Divorce Law Blog

Posts Tagged ‘alimony’

In 2011, the Massachusetts Legislature passed the Alimony Reform Act (ARA), which made substantial changes to the Masschusetts alimony system, including the implementation of a durational alimony scheme, thereby revising the older system once known as “alimony for life.” Under the old system, the alimony payment period was indefinite in duration, but the new law follows guidelines determined by length of marriage, from 5 years to 20+ years. This raised certain questions and challenges, especially that of alimony judgement pre-ARA (prior to March 1, 2012) as compared with post-ARA judgements. Earlier this year, three notable cases were contested under the new guidelines, questioning whether alimony payors whose divorce judgments were entered prior ARA’s effective date gain the benefit of substantive termination and modification under the new law. These three cases, Doktor v. Doktor, Chin v. Merriot, and Rodman v. Rodman, were all decided on the same day, all with the same answer: “No.”

All three cases were variations of the same concept: the alimony payor requested to end general term alimony payments based on the Massachusetts General Law chapter 208, § 49(f) interpreted as stating that alimony payments shall terminate at the payor’s attainment of full social security retirement age. There were some notable differences between the cases: in Chin v. Merriot, the husband has already reached retirement age at the time of divorce, whereas in both Rodman and Doktor, the paying spouse had attained retirement age after the divorce settlement.

Mr. Chin’s argument hinged on two points: that M.G.L. c. 208, § 49(f) superceded the “uncodified” section 4 of ARA (the provision that, other than durational limits for a marriage of 20 or fewer years, ARA is not in itself a material change of circumstances), and that the cohabitation modification (as his ex-spouse was cohabiting with another man) should retroactively apply. Mr. Rodman’s argument held that a merged alimony agreement such as his merits being treated differently from cases with surviving agreements, and Mr. Doktor argued that his former wife no longer required financial support through alimony. None of these arguments held.

The Supreme Judicial Court instead held that the ARA statute reflects a clear legislative determination that the uncodified sections 4–6 of the ARA override the more payor-friendly substantive sections of M.G.L. c. 208, § 49–55, the only exception being the general term durational limits as defined. The net result? While bad news for pre-ARA payors, the ARA protects payee spouses from abruptly losing their alimony payments when automatic social security retirement age was not obtainable in court. In other words, the SJC’s interpretation of the state legislature’s intent favors the interests of payees over those of payors.

For details of these three cases, please read Doktor v. Doktor, Chin v. Merriot, and Rodman v. Rodman.

For more details of the effects of the Alimony Reform Act, also covering Grounds for Termination of Alimony, Determining the Amount of Alimony to be Paid, and Alimony Modifications, please read Effects of the 2011 Massachusetts Alimony Reform Act, and also Massachusetts Alimony Reform Act of 2011 Law Summary.

Since the economic downturn of 2008, many have reported that the divorce rate is slightly down because of the economy. This is true. However, the Courts and attorneys that practice family law are busier than ever because people are reopening old support orders and filing for contempts as jobs are lost, incomes decrease, and asset values decline. Additionally, cases are being fought and litigated much harder and more aggressively as parties fight over an ever decreasing pie. One of the effects of the changing economy was the Massachusetts 2011 Act Reforming Alimony in the Commonwealth (read more).

For some people (usually men), this is a great time to file for divorce. If you are already paying alimony or child support you might even consider filing for a modification. Alimony and child support orders are almost always based on current income. If you are unemployed or your income has decreased substantially, alimony and/or child support should reflect this and you should be paying less. Many people fail to have the Courts reduce their support obligation when they lose their jobs or their income decreases (it doesn’t automatically go down – you must go back to Court!) and end up with large arrearages. If your income subsequently increases, the party receiving the support will have to refile and bring you back to court to increase the support. Many (if not most) support recipients fail to do this. They usually don’t even know that the income of the payor has increased! I have seen many cases where support orders are based on incomes that are a fraction of the payor’s current income.

