Alimony
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" Alimony"
is the term used in many states for financial support paid to a
ex-spouse after a divorce. In Minnesota the term "alimony" has
been replaced with the term "Spousal Maintenance."
The terms are synonymous. In some states, an award of
alimony may be based on marital fault.
As a result, issues such as dating, infidelity or even abuse are
not factors considered in determining whether to award spousal
maintenance. (For a guide to Alimony in all
50 states
Click Here).
Minnesota,
however, is a "no fault" divorce state. As a result, issues such
as dating, infidelity or even abuse are not factors considered
in determining whether to award spousal maintenance.
As recent as
1984, Minnesota Statutes relating to awards of spousal
maintenance were interpreted by the Minnesota Courts of Appeal
as disfavoring awards of permanent spousal maintenance. At that
time, in order for the Court to award permanent spousal
maintenance, it had to find that exceptional circumstances
existed warranting an award of permanent financial support. To
demonstrate that an exceptional case existed, the party seeking
the award of permanent maintenance had to show that he/she had
little likelihood of becoming self-sufficient.
Since 1984
Minnesota Statues have been modified by the state legislature to
favor permanent spousal maintenance awards when certain
circumstances exist.
In 1985
amendments to Minnesota Statutes modified the spousal
maintenance statute to require trial courts to consider the
standard of living established during the marriage when awarding
spousal maintenance.
The 1985 amendments
also added language requiring an award of permanent spousal
maintenance where there is uncertainty regarding the need for a
permanent award. In short, if there was any question whether
permanent spousal maintenance was necessary, that uncertainty
was to be resolved in favor of a permanent spousal maintenance
award.
Unlike
Minnesota's child support statutes, there are no percentage
guidelines to determine when spousal maintenance is appropriate
or at what level. In Minnesota, trial courts have broad
discretion in deciding whether to award maintenance and in
determining its duration and amount. As a result, spousal
maintenance often becomes one of the most contested issues in
divorce proceedings.
Currently, spousal maintenance awards are granted pursuant to
Minnesota Statutes § 518.552 if the spouse seeking
maintenance demonstrates that he or she:
-
lacks sufficient property, including marital property
apportioned as part of the divorce to provide for the
reasonable needs of the spouse considering the standard of
living established during the marriage, especially, but not
limited to, a period of training or education; or
-
is unable to provide adequate self-support, after
considering the standard of living established during the
marriage and all relevant circumstance, through appropriate
employment, or
-
is the custodian of a child whose condition and
circumstances make it appropriate that the custodian not be
required to seek employment outside the home.
In determining the amount and duration of spousal maintenance,
Minnesota statutes require that Courts address all relevant
factors. The statute specifically identifies the following as
relevant issues in determining spousal maintenance:
-
The financial resources of the spouse seeking maintenance;
-
The amount of time that is necessary for the spouse seeking
maintenance to acquire necessary skills or education to find
appropriate employment;
-
The age and physical and emotional health of the recipient
spouse;
-
The standard of living established during the marriage;
-
The length of the marriage;
-
The contribution and economic sacrifices of a homemaker
including loss of seniority, retirement benefits and other
employment opportunities foregone while working at home
-
The financial resources available to the spouse from whom
maintenance is sought.
No single factor is dispositive and the Courts must weigh all
factors giving appropriate weight to each.
Awards,
Denials and Modifications of Maintenance
If the parties
are unable to resolve disputes related to spousal maintenance,
after a trial that considers the factors set out in the previous
section, a court may:
- award
spousal
maintenance;
-
reserve
spousal
maintenance (not award maintenance currently but leave the
matter open for further review);
- deny
spousal
maintenance.
Awards of
spousal maintenance may be "temporary" or
"rehabilitative", designed to rehabilitate the spouse so
that he/she may become self-supporting, or "permanent."
No matter whether
spousal maintenance is awarded, denied or reserved after a
trial, the issue may be always be readdressed and spousal
maintenance modified upon a showing that there has been a
substantial change in circumstance making the original award (or
denial) unreasonable or unfair.
From a practical
standpoint, it is unlikely that a Court denying spousal
maintenance would later change that determination absent
compelling circumstances. A compelling circumstance may include
a critical illness befalling the party seeking maintenance which
renders that person incapable of working or providing for their
own support. There would also have to be a showing that the
person from whom maintenance is sought has the ability to
contribute.
Temporary awards
of spousal maintenance usually dictate factual presumptions on
which the award is based. For example, maintenance may be
awarded for a period of five (5) years at a certain level
predicated on the recipient enrolling in and completed
educational courses and finding employment in that period of
time. Either party may bring the matter back before the Court if
the recipient becomes self supporting at an earlier date or,
through no fault of his/her own, fails to find employment within
the designated period. Orders setting forth detailed educational
and employment time lines on which the maintenance award is
based tend to favor the person paying spousal maintenance since
the recipient must demonstrate good cause why the time lines
were not followed or achieved to extend the spousal maintenance
beyond that period.
There are only
one way to preclude the Court from having jurisdiction to award
spousal maintenance. Minnesota Statutes relating to spousal
maintenance awards specifically allow the parties to enter into
a private agreements that preclude or limit spousal maintenance
awards. These agreements may take the form of properly executed
prenuptial agreements or agreements reached as part of the
divorce proceedings.
Unfortunately, such agreements are disfavored by Minnesota
Courts. Any court that is asked to enforce such an agreement
must determine that the stipulation is fair and equitable and
supported by adequate consideration after full disclosure of
each party’s financial circumstance.
Since the Court determines what is fair and equitable at the
time of the divorce, it is particularly unlikely that prenuptial
agreements executed years in advance will carry much weight.
What is fair and equitable at the time the marriage begins may
not be fair and equitable when it ends.
