Divorce & Money
Maintenance vs. Alimony
The idea of maintenance is a product of Colorado’s being a “no-fault” divorce state. It does not matter who may or may not have been the “bad actor” during a marriage. The old concept of alimony arose during a time when it was very difficult for most women to support themselves, especially with young children at home, or if they had not worked outside of the home. The prevailing presumption was that if the man wanted to get divorced he would have to pay to support the former wife in a manner similar to the one she had enjoyed during the marriage if at all possible.
Maintenance is based on different premises and assumptions. The primary one, after the no-fault assumption, is that each party will be able to survive on his/her own after divorce. Therefore, if a party (more often the woman, but not always) obtains maintenance he/she needs to meet a threshold showing he/she is a “candidate for maintenance” which involves showing that he/she cannot support him or herself without financial help from the divorcing spouse. There are many factors in considering a party’s inability to support themselves on their own, such as young children, a physical or mental disability, age, lack of training and the like.
How Long Will Maintenance Last?
In previous eras alimony was generally considered permanent. In modern times it is rare for maintenance to actually be permanent.
The general direction of maintenance these days is more towards the idea of rehabilitation. Basically, the standard can be construed as enough support for a long enough time for a previously unemployed, or under employed spouse to get either training or schooling to enable him or her to better support themselves. A common mistake that is made by divorcing parties is the idea that both parties should end up with the same income. The trend now is to use maintenance not to equalize the income of the parties but to bring the lesser earning party to a level of self-sufficiency. The courts will also seriously consider the length of the marriage and the age of the parties in awarding longer-term maintenance or even permanent maintenance.
How is the Amount and Frequency of Maintenance Payments Determined?
The amount of maintenance is determined by taking several factors into consideration:
- The standard of living during the marriage
- The length of the marriage
- The time necessary to acquire sufficient education or training to enable party to find appropriate employment and what their future earning capacity might be
- The age as well as physical and emotional condition of the party wanting maintenance
- The ability of the spouse who would be paying maintenance to meet his or her needs while meeting those of the spouse seeking maintenance
There are several ways maintenance can be handled in a dissolution. The most well known is periodic, usually monthly, for an indefinite period of time. This is generally called permanent maintenance and is unusual unless the payee is now and will be unable to support themselves. Periodic payments for a fixed period of time is more and more common. A “lump sum award” is when the spouse receiving maintenance takes the one payment to enable him or her to become self-supporting. This form is very unusual and would only be used in special circumstances.
What if We Agree on an Amount?
The idea of contractual maintenance (agreed to by the parties) is a more and more popular form of maintenance. In this instance the parties contract (through a separation agreement) that one spouse will pay the other a set amount per month (this amount can vary by month) for a definite period of time. The parties agree that neither the amount nor the duration is modifiable by the court.
Are Maintenance Payments Tax Deductible?
Maintenance is generally deductible to the payor and taxable to the payee. There are some specific I.R.S. requirements that need to be carefully considered especially if the amounts paid per month are not always the same. Maintenance terminates with the death of the payee or his or her remarriage (unless otherwise agreed). Often the payor is required to secure the maintenance amount with life insurance. Summary
In any case where maintenance is a serious possibility or necessity, it is important to have legal representation and guidance. As with all issues in divorce, this one can be negotiated, mediated, arbitrated or handled collaboratively. The issue of maintenance, if handled collaboratively will have the use of a collaboratively trained financial professional if helpful. Litigation and a trial in front of a Judge is of course always an option. One reason it is so important to have legal counsel in these maintenance cases is that the case law is always changing as well as the cultural norms.