Spousal maintenance is an emotionally charged issue. The fact that no formula exists relative to alimony awards means each case is treated uniquely. Given the lack of predictability concerning alimony awards, litigants sometimes have a tough time deciding how to appropriately settle their case. Our experienced team of spousal support lawyers in Minnesota can help you navigate the legal nuances of alimony.
Nature of Spousal Maintenance
Of all the financial issues involved in a divorce, spousal maintenance (alimony) is usually the most complicated, and emotional.
Spousal maintenance is a difficult issue because unlike child support (which is based on a specific formula), alimony is a “factor-based” financial award. There are no absolutes.
Ten judges would likely view the same set of facts very differently, and issue ten distinct opinions – all of which would be upheld on appeal, given the discretion afforded to judges.
The bottom line is that alimony is an issue that is handled on a case-by-case basis. As a result, our spousal support attorneys in Minnesota often consider a “range of possible outcomes” during settlement negotiations, as opposed to a finite projection.
Purpose of Alimony
Spousal maintenance payments are designed to provide financial assistance to an ex-spouse who is incapable of meeting their monthly expenses, either temporarily or permanently.
Determining Need and Ability to Pay
The starting point in considering a spousal maintenance award involves determining the “need” of the person seeking alimony. They must provide an anticipated budget. That anticipated budget must be “reasonable,” in light of the standard of living enjoyed by the parties during the marriage (no Cadillac payment for someone who routinely drove a Chevrolet).
Once the budgetary needs of the recipient are determined, earnings of that litigant (whether actual or potential) are explored. If the income of the spouse seeking alimony falls short of their budget, they have established a “need.”
The next step in the analysis involves a comparison of the payer’s income and budget, in ascertaining their ability to pay spousal maintenance.
Because alimony is deductible to the payer, and must be reported as income by the recipient, the income tax consequences of spousal maintenance payments are taken into account in determining need and ability to pay.
Amount and Duration of Alimony Award
The question then becomes how much the payer should pay, and for how long. To determine the amount, and duration of alimony, spousal maintenance lawyers in Minnesota will examine the following factors:
- The financial resources of the party seeking alimony;
- Time necessary to acquire sufficient education or training to enable the party seeking alimony to find appropriate employment;
- Standard of living established during the marriage;
- Duration of the marriage and, in the case of a homemaker, the length of absence from employment;
- The loss of earnings, seniority, retirement benefits, and other employment opportunities forgone by the spouse seeking alimony;
- The age, and the physical and emotional condition of the spouse seeking alimony;
- The ability of the spouse from whom alimony is sought to meet needs while meeting those of the spouse seeking alimony; and
- The contribution of a spouse as a homemaker or in furtherance of the other party’s employment.
Temporary and Permanent Spousal Maintenance
Spousal maintenance can be awarded on a temporary or permanent basis. A more accurate way of describing alimony involves characterizing it as “definite” or “indefinite.”
A temporary (definite) award of spousal maintenance provides for payments to the recipient for a specified period of time. Some temporary awards are non-modifiable by agreement (both as to amount and duration), so that certainty exists for the litigants (called a Karon waiver). In other situations, a temporary award may be made subject to future modification.
A permanent (indefinite) alimony award involves payments made until there is a significant change in circumstance for either party (remarriage, retirement, or a significantly increased or decreased income).
Podcast: Spousal Maintenance in Minnesota
This is Jason Brown. I’m one of the founding partners with the Brown Law Offices, a Minnesota divorce and family law firm located about 15 minutes northwest of downtown Minneapolis.
Now, today’s show is going to focus on an issue that is often more emotionally charged than the issue you might think would lead in that area, and that’s child custody cases. But actually in my experience, I have found that spousal maintenance cases tend to be a lot more raw and personal to the parties who are involved. As you might expect, the conflict stems from the fact that the party who’s asked to pay spousal maintenance rarely wants to make that payment. They see it as nothing more than pure greed on the part of their soon-to-be ex-spouse. Whereas, their soon to be ex-spouse is probably going to be in a financially difficult situation and does need that money in order to support themselves going forward.