This becomes especially important in alimony cases. Depending upon the judge, alimony may be particularly difficult to change. If the alimony order was based on a period during which the payor’s income was low, it may be very difficult for the recipient spouse to obtain an increase.

Lastly, the value of assets that are usually retained by men in property settlements (such as a family business or stock options) may be temporarily depressed in a slow economy and therefore the wife would receive a smaller share of other assets to accomplish property division.

Massachusetts Rules of Domestic Relations Procedure, Supplemental Rule 410, Mandatory Self Disclosure, details the documentation which must be disclosed within 45 days of service of the summons for a divorce proceeding, unless otherwise agreed by the parties thereto or ordered by the court.

Rule 410 details decrees that the following must be disclosed:

1) Both parties’ federal and state income tax returns and schedules for the past three (3) years, plus any non-public, limited partnership and privately held corporate returns for any entity in which either party has an interest. These must be disclosed together with all supporting documentation for tax returns, including but not limited to W-2’s, 1099’s, 1098’s, K-1, Schedule C and Schedule E.

2) All bank account statements for the past three (3) years, including those held in the name of either party, whether individually or jointly; those held in the name of another person for the benefit of either party; or those held by either party for the benefit of the parties’ minor children.

3) The four (4) most recent pay stubs from each employer for whom either party worked.

4) Documentation regarding the cost and nature of available health insurance coverage.

5) Statements for the past three (3) years for any securities, stocks, bonds, notes or obligations, certificates of deposit owned or held by either party or held by either party for the benefit of the parties’ minor children, 401K statements, IRA statements, and pension plan statement for all accounts listed on the 401 financial statement.

6) Copies of any loan or mortgage applications made, prepared or submitted by either party within the last three (3) years prior to the filing of the complaint for divorce.

7) Copies of any financial statement and/or statement of assets and liabilities prepared by either party within the last three (3) years prior to the filing of the complaint for divorce.

Additionally, during the progress of the case, both parties shall supplement all disclosures as material changes occur, such as increase or decrease in value of securities, bank accounts, or other financial instruments. Neither party shall be permitted to file any discovery motions prior to making the initial disclosure as described herein.

Unavailability of Documents: In the event that either party does not have any of the documents required by Rule 410 or has not been able to obtain them in a timely fashion, he or she shall state in writing, under the penalties of perjury, the specific documents which are not available, the reasons the documents are not available, and what efforts have been made to obtain the documents. As more information becomes available there is a continuing duty to supplement throughout the duration of the case.

In January 2011, following other states other states where alimony payment laws have changed as payors argue they are struggling in the current economy, Senator Gale Candaras, Esq. and Representative John Fernandes announced new legislation to reform the current Massachusetts alimony system. The Alimony Reform Act of 2011 as defined in the new law makes major changes to Massachusetts’ previous alimony legislation. So what are these changes and what implications do they have for alimony in Massachusetts? You can read a summary of Chapter 124 of the Acts of 2011, An Act Reforming Alimony in The Commonwealth here.

Among the most significant changes in the law is the implementation of a durational alimony scheme. Previously, when the court ordered a spouse to pay alimony pursuant to a divorce judgment, the payment period was indefinite and often referred to as “Alimony for Life.” However, under the Alimony Reform Act, the court now follows an Alimony Term Limits schema which determines the maximum length that alimony can be assigned depending upon circumstances.

• Long term marriages (more than 20 years): Alimony will end at retirement age as defined by the Social Security Act.
• 5 years or less: Maximum Alimony term is 50% of the number of months of marriage.
• 10 years or less but greater than 5 years: Maximum Alimony term is 60% of the number of months of marriage.
• 15 years or less but greater than 10 years: Maximum Alimony term is 70% of the number of months of marriage.
• 20 years or less but greater than 15 years: Maximum Alimony term is 80% of the number of months of marriage.
• Other term limits apply for “Rehabilitative Alimony, “Reimbursement Alimony”, and “Transitional Alimony”.

