What Factors Are Considered in Alimony Decisions?

What Factors Are Considered in Alimony Decisions?

alimony

The purpose of maintenance is to help the lower-income spouse become financially independent after a divorce.  While these payments are colloquially known as alimony, New York State law refers to them as maintenance.  The lower-income spouse may have given up a career in order to support the higher-income spouse, or they may have grown accustomed to a certain standard of living during the marriage and wish to maintain that standard.  Regardless of the circumstances of one’s marriage, receiving maintenance keeps the less monied spouse on his/her feet until he/she can become self-sufficient or until he/she remarries.

Under New York State Law, there are two types of maintenance: “pendente lite” or temporary maintenance and post-divorce maintenance.  Both temporary and post-divorce maintenance are determined by a set formula.  However, that formula caps the payor’s income at $184,000.

Temporary Maintenance

This type of maintenance provides the lower-income spouse financial support during the divorce action.  To determine the amount of temporary maintenance, the court uses a statutory formula which is based primarily on the spouses’ respective incomes.  The formula requires the court to take the following steps to calculate the amount of temporary maintenance:

  1. Subtract 25% of the supported spouse’s income (or 20% of the supported spouse’s income if there is no child support) from 20% of the paying spouse’s income (or 30% of the paying spouse’s income if there is no child support),
  2. Multiply the total income of both spouses by 40% and subtract the supported spouse’s income from that amount.
  3. Take the lower result of steps (1) and (2).  This is the correct temporary maintenance amount.

For example, if Spouse A earns $100,000 per year and Spouse B earns $50,000 per year, and Spouse A will pay child support to Spouse B, yearly maintenance payments would be:

  1. $20,000 (20% of $100,000) – $12,500 (25% of $50,000) = $7,500
  2. $150,000 × 0.4 (40%) = $60,000;  $60,000 – $50,000 = $10,000
  3. $7,500 per year in temporary maintenance.

Determining temporary maintenance can be complicated where he payor spouse has his/her own business.  Pending a completed business valuation, a determination of actual income can be tricky.

Under these guidelines, the payor spouse’s income is capped at $184,000.  If the payor spouse’s income is higher than the cap, and the judge finds that the temporary maintenance awarded by the income cap is unjust or inappropriate, the judge can adjust the guideline amount of temporary maintenance by considering a number of factors.  These factors are:

  • The age and health of the parties;
  • the present or future earning capacity of the parties, including a history of limited participation in the workforce;
  • The need of one party to incur education or training expenses;
  • The termination of a child support award during the pendency of the temporary maintenance award when the calculation of temporary maintenance was based upon child support being awarded and which resulted in a maintenance award lower than it would have been had child support not been awarded;
  • The wasteful dissipation of marital property, including transfers or encumbrances made in contemplation of a matrimonial action without fair consideration;
  • The existence and duration of a pre-marital joint household or a pre-divorce separate household;
  • Acts by one party against another that have inhibited or continue to inhibit a party’s earning capacity or ability to obtain meaningful employment. Such acts include but are not limited to acts of domestic violence as provided in section four hundred fifty-nine-a of the social services law;
  • The availability and cost of medical insurance for the parties;
  • The care of children or stepchildren, disabled adult children or stepchildren, elderly parents or in-laws provided during the marriage that inhibits a party’s earning capacity;
  • The tax consequences to each party;
  • The standard of living of the parties established during the marriage;
  • The reduced or lost earning capacity of the payee as a result of having forgone or delayed education, training, employment or career opportunities during the marriage; and
  • Any other factor which the court shall expressly find to be just and proper.

Post-Divorce Maintenance

Determining how much maintenance will be paid after the divorce can also be complicated.  The best way to decide the amount of maintenance is for the parties to come to an agreement without involving a judge.  This way, the parties have control over the outcome and can use maintenance as one of many bargaining chips in divorce negotiations. However, if this cannot be achieved and a judge decides the issue, the parties have little control over the outcome. 

The same formula used to determine temporary maintenance is used to determine post-divorce maintenance. And if a judge wants to award maintenance that exceeds the amount awarded by the income cap, he/she must consider the same factors listed above with the addition of:

  • The equitable distribution of marital property and the income or imputed income on the assets so distributed; and
  • The contributions and services of the payee as a spouse, parent, wage earner and homemaker and to the career or career potential of the other party.

With so many factors to consider, it is very difficult to predict how a judge will rule on post-divorce maintenance.  Furthermore, the duration of these payments can be a contentious issue.

How Long Does Post-Divorce Maintenance Last?

In most cases, a judge will decide the duration of maintenance payments based on these guidelines:

Length of the marriage Percent of the length of the marriage for which maintenance will be payable
0 up to and including 15 years 15%–30%
More than 15 up to and including 20 years 30%–40%
More than 20 years 35%–50%

For example, if a couple was married for 10 years, maintenance payments would be paid for 1.5 to 3 years.  But if a couple was married for 30 years, maintenance payments would be paid for 10.5 to 15 years.  And much like the amount of maintenance paid, the parties will only have control over the exact duration of maintenance if they come to an agreement without judicial intervention.  Even so, the parties only have “guidelines” to aid in their negotiations, not hard and fast rules.

Tax Considerations

Before the Tax Cuts and Jobs Act of 2017, which went into effect January 1, 2019, maintenance payments were tax deductible for the payor spouse and reported as taxable income for the payee spouse.  Now, there is no deduction for the payor spouse and the payee spouse does not need to claim the payments as income.  This issue is explored in further detail in a previous blog post on our website titled “How Does the New Tax Law Affect Divorce?”

Conclusion

Maintenance can be a great way for a less monied spouse to ease their way into self-sufficiency.  But if the parties want to have some control over the amount and duration of maintenance, they should avoid leaving the issue to be decided by a judge.  The best outcome is for the parties to come to an agreement on the amount of maintenance that is paid.  A capable matrimonial attorney will make every effort to settle the issue of maintenance before it goes before a judge.

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