In an ideal world, determining marital standard of living would be relatively easy. Courts would simply assess the lifestyle enjoyed by both spouses and use this as a basis for alimony and child support payments. Unfortunately, things are not always so simple in the highly contentious world of divorce. This is especially true when dealing with high net worth divorces, when spouses are aiming to exaggerate or downplay their luxurious lifestyle, depending on their motives.
So, how exactly is marital standard of living calculated, anyway? What kind of evidence needs to be assessed, and how can spouses sway the courts in their favor? This is an important question, as the standard of living during a marriage can impact a divorce outcome perhaps more than any other factor.
While forensic accountants are not necessary for all divorces, they can be useful when calculating marital standard of living is difficult. While attorneys are trained to handle financial matters, they may not have the necessary expertise to “unravel” the various elements of a couple’s lifestyle during their marriage. This involves collecting evidence, analyzing financial documents, and assessing spouses’ incomes and spending habits. In many high net worth divorces, forensic accountants allow spouses to show courts the “genuine” marital standard of living.
Marital Standