The future may hold some relief for spousal support payors. Last year Sen. Emmett Hanger of Augusta, Virginia made a proposal to cut off spousal support when a payor reaches retirement. This year a modification was made to that proposal that would make retirement count as a “material change of circumstance,” the standard a court must consider when weighing whether to modify a spousal support award.
When couples divorce, the court may order one spouse to pay the other spousal support, sometimes referred to as alimony. Courts base the award on various factors that include the length of the marriage, the income and earning capacity of each spouse, and the lifestyle of the couple during the marriage. Often, in long-term marriages, the support award can be permanent (i.e. for life). While this is meant to balance the equities between the spouses, the practical effect can be that the payor spouse remains obligated to pay the same amount for the rest of his or her life. Once someone retires, this can become very difficult to maintain, as that person is no longer bringing in a salary.
To decrease or terminate a spousal support award following a divorce (or subsequent court order), the payor spouse must petition the court. Before a court may consider altering the spousal support amount, it must first determine whether there has been a material change in circumstances since the last order was entered. If this has been shown, the court then reviews the assets of the payor to determine whether, even though he or she is no longer working, they have the ability to continue making payments. The basic analysis that the court performs is balancing the needs of the payee spouse against the ability of the payor spouse to pay. The court looks at the payor's assets, such as retirement accounts, to make that determination. Under current law, the court does not look at the assets of the payee spouse in this analysis, even if the payee spouse received an equal or significant amount of the retirement assets that accrued during the marriage. Further, there is no clear directive in either case or statutory law whether retirement is a material change in circumstances.
The referenced change in the law attempts to even the playing field between payors and payees. Under the new statutory scheme, the payor reaching retirement age (as defined by Social Security) is a material change in circumstances. The new law will allow payors to at least have their day in court on the financial issues. The new statute also sets forth new factors for the court to consider in modification proceedings based on retirement, including an analysis of the assets of both parties (whereas under current law the court only considers the assets of the payor). These new laws will go into effect on July 1, 2018.
We’ll keep you up to date on this proposed modification as the conversation continues. Until then, as always, please contact us with any questions you have about separation or divorce.