Many people facing a dissolution of marriage (divorce) are worried about their financial future, and often that worry crystallizes around the issue of spousal maintenance, or what we used to call “alimony.” A higher-earning spouse may worry that he or she will have to pay maintenance, and will not have enough left to live on. A spouse who limited his or her own career to care for the family may be concerned about not being able to be self-supporting after the divorce.
A maintenance payment that allows the spouse who receives it to get back on his or her feet, without depleting the resources of the other spouse, may be the answer. But how common is spousal maintenance, and how difficult is it to get?
With the increase in two-income families over the past several decades, there is a perception among many people that maintenance is a thing of the past. It’s not—but that doesn’t mean it is automatically granted. Let’s talk about maintenance in Missouri, and how likely it is to play a role in your divorce.
Essentially, a Missouri court can order maintenance for one spouse in a dissolution of marriage or legal separation based on the threshold of need. According to Missouri law on maintenance, there are two circumstances that together constitute need. A spouse entitled to maintenance must lack sufficient property (including marital property received in the divorce) to provide for his or her reasonable needs, and that spouse is unable to support him- or herself through adequate employment. The receiving spouse may lack job qualifications, or may be obligated to care for a child whose needs make it inappropriate for the parent to maintain full-time employment.
The first step of a maintenance analysis is determining whether the requesting spouse’s “reasonable needs” exceed their ability to meet their own reasonable needs through income-producing property awarded to him or her or through appropriate employment. Once the threshold of need is met, how exactly does the court decide how much to award? The judge will take into account several factors, including:
Taken together, the analysis of these factors is intended to result in an outcome that is fair to both spouses, without leaving one spouse in financial distress while the other spouse has more than enough resources to meet his or her reasonable needs.
While meeting the financial needs of the dependent spouse is the primary consideration, other factors affecting the fairness of an award also matter. The other spouse’s ability to pay maintenance is an obvious limiting factor. Even if one spouse can demonstrate need, maintenance cannot be awarded if the paying spouse does not have the ability to pay. Other factors can be relevant as well. Did one spouse sacrifice his or her career to care for children so that the other could devote long hours toward making partner at the firm? Did the party being asked to pay maintenance support waste or gamble away the couple’s assets? These issues, and many others, may be taken into account.
Of course, in order for a judge to take something into account, evidence must be brought before the court. If your divorce matter is headed for trial, it is important to work with an attorney who can help to paint a picture for the court that is most favorable to your position. In reality, though, a divorce trial may not be in your future. The vast majority of divorce cases settle, which means that you and your spouse may need to reach agreement on whether there should be maintenance payments, how long they should go on, and amount.
Another important issue is whether to make maintenance payments modifiable. If you do not reach an agreement and a judge decides the maintenance issue after a trial, any maintenance award is very likely to be modifiable. This means that the maintenance obligation goes on indefinitely with no end date, and the paying spouse will have to return to court later to attempt to prove that maintenance should be reduced or terminated. This is a powerful consideration in negotiations regarding the amount and duration of maintenance to be paid. Discuss with your attorney the relative merits of modifiable and non-modifiable alimony awards and whether “term” maintenance is appropriate for your situation.
Perhaps the most significant development regarding maintenance is not a change in Missouri law, but in federal tax law. The Federal Tax Cuts and Jobs Act (TCJA) has had a major impact on maintenance law. Prior to the TCJA provision in question taking effect, maintenance was tax-deductible to the payor, and taxable income to the payee. Now, maintenance is tax-free income to the recipient, and taxable to the person paying.
While this seems like good news to recipients of maintenance, it may make it more difficult to negotiate alimony in a divorce settlement. Where once there was a benefit, the tax deduction, to the person paying alimony, now they have to pay tax on that money. Obviously, this makes paying maintenance less attractive. So, to go back to the question in the title of this blog post, maintenance isn’t disappearing (yet), but the shift in tax law may give it a shove in that direction.
If you have questions about maintenance support in Missouri, we invite you to contact our law office to schedule a consultation. We look forward to working with you.