Spousal Support - Maintenance
Scott Baroway
Mediation Partners
720-889-2808
Baroway@gmail.com
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Maintenance
State law
A payment, other than equitable distribution or child support,
to a former spouse
Ends upon death of former spouse
May ends upon remarriage and/or cohabitation depending on
agreement
Federal tax law
Different requirements than under state law
Important because of tax consequences
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Colorado Maintenance Law
(C.R.S. 14-110-114)
Permanent/Long Term May Be Awarded ONLY IF:
Lacks sufficient property to provide for reasonable needs, AND
Is unable to support self through appropriate employment, OR
Is custodian of child whose condition or circumstances prevent
employment outside of home
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Definitions
“Reasonable Needs” – depends on particular facts and
circumstances of parties marriage.
“Appropriate Employment”- depends on parties economic
circumstances and reasonable expectations established during
the marriage.
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Statutory Maintenance Factors
1. Actual need and ability to pay (financial resources avail)
2. Length of the marriage
3. Age, physical and emotional health of parties
4. Standard of living during the marriage
5. Earning capacities, educational levels, vocational skills and
employability
6. Ability of paying spouse to meet own needs while paying
maintenance
7. Parental responsibilities for children
8. Time and expense to acquire education and training to enable
party to find appropriate employment.
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Other Maintenance Factors
9. Tax Effects
10. Present Circumstances are controlling rather than historical
11. However historical may be consider to impute income
12. Duration of Maintenance Award
1. Continuing or for definite period of time
2. Incremental reductions ok if basis
3. Expectation of retirement benefits ok to reduce
4. Improper speculation about future NOT allowed
10. Any other factors which the court may deem relevant
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The Practical Problems In
Determining Maintenance
No formula approach like child support or “rules of thumb”
Except “temporary maintenance”
“Standards” have little place in the law of domestic relations
The law grants judges great discretion – rarely overturned on
appeal
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Maintenance Issues
Permanent vs. Temporary
Rehabilitative v. Reimbursement
Retirement
Cohabitation / Remarriage
Changes Circumstances
Taxability
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Pre-Decred Maintenance
(C.R.S. 14-110-114(2))
Combined Annual Income < $75,000/yr
Rebuttable Presumption for pre-decree support
Calculation
(40% of higher earners gross income –
50% of lower earners gross income)
“Courts shall deviate if “inequitable or unjust”
TEMPORARY MAINTENANCE ONLY
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“Income” defined
From every source (Same as Child Support)
Salaries, wages, tips (all), commissions, indep contractor
payments, bonuses, dividends, severance, pensions, royalties,
rents, interest, trust income, annuities, capital gains, moneys
from self employment for personal use, social security, workers
comp, unemployment, disability, PI case, monetary gifts, prizes,
ptsp distributions, reimbursed expenses from work if significant
and reduce personal living expenses, alimony received,
overtime if required by employer
Self Employment – Income after “ordinary business expenses” –
must be real business expense
Lots of Rules and tests here – but no clear line to follow
Subtract maintenance or support paid to prior marriage or
11 children if through court order.
Not Income
Child Support Received
Means tested assistance – SSI, food stamps, Colorado Work
Programs
Income from additional jobs from 40+ week employment
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Pre-decree Maintenance
Example
Spouse A Spouse B
5000/mo 2400/mo
40% = $2000/mo 50% = $1200/mo
$2000 – $1200 = $800/mo – presumptive
Temporary award
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Permanent Maintenance
Awarded in long term marriages
Long term marriages can be as short as 10 years
Typically 10-15 year marriages in the gray zone
Very fact dependent
Permanent alimony can end/be modified
Substantial change of circumstances, e.g., retirement, disability
of either party
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Cohabitation
Depends on terms of agreement
Remarriage ends permanent and limited duration
alimony
Cohabitation not sufficient by itself to reduce
Depends on facts
How close to marriage
How much support provided
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Tax Considerations
Alimony is deductible from income for the paying spouse and taxable to
receiving spouse
Requirements are
Written divorce or separation instrument
Spouses cannot live together after divorce
Cash (or cash equivalents)
Marriage relationship
Must file separate tax returns
Must terminate at death
Must not be child support
May be deemed child support if terminates or reduces as a result of a child
contingency
e.g., reduction of alimony on child’s 18th birthday
16 Review by tax professional may be warranted
Alimony Recapture–IRC 71(f)
Intended to prevent front loading of maintenance OR
conversion of property settlement payments into deductible
alimony.
If Alimony decreases or terminates during first three calendar
years, some recapture (loss of deduction) – talk to
accountant.
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