It is likely there will be lots of news stories on or about March 1, 2012 proclaiming a new day in Massachusetts because of the alimony reform law. There are still many unanswered questions and we will begin on that date to learn how the law is applied in our probate courts. It will take many months or years before any of us will have enough experience to know for sure.
The big innovation of the new law is that alimony is no longer for life. There are durational requirements which dictate how long alimony is payable. The new alimony law also limits alimony to 30-35% of the difference between the spouses’ respective income, although this amount is not mandated, so it could be less. The duration of alimony payments is dependent on the duration of the marriage. The law contains a long list of exceptions and permissible grounds for deviation from the duration and amount limits. This post will cover a couple of them and in following days I will post on others.
The easiest to understand is that if there is a chronic illness or unusual health circumstance of either party, the courts can deviate from the durational and amount limits. This means that payors may be relieved of their obligations if they are sick and payees might receive more alimony for a longer period of time if they are sick. There are no guidelines for how to apply this exception. Exactly how strict the courts will be in limiting or expanding this exception remains to be seen. How sick do you have to be to get excused from your alimony obligation, or to have it reduced? When does alimony have to be increased because of illness? Most likely the illness will have to have direct financial impact. So if you have a serious form of illness that does not impact you financially, it is unlikely it will have a significant impact on your alimony. You could have a minor illness such as anxiety or depression that might make it difficult or impossible for you to work, and that could result in a meaningful change in your alimony. The courts are familiar with these kinds of inquiries, as health and vocational ability have long been considerations in determining alimony.
The court may deviate if there are tax considerations. It is not clear exactly what tax considerations will matter. I suspect that it means that the court is permitted to look at the after tax cost to the payor and the after tax benefit to the payee, but again, there are no clear guidelines regarding how the courts are to take into account tax considerations.
The court may deviate if the payor is providing health insurance or life insurance for the payee. So the implication here is that the alimony would probably be lower than the suggested range if the payor is also providing life insurance and health insurance. Given that health insurance costs are rising rapidly, that would mean that alimony payments could be reduced solely because of the extra cost of health insurance over time.
More problematic is the exception in the event there is unearned income from assets not allocated in the parties’ divorce. This would apply if there is an inheritance, or other windfall, or simply if in the years following the divorce, one of the parties managed to acquire a significant net worth. There may be the necessity of detailed examination of the financial history of the parties in the years following the divorce. For example, if the parties sold and divided equally their marital home and the husband invested those proceeds in a new and successful business, while the wife spent the money, would that result in a greater alimony obligation? It would seem that this is a potential outcome. At the very least, clients would be well advised to keep careful records about what they have done with the assets they receive from the divorce.