My last post was a broad overview of the issue of spousal support in marital dissolution. Now, I want to look more carefully at the practical ways of determining amount and duration of permanent spousal support.
In most divorce cases that I have seen, arranging the details of permanent spousal support is a top priority for the parties themselves. This is certainly understandable, given that parties are keeping a watchful eye on their immediate needs: the Payor, who will be writing the check, is likely thinking about the money needed to cover it, whereas the Recipient, who will be using the check, is likely thinking about its sufficiency for minimum, necessary expenses. In my role as a Temporary Judge, I tend to look beyond such immediate concerns to broader considerations, such as expected passages in life, the expectations for adjustment of support in the future, and the overall ability of each party to deal with the on-going requirements of life, work, and self-support.
Furthermore, parties often want permanent spousal support to proceed in the very same way that temporary support was handled—i.e., they want to put income figures into a computer and have software determine exactly how much they can expect to pay and receive. Unluckily, however, the law says that the Court CANNOT use computer generated calculations for permanent spousal support (but MUST use such calculations for child support!)
So, when it comes to working out the details of permanent spousal support, parties have no other choice but to rely on their own negotiating efforts in settlement discussions. For some, this may be the bad news. For others, this may be the good news since the parties do indeed get to make their own choices in dealing with this important matter.
This is not to say, however, that parties must ‘invent the wheel’ in this regard. In general, there are two major frameworks for managing amount and duration of permanent spousal support: 1) ‘automatic’ application of predefined conditions, and 2) future determination by the Court.
1) ‘Automatic’ Application of Predefined Conditions
Parties can establish a negotiated set of definable and observable criteria for either or both payment and jurisdiction.
In this instance, the parties define the conditions for payment and/or any modification thereof, and then the Court simply mechanically enforces these conditions, without judgment. For example, the parties might agree that there will be no modification of spousal support unless Payor has a reduction in income of at least 10% of the last year’s income, for at least six months.
2) Future Determination by the Court
Parties allocate to the court at some time in the future the responsibility to determine modification of either payment or duration if parties themselves do not reach agreement on one or both of these.
The court will then make its determination either by
1. applying the normal, legally defined criteria from case and statutory law [i.e., no guidance will be given in the documents; the court simply applies the law,]
2. using party-defined criteria on the still financially related former spouses. For example, the parties themselves might stipulate that support will terminate absolutely if Recipient is residing in a quasi-marital relationship with a member of either sex, whether or not that relationship decreases the need for support. [NB: current statutory law requires that the cohabitation must be with a member of the opposite sex, and merely provides a presumption of decreased economic need.]
No matter which of these frameworks parties use, they and their attorneys will also have the following common patterns to consider for matters of payment and duration:
1. Pay the computer-generated support amount that had
been determined for short term, temporary support.
Though the Court, by law, cannot use computerized calculations to determine permanent spousal support, the parties themselves may do so if they wish.
Note, however, that the formula used to determine temporary spousal support is based on the assumption of a single earner household, which may not be relevant for all households.
2. Pay a support amount that is based on expectations of some specific performance of the Recipient in the future, such as completion of school, increased earnings or the achievement of some other, financially significant milestone.
Parties who choose this “conditional plan with consequences” must also recognize that it requires a lot of effort and ongoing involvement of the former spouses to address such matters as these: supervision of performance; proof of accomplishment of required conditions; accuracy of the future predictions and thus, compliance with the entire plan.
Parties contemplating this plan should answer these questions: how will the risk of inaccuracy be equitably allocated to both parties? Who suffers if a condition is not met?
3. Pay a support amount that is based on returning each
party to the appropriate Marital Standard of Living (MSOL).
Under this plan, the Recipient would see a basic Smith/Ostler percentage increase in support if the Payor’s income improves post-judgment. Such an increase, however, is usually capped at the designated MSOL (including all earnings of the Recipient).
4. Custom-design a support payment plan such that the initially-agreed upon support amount adjusts (i.e., changes) in a predetermined way once certain imminent conditions occur.
A custom designed support plan might work like this: the parties bargain for a step down in support as soon as a care-giver obligation ends for the Recipient; or upon the Recipient’s receipt of an expected inheritance; or when a closely held company finally goes public, thereby multiplying the value of divided options.
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In the end, there’s just no way around it: making arrangements for permanent spousal support gives one much to consider, no doubt more than many parties initially imagine.
The next post will offer one more installment in this series on permanent spousal support, looking more closely at the limitation of the Court’s jurisdiction and support payment termination.
©2011 James Frederic Cox