The Act also defines multiple types of alimony, which the court can utilize when creating a divorce order. Alongside the General Term Alimony following the schedule above, the law establishes three other term limits which apply to Rehabilitative Alimony, Reimbursement Alimony, and Transitional Alimony. These types of alimony can be ordered in place of the General Term Alimony for a duration of less than five years. Under the reform, a judge has discretion to order one of the shorter types of alimony, even when the General Term Alimony would dictate a longer period of alimony.

Grounds for Termination of Alimony

Under the Act, General Term Alimony can terminate when the recipient remarries or cohabitates with a new partner. Under the previous terms of the law, cohabitation was inadequate reason to terminate alimony, and there were some cases where alimony did not terminate upon remarriage of the recipient. The new law can thereby affect alimony recipients who cohabitate with a boyfriend or girlfriend in order to avoid marriage and thereby continue to receive alimony payments from their ex-spouses.

The Alimony Reform Act also states that General Term Alimony shall terminate upon the payor reaching the full retirement age or when that person becomes eligible for the old-age retirement benefit under the United States Old-Age, Disability, and Survivors Insurance Act. As you can imagine, this has significant implications for people who divorce when approaching retirement age, as previously retirement was not in itself sufficient to warrant termination of an alimony obligation. As judges are taking the position that there is a rebuttable presumption that alimony shall be terminated under such circumstances, you should consult with an experienced divorce attorney.

Determining the Amount of Alimony to Be Paid

Under the Alimony Reform Act, the court excludes a number of income sources from its determination of an alimony award, such as the gross income used to determine a spouse’s child support obligation.

Additionally, the Act further excludes any income the payor spouse receives from a second job or overtime from a determination of alimony. A somewhat fuzzy area regards a spouse who is not paid an hourly wage, but instead receives a weekly salary regardless of how many hours per week he or she works.

Another consideration under the Alimony Reform Act address circumstances where a payor spouse remarries. Under the new law, the new spouse’s income is no longer considered for the purpose of increasing the payor spouse’s alimony obligation. Obviously, this has strong implications for cases in which a payor spouse remarries someone with financial strength while the recipient ex-spouse has encountered financial difficulties.

Modifications of Alimony Orders Prior to the Alimony Reform Act

The overview: the Alimony Reform Act is a sufficient material change in circumstance to alter the duration of a previously ordered alimony award, but it does not justify a change in the amount of alimony that was previously awarded. In cases where the parties to a divorce agreement stating that their alimony order shall not be modifiable will not be entitled to modify their alimony order based on the Alimony Reform Act. So while the act has some impact on pre-act alimony orders, these impacts are limited.

What does this really mean for anyone with a pre-act alimony order? If you were ordered to pay alimony prior to the enactment of the new law, you can only seek modification for the duration of your obligation and can not obtain a modification for the actual amount of alimony that you were originally ordered to pay.

While these modification changes may sound appealing if you are paying alimony from a prior alimony oder, you should review the circumstances and potential ramifications of seeking a modification with a qualified divorce attorney as you may find yourself involved in a counter claim for an increase by the alimony recipient. Indeed, given the range of changes to the law under the Alimony Reform Act of 2011, it remains vital that you consult with an experience divorce attorney to analyze your circumstances and determine your optimal action.

On Monday, September 26, 2011, Governor Deval Patrick signed into law Chapter 124 of the Acts of 2011, An Act Reforming Alimony in The Commonwealth. This law sets new limits on alimony in Massachusetts, sharply curbing lifetime alimony payments in divorce cases and making a series of other changes to a system that critics considered outdated. Below is a summary of the law. See my blog post of May, 2012 for a discussion of the implications of the new law.