In most cases, the interests of persons asked to pay spousal
maintenance are better served by offering an immediate buy-out
of spousal maintenance in return for a waiver that would
preclude the court from modifying spousal maintenance in the
future. This buy-out may occur as part of a property settlement
that favors the party seeking maintenance.
To determine what amount to offer or accept as a buy-out, it is
important to consider two factors:
-
the present value of the asset
-
the tax consequences
Present value refers to the value of a dollar today as compared
to the value at some point in the future. Remember, a dollar
paid today is more valuable than a dollar received next year or
even next week since the money properly invested would gain
interest over that period. As a direct result, a buy-out of
spousal maintenance will always be less than the total value of
the spousal maintenance paid over time.
Imputation of
income is a harsh result where the Court requires a party to pay
spousal maintenance (or child support) based on earning
capacity rather than true income. For example, if one
party quits a job and reduces his/her income voluntarily or if a
party fails to seek gainful employment though able-bodied, the
Court may base that person’s income on earning capacity.
Oftentimes, the parson’s prior work history plays a pivotal role
in determining what they have the ability to earn.
To award
maintenance based on earning capacity, the court must make
specific findings that an obligor is underemployed in "bad
faith." In fact, Minnesota Statutes § 518.51, Subd. 5B(d)
plainly states that "a parent is not
considered voluntarily unemployed or underemployed upon a
showing by the parent that the unemployment or underemployment:
- is temporary
and will ultimately lead to an increase in income; or
- represents a
bona fide career change that outweighs the adverse effect of
that parent's diminished income on the child."
Evidence that
may be presented to demonstrate "bad faith" or earning capacity
include:
- Past Income
information;
- Past
employment history;
- Educational
history;
- Documents or
awards related to education or work achievements;
- Documents
demonstrating that previous employment was voluntarily
terminated.
Evidence that
may be presented to rebut allegations that a person is
self-limiting his or her income in "bad faith" include:
- Documents
demonstrating that the termination of prior employment was
involuntary (eg. Documents indicating that the person was
fired or was required to quit for medical reasons);
- Any
documentation of efforts to seek substitute employment (eg.
Job applications, rejection letters, newspaper ads);
-
Documentation that job skills are outdated for a job similar
to the one that was terminated.
In deciding whether to “buy-out” the other party’s spousal
maintenance, it is important to consider the tax consequences.
Property or proceeds exchanged as part of a property settlement
is not taxable event. The proceeds paid are not deductible to
the payor or taxable to the recipient. By contrast, the payment
of spousal maintenance is a taxable event. Spousal maintenance
is tax deductible by the person paying. It is not
included as income for the obligor giving that party a dollar
for dollar offset against his/her earnings. By contrast, spousal
maintenance that is paid is included as taxable income by the
person that receives it.
It is also important to note that attorney’s fees incurred by
a party seeking spousal maintenance may be tax deductible as an
expense incurred for the production of income. You may wish to
speak with your attorney regarding that issue.
To determine the skill level of a spouse seeking spousal
maintenance, it may be necessary to have a vocational evaluation
performed. If requested by a party, it is likely that a Court
will require the party seeking spousal maintenance to cooperate
with such an assessment.
A vocational evaluation is conducted by a Qualified
Rehabilitative Consultant (QRC). During the evaluation stage,
the QRC will administer a series of questionnaires designed to
highlight the vocational strengths and weaknesses of the party
being tested. With theses test results, the QRC examines the
fields of employment in which the person examined is likely to
have the most success. The evaluation also analyzes the past
work and educational history of the individual as well as that
person’s employment goals.
After the evaluation has been performed, the QRC drafts a
report that identifies the fields in which the tested person has
demonstrated strengths. The report then analyzes the field to
determine what additional education is necessary, if any; the
likely period of time for completing that education; the costs
associated with the education; and the likely wage that the
tested person is likely to achieve after education and training.
The results of a vocational evaluation may be challenged at
trial. However, these independent experts hold great sway with
the Court in determining the amount and duration of spousal
maintenance awards.
You may find names of vocational evaluators in our
list of professionals.
As previously stated, some relevant factors considered by the
court in deciding whether to award spousal maintenance include
the finances of the parties, the education levels of the
parties, the work histories of the parties, the health of the
parties and the standard of living the parties established
during the marriage. In order to properly document these issues
at trial you should provide the following:
- A written history of employment for both parties
including a job description, the name of the employer, the
wage paid and period of time worked;
- A written history of each party’s educational background
including schools attended, years attended and degrees or
certifications achieved;
- Tax returns for each year of marriage including W-2 and
1099 forms for each party;
- A written chronology of vacations taken during the
marriage;
- Photographs and post cards of vacations taken during the
marriage may provide a pictorial history to supplement the
written history;
- A written list of assets and luxury items owned at any
time during the marriage (even if not presently owned)
including the date that each item was acquired, its value
and the date of disposition. You should include items such
as jewelry, recreational vehicles, real estate, condos,
interests in businesses or corporations, and time shares;
- Financial documents verifying the value of luxury
assets;
- Financial account records demonstrating the value of
each item;
- Checking account registers and credit card statements
demonstrating the spending habits of the parties;
- A written list of necessary monthly expenses.
For additional information, please call 612.240.8005.
ENDNOTES:
-
McClelland v. McClelland,
359 N.W. 2d 7 (Minn. 1984)
-
Minnesota Statutes § 518.552, subd. 1, 2.
-
Minnesota Statutes § 518.552, Subd. 3.
-
Minnesota Statutes § 518.552, subd. 1 (1998).
-
Minnesota Statutes § 518.552, subd. 2.
-
Minnesota Statutes § 518.552, subd. 5.
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