Important to keep in mind the fact that Minnesota is a no-fault divorce state. What that means simply is that if you are the primary breadwinner in your family and your spouse has been a stay-at-home parent and you’ve been married for quite a while, and they’ve indicated to you that they’ve had an affair and want to dissolve the marriage; you need to keep in mind, the court is not going to take that kind of conduct into account in determining whether an award of spousal maintenance is appropriate, how long the maintenance payment should continue, or how much the monthly maintenance payments ought to be.
Some of the more difficult days I’ve had as a divorce lawyer have been those where we have to have the realization conversation with our client, who happens to be the sole breadwinner for the family, and tell them that not only are they going to have to sacrifice half of the retirement they’ve accumulated and half the equity in their home and half their personal property and see their kids half the time; but now, they also get to pay their cheating spouse money every month because of the fact that they want to get a divorce. Not a pleasant conversation to have, but we have to do it because, again, Minnesota is a no-fault divorce state and it does not matter to the court what led to a breakdown in the marriage.
Needs and Resources
All right, so if the court is not going to take into account misconduct or perceived misconduct, things like infidelity or financial mismanagement or alcoholism or acts of domestic abuse, in determining how much alimony and for how long, what the court look at? Well, there’s a series of criteria that are set out in the Minnesota statutes. The essence of it is that the court is going to look at the needs of the requesting party and that requesting party’s resources to provide for themselves going forward, coupled with the same exact question on the spouse who’s being asked to pay. Basically, what does their budget look like and how much income do they have coming in each month following the divorce.
But of course this is the law, it’s got to be more complicated than that. And the reality is that alimony claims and cases and scenarios are one of the more difficult issues to tackle and predict. And the reason is that unlike an award of child support, where basically the parties are going to take their income and the number of children and the expense associated with health insurance and the like, and plug it into a formula and out comes a number and the court adopts that number about 95% of the time, and we’re done; alimony is based on factors. It’s based on some elements that the court has to balance in figuring out what number feels right. You could ask a hundred judges, give them the same set of facts and ask them to make an alimony award and determination about how much and for how long, and it’s very likely you would receive a hundred different answers.
Marital Standard of Living
And so from the standpoint of predictability, a lot goes into looking at the various factors that the court is going to examine in determining what sort of alimony award is appropriate. Again, we tend to treat the starting point for the analysis as the financial resources of the party who is seeking alimony as compared to their ongoing monthly expenses. The relevant standard that the court is going to take into account in examining their monthly expenses is the standard of living that was established during the marriage. Basically, parties who lived a lofty lifestyle, who drove luxury automobiles, who frequently vacationed, who ate at the finest restaurants and shopped at the finest stores, their budget going forward may look a lot different than someone who’s making an hourly wage of $14 or $15 bucks an hour, both parties in the home working and basically living from check to check.
The question for the court is what’s reasonable, and reasonableness is not only objective. In other words, what is reasonable to the greater community, but it’s also subjective based upon the way the parties enjoyed life during the marriage. And so what the court is going to do is figure out, okay, what’s the monthly budget and then how much income does that soon-to-be ex-spouse have coming in or how much income could they earn in order to support themselves. The court will also take into account child support awards. They may also take into account interest that a party could earn on assets if the marital estate is significant enough.
Ability to Pay
Now, just because someone has a need for alimony doesn’t guarantee that they’re going to receive an award of spousal maintenance. The second step in the analysis, as you might expect, is a review of the obligor, or the party who’s being asked to pay a review of their income, and their reasonable ongoing monthly expenses. If their income is insufficient to meet their ongoing expenses, the court may be inclined to deny the award of spousal maintenance. On the other hand, just because that soon-to-be ex-spouse’s income is insufficient to meet their expenses, that doesn’t mean the court is necessarily going to deny the other spouse the right to receive spousal maintenance.
Quite often what we find is that judges will make the parties share the pain, so to speak. One frequent outcome is for the court to take the budgets of each and the available cash to each. Not necessarily equalize the the cash because that can be an abuse of discretion under some case law that’s been decided by the Minnesota Court of Appeals, but there is no decision concerning the ability of the court to equally divide the shortfall. And so what they’ll do is say that both parties are going to live $600 in the hole or $700 or $800 or $1,000 in the in the negative each and every month.
