enjoying a happy marriage, I feel sad and frustrated,” a woman wrote on the second wives club page of the FAR website. She wrote her fiancé was paying lifetime alimony to his ex-wife, and lifetime alimony is ridiculous, especially since he wants to spend the rest of his lifetime with her. “The reality is that I am not accepted into my fiance’s family as his ‘wife’, but rather as a girlfriend. The situation makes me feel like a second class citizen,” she wrote.
Like in New York, Massachusetts, Florida and New Jersey, an alimony reform grassroots organization is active in Connecticut who believe that “it’s time for the state to update its antiquated alimony laws for the 21st century.” Connecticut Alimony Reform (CTAR) adapted provisions and concepts from Massachusetts’ and New York’s new reform laws, supporting legislation that will “bring consistency, predictably and fairness to both parties and their children in this highly contentious area of family law.”
The group held a rally June 6 in Westport, Connecticut to highlight their proposals for alimony laws reform. A prominent Westport divorce lawyer, Arnold Rutkin, an opponent of a CTAR-backed bill introduced in the state Judiciary Committee in March appeared at the event, and despite their differences, were able to find a little common ground about problems in Connecticut’s family court system. “It’s a nightmare and it’s getting worse,” Rutkin remarked in a question and answer session with group members. He suggested a two year symposium to study alimony laws reform, which CTAR rejected, citing the “urgent need for alimony reform.”
“Our concerns [about reform] were heard loudly and clearly, and we have started vital conversations among legislators, lawyers, and ordinary citizens who get divorced every day in Connecticut,” a CTAR representative stated on the group’s website, ctalimonyreform.com. “These conversations will continue, and, with your help, our membership and our public presence will keep growing in the weeks and months to come. We are hard at work developing the next stages of our strategy, in the meantime, thank you for joining us, and please continue to stay in touch with us as we all know how vital (necessary) reform is in our great state.”
“There are so many problems with Connecticut’s alimony laws, it’s hard to isolate one or two,” said CTAR board member Charles Crenshaw, 68, of Bloomfield, who divorced in 2003 and has attempted unsuccessfully to modify his permanent payments twice, being ready to retire and having a full-time working ex-wife. “The return trips to court are toxic for the entire family. It’s especially hard for children of divorce when parents return to court and do battle. The wounds never heal. This prolongs the pain of divorce.”
Following the precedent of Mass Alimony Reform (MAR), a grassroots organization that spearheaded the effort to revise Massachusetts’ antiquated alimony laws, CTAR has taken the lead in advancing the need for structure, predictability, and consistency in alimony awards and in modifications, when parties return to court long after divorce in order to plead for lower or higher payments when circumstances change. We wrote about the Massachusetts movement on Divorce Attorney Home.com in this post.
CTAR’s core principles of alimony reform in their state were included in the defeated bill, but remain their rallying cry:
- Establish guidelines for alimony duration and amount with flexibility for unusual cases;
- Establish new criteria to define and determine cohabitation;
- Provide that alimony payers have a meaningful right to retire and see payments lowered or ended.
- Remove the income and assets of a payer’s new spouse from the amount available for alimony adjustments in a modification.
The drives to update alimony laws in Connecticut, New Jersey, Florida and Massachusetts signal an emerging national movement and will be most interesting to watch. You can be assured that we’ll keep on top of this issue in this blog, and bring you the latest news we can find.