SPOUSAL MAINTENANCE:
When and Why is it Awarded?
by
Attorney Alison Petri
For additional information: link to Radosevich, Mozinski, Cashman & Olson LLP
Spousal maintenance, formerly known as alimony, is a money payment from one spouse to another as a result of a divorce, typically on a monthly basis. Payments can be ordered by a court for a limited or indefinite length of time. The purpose of maintenance is two-fold: 1) to support the receiving spouse in accord with both divorced spouse’s needs and earning capacities, and 2) to ensure a fair and equitable financial arrangement between the parties.
There is no specific formula to determine the length and amount of a maintenance award because each case is decided on its own facts. However, the courts will consider several factors in deciding whether maintenance will be awarded and, if so, how much and for how long. One of the most important factors is the length of the marriage. Although there is no set period of time a couple must be married for maintenance to be ordered, there is a tendency to award maintenance for longer term marriages.
Although there is no hard and fast rule, a short-term marriage is often considered less than five years while a long term marriage is twenty or more years. For mid-term marriages, the longer the couple is married, the more likely maintenance will be ordered. It is important to remember that short term marriages may obtain a maintenance award and long term marriages are not guaranteed a maintenance award. It all depends on the particular facts of the marriage.
Other important factors include the age and health of both spouses, the educational level of each at the time of marriage, any contribution made to the education of one spouse by the other during the marriage, and the earning capacity of both. The court also reviews whether the spouse seeking maintenance can become self-supporting at a standard of living reasonably comparable to the standard of living enjoyed during the marriage.
The court will consider all income sources in determining what the standard of living was during the marriage. In general, maintenance awards are based on the couple's financial circumstances at the time the divorce is being finalized. If the court believes that either spouse is not generating income to their normal capacity, the court may consider that spouse’s earning capacity rather than actual earnings. This is true whether the 'shirking' spouse has reduced income in order to avoid paying maintenance, or to increase the amount of maintenance awarded to him or her.
If maintenance is ordered, it is tax deductible to the spouse paying maintenance and taxable to the spouse receiving the payments. This is the opposite of tax treatment for child support, which is a non-taxable event to both spouses.
If maintenance is awarded, even for an indefinite term, it will terminate upon the death or remarriage of the receiving spouse. However, the termination is not automatic, rather, the paying spouse must notify the court. The amount being paid in maintenance can also be modified or terminated if there is a 'substantial change in circumstances' following the divorce. A substantial change of circumstances could result from retirement, disability, change in income, or the receiving spouse's need for maintenance.
Maintenance is often an unpredictable and contentious issue between divorcing spouses. The key to determining maintenance is focusing on how the specific facts of a marriage fit into two themes: support and fairness.
For additional information: link to Radosevich, Mozinski, Cashman & Olson LLP