Duration of the Marriage
The other more critical element the court’s going to look at involves the duration of the marriage. There is a direct correlation between the length of marriage and the length of the alimony award. As you might expect, the longer the marriage, the more likely the court is to grant a more permanent award of spousal maintenance. There is this rumor floating around that there is some formula the court uses, something along the lines of half the length of the marriage is inappropriate length of time for an award of spousal maintenance. That is not the case. There are some judges who might use that as one of the elements they apply in determining how much and for how long, but there is no statutory requirement that the court look at the length of marriage and divide it in two.
Permanent v. Temporary Awards
The reason that maintenance cases are so darn difficult to deal with is because, again, there’s no magic formula. There are cases out there where you have equal lengths of marriage where the Court of Appeals has said “yes” to one party in receiving a permanent award order spells a maintenance and “no” to another. What we find is typically marriages that are 15 years or less in duration, typically those will involve more temporary awards. You might expect up to about one half the length of marriage. Again, that’s not a statutory criteria, but just a rule that kind of it gets tossed around anyway. And so from a predictability standpoint, we might start there. But a case that involves a marriage that is, let’s say, a marriage of 20 or 25 years, we’re virtually certain that the court would entertain an award of permanent spousal maintenance in a situation like that.
Absence from Employment
Other factors a court’s going to look at include, in the case of a homemaker, the length of time that they have been absent from the workforce and to the extent to which their education skills or training have become obsolete. Kind of a typical scenario there would involve a spouse who has been a stay at home parent who had a degree in IT back in the mid 1990s, and I mean that that degree is basically worthless at this point aside from the standpoint of having a four-year college degree. Everything in that field has changed over the last 15 years.
The court will look at the loss of earnings, seniority, retirement benefits and other employment opportunities that the spouse who is seeking maintenance has given up in playing a role as a homemaker. They’ll look at the age of the parties, the physical and emotional condition of the parties. They will look at the contribution of each party in building the marital estate as well as the contribution from a spouse who’s been a homemaker in supporting the other parties, employment or business. Again, the classic scenario there, to an airline pilot who has had a spouse stay home and serve as the primary caretaker for the children, thereby allowing that pilot to gain seniority and increase their wages. The court’s going to look at that and balance that as part of the alimony equation.
So couple of things to take away from the elements the court’s going to look at. First, very unpredictable in terms of what a court is going to do. And second, there are a lot of criteria and a lot of factors the court can take into account, and the judges are given a lot of discretion in making these awards. Very rare for the Minnesota Court of Appeals or Supreme Court to overturn the award issued by a district court judge.
A couple of key points here before we wrap up this podcast. First is the fact that from an income tax perspective, spousal maintenance payments are tax deductible to the payer and they are income to the recipient. The opposite is true with child support. So part of our analysis in making a recommendation to a client involves looking at all of the tax consequences that will flow from an award of spousal maintenance.
Spousal Maintenance Buyout
And the other important thing to keep in mind is that quite often we’re able to get alimony issues resolved or settled through a lump sum buyout. Some will opt to receive a cash payment from their spouse in lieu of seeking in award of spousal maintenance. Typically, these are reserved for cases where temporary awards of spousal maintenance would be appropriate.
Let’s say that our analysis of the case leads us to believe that the court would grant someone an award of $1,000 a month for a period of five years. Total payments would be $12,000 per year; over five years, $60,000. But, it would be deductible to the payer and it would be income having to be reported on state and federal income taxes to the recipient. Well, if we can get that recipient, let’s say $35,000 or $40,000 cash as opposed to $60,000 over time, the net effect is the same. And so what will happen in many cases where temporary awards are contemplated is we will have the parties permanently waive the right to receive spousal maintenance from the other, but have the spouse who would otherwise receive spousal maintenance receive a lump sum cash distribution from their soon-to-be ex-spouse.
And there you have it, a quick 10-minute primer on the issue of spousal maintenance. A very difficult issue to deal with in family court given the unpredictability associated with it. And the bottom line is that every case is unique and there is no magic formula for determining how much and for how long. And so if you have questions about your situation, I certainly invite you to give us a call. You can find our contact information throughout the website.