||Wisconsin Spousal Support, Wisconsin Alimony, WI Spousal Maintenance, WI Support laws
Alimony & Spousal Maintenance
Spousal Maintenance Factors
Spousal Maintenance Awards - Denials - Modifications
Spousal Maintenance Waivers (Prenuptial Agreements)
Spousal Maintenance Buy-outs
Imputing Income for Spousal Maintenance
How to Present a Maintenance Case
Tax Consequences of Spousal Maintenance
"Alimony" is the term used in many states for financial support paid to a ex-spouse after a divorce. In Wisconsin the term "alimony" has been replaced with the term "Spousal Maintenance." The terms are synonymous.
Maintenance is most often used to provide temporary financial support from one spouse to another when that spouse was financially dependent on the other during the marriage. In most instances maintenance is designed to provide the necessary support for a spouse until he or she either remarries or becomes self-supporting. In some states, an award of alimony may be based on marital fault. However, Wisconsin is a "no fault" divorce state which means that perceived marital misconduct such as infidelity or abuse are not considered in determining support obligations. (For a guide to Alimony in all 50 states Click Here). Spousal Maintenance is an obligation that is independent of child support and property settlement obligations.
Unlike Wisconsin's child support statutes, there are no percentage guidelines to determine when spousal maintenance is appropriate or at what level. In Wisconsin, 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.
Spousal Maintenance Factors
Currently, Spousal Maintenance awards are granted pursuant to Wisconsin Statutes § 767.26. Under this law the courts are guided by ten factors that should be considered in determining a spousal maintenance award. The factors include:
No single factor is dispositive and the Courts must weigh all factors giving appropriate weight to each.
- The length of the marriage.
- The age and physical and emotional health of the parties.
- The division of property made in the divorce.
- The educational level of each party at the time of marriage and at the time the action is commenced.
- The earning capacity of the party seeking maintenance, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children and the time and expense necessary to acquire sufficient education or training to enable the party to find appropriate employment.
- The feasibility that the party seeking maintenance can be-come self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage, and, if so, the length of time necessary to achieve this goal.
- The tax consequences to each party.
- Any mutual agreement made by the parties before or during the marriage, according to the terms of which one party has made financial or service contributions to the other with the expectation of reciprocation or other compensation in the future, where such repayment has not been made, or any mutual agreement made by the parties before or during the marriage concerning any arrangement for the financial support of the parties.
- The contribution by one party to the education, training or increased earning power of the other.
- Such other factors as the court may in each individual case determine to be relevant.
One important factor in determining whether spousal maintenance is paid and for how long is the length of the marriage. Shorter marriages often result in no award of spousal maintenance or lesser awards. Longer marriages may result in long term or even permanent awards. A second important factor in determining the level of spousal maintenance is the standard of living the parties enjoyed during the marriage. When faced with a long term marriage (fifteen years or more), often Wisconsin trial courts begin their evaluation of spousal maintenance with the proposition that a spouse that is dependant on the other for financial support is entitled to 50% of the earnings of both parties. This is considered to be a starting point for equalizing the standard of living for each party.
Awards, Denials and Modifications of Maintenance
If the parties are unable to resolve disputes related to spousal maintenance, a court may:
Awards of spousal maintenance may be "temporary" or "rehabilitative", designed to rehabilitate the spouse so that he/she may become self-supporting, or "permanent."
- award spousal maintenance;
- reserve spousal maintenance (not award maintenance currently but leave the matter open for further review);
- deny spousal maintenance.
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. Under most circumstances spousal maintenance automatically terminates when one spouse dies or the spouse receiving maintenance remarries.
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. 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 Wisconsin 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 many 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:
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.
- the present value of the asset
- the tax consequences
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.
Documents that may be presented to the Court regarding 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.
Documents that may be presented to the Court refuting a claim that income should be imputed may 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.
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.
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.
Spousal Maintenance also raises a myriad of tax issues that must be considered.
In deciding whether to “buy-out” the other party’s spousal maintenance, it is important to consider all of the potential tax consequences.
Property Division versus Spousal Maintenance.
Property or proceeds exchanged as part of a property settlement is not taxable event. The proceeds paid are not deductible to the payer 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.
Maintenance Paid While Living Together. Under Federal tax law, spousal maintenance payments made while the parties reside in the same home are not deductible to the payer or taxed to the payee unless a written divorce or separation agreement has been executed.
Maintenance Substitute under Section 71. Parties may also waive spousal maintenance for a substitute payment under Section 71 of the Internal Revenue Service code which allows for payments of a specific duration that may taxable to the payee and deductible to the payer but do not terminate upon death or remarriage as with spousal maintenance.
Attorney's Fees & Maintenance.
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.
For additional information, please contact our attorneys at
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