1. Alimony Term Limits
• Long term marriages (more than 20 years): Alimony will end at retirement age as defined by the Social Security Act.
• 5 years or less: Maximum Alimony term is 50% of the number of months of marriage.
• 10 years or less but greater than 5 years: Maximum Alimony term is 60% of the number of months of marriage.
• 15 years or less but greater than 10 years: Maximum Alimony term is 70% of the number of months of marriage.
• 20 years or less but greater than 15 years: Maximum Alimony term is 80% of the number of months of marriage.
• Other term limits apply for "Rehabilitative Alimony, "Reimbursement Alimony", and "Transitional Alimony".
2. Second Wife’s (Husband’s) Income and Assets Excluded
   "In the event of the payer’s remarriage, income and assets of the payer’s spouse shall not be considered in a re-determination of alimony in a modification action."
3. Co-Habitation Suspends, Reduces, or Terminates Alimony
   "General Term Alimony shall be suspended, reduced or terminated upon the cohabitation of the recipient spouse when the payer shows that the recipient has maintained a common household with another person for a continuous period of at least three months."
4. Child Support: Gross Income is Excluded From Alimony
   For purposes of setting an alimony order, the court shall exclude from its income calculation gross income which the court has already considered for setting a child support order…"
5. Child Support: Alimony Term is Co-Terminus with Child Support
   "Where the Court orders alimony concurrent with or subsequent to a child support order, the combined duration of alimony and child support shall not exceed the longer of: (i) the alimony duration available at the time of divorce; or (ii) rehabilitative alimony commencing upon the termination of child support. "
6. Alimony Amount is Limited
   "… the amount of alimony should generally not exceed the recipient’s need or 30 percent to 35 percent of the difference between the parties gross incomes established at the time of the order being issued."
7. A Second Job or Overtime Income is Not Included in Alimony Modification
   "Income from a second job or overtime work shall be presumed immaterial to alimony modification if:
   (1) A party works more than a single full-time equivalent position; and
   (2) The second job or overtime commenced after entry of the initial order."
8. Payment of Health Insurance and/or Life Insurance Reduces Alimony Payment
   In setting an initial alimony order, or in modifying an existing order, the court may deviate from duration and amount limits for General Term Alimony and Rehabilitative Alimony upon written findings that deviation is necessary. Grounds for deviation may include:
   (3) Whether the payer spouse is providing health insurance and the cost of health insurance for the recipient spouse;
   (4) Whether the payer spouse has been ordered to secure life insurance for the benefit of the recipient spouse and the cost of such insurance;
9. Alimony Term Extensions Are Limited And Require Clear And Convincing Evidence
   "The court may grant a recipient an extension of an existing alimony order for good cause shown. In granting extension, the court must enter written findings of:
   (i) A material change of circumstance that occurred after entry of the alimony judgment; and (ii) Reasons for the extension that are supported by clear and convincing evidence.
10. Alimony Ends with the Remarriage of the Alimony Recipient

When Governor Deval Patrick signed Chapter 124 of the Acts of 2011 on September 25, 2011, the Commonwealth of Massachusetts effectively abolished most lifetime spousal support, thereby joining several other states where alimony payment laws have changed as payors argue they are struggling in the current economy.

The measure generally ends alimony either when the payor reaches retirement age or when the recipient has cohabitated with a romantic partner for 90 days. Further, the law also establishes a formula for alimony, based on the length of the marriage. For example, a 15-year marriage would generally yield alimony which would last no more than 10.5 years of marriage.

However, the law still allows judges to award indefinite alimony for long-term marriages (those lasting 20 or more years), and in the case of short marriages, judges can order “reimbursement alimony” in such situations as when one spouse put the other through school during the marriage.

The major impact of the Massachusetts law is to end the previously common practice of judges awarding alimony as a permanent entitlement; such practice is becoming increasingly rare practice across the U.S. Additionally, and for the first time, the law sets guidelines for determining the amount of alimony payments. Signed in September 2011, the changes took effect in March 2012, which allows people who are currently paying lifetime alimony to file for modifications starting in 2013.

This area of law is still evolving and there is very little applicable case law at this time. An experienced divorce lawyer can advise you as to how the new statute might affect your individual situation.