One of the most contentious situations you face as a family law practitioner is when one of your high-asset divorce clients likely will have to pay alimony or one of your less financially advantaged clients likely will require alimony. Alimony negotiations tend to be some of the most argumentative and acrimonious divorce conflicts, and while your CFL Designation for Divorce Practitioners gives you the requisite financial knowledge to competently advise your clients, realistic financial advice is not necessarily what your client is looking for.
No one need tell you that a stay-at-home wife and mother believes she is entitled to substantial alimony when she and her high-asset husband divorce, especially when they have been married for a long time. Conversely, the husband feels that he should not be required to provide the lavish lifestyle his wife wants.
Such was the situation in the case of Young v. Young that the Supreme Judicial Court of Massachusetts decided in 2017. Here the couple had been married for 24 years. The husband was a highly-paid executive with a variety of income sources and the wife, by mutual agreement, had stayed home to raise the children and manage the household.
Original Alimony Provisions
The trial court found that not only did the husband receive a base salary of $350,000 per year, he also received a $1.6 million bonus and additional compensation from seven different compensation programs and share plans. Noting that the husband’s income had been on “an upward trajectory” in the years preceding the divorce, and that the couple’s lifestyle; i.e., their “needs,” matched that trajectory, the trial court granted Mrs. Young alimony in the amount of 33 percent of Mr. Young’s annual gross income. Mr. Young appealed.
The Court noted that the Alimony Reform Act of 2011 defines alimony as “the payment of support from a spouse, who has the ability to pay, to a spouse in need of support for a reasonable length of time, under a court order.” The Act gives the judge discretion to consider all “relevant and material” factors when determining the alimony amount. However, as a presumptive parameter, the Act also states that alimony generally should not exceed 30 to 35 percent of “the difference between the parties’ gross incomes established at the time of the order being issued.”
As to the receiving party’s need, the Court cited Massachusetts case law stating that “need” means “the amount needed to allow the spouse to maintain the lifestyle he or she enjoyed prior to termination of the marriage” and/or “the amount necessary to support the wife in the manner of living to which she has been accustomed.” However, this need should not outweigh the “detriment of the provider spouse” and there should be a “fair balance of sacrifice” between the spouses.
The Court held that an alimony award “must reflect the parties’ marital lifestyle, not the marital lifestyle the parties might have enjoyed had they stayed together.” In other words, where, as here, both the husband’s income and the couple’s marital needs were on “an upward trajectory” prior to the divorce, the wife’s need should not be allowed to continue expanding after the divorce, even if the husband’s income continues to so expand. Thus the Court remanded the case to the Probate and Family Court with instructions to reevaluate its original decision and issue a new alimony award.
The Court noted that while the Alimony Reform Act of 2011 and Massachusetts law allow for both flat and percentage-based alimony awards, the latter are not necessarily “advisable on the merits or compatible with the fundamental purposes of alimony.” In addition, it held that self-modifying contingency alimony awards are the exception rather than the rule and “must be justified by the special circumstances of the case.” Here the Court held that no such special circumstances existed, another reason for its remand to the Probate and Family Court.
Sometimes the only way to convince your divorce client to be reasonable with regard to alimony is to point out what the courts in your state likely will and will not allow. Prolonged litigation, complete with appeals, serves the interests of neither spouse.
For more information on financial issues you need to be aware of, how gaining your CFL Designation for Divorce Practitioners will give you the financial knowledge and skills you need to attract additional high-asset clients, and the other benefits of AACFL membership, please visit this page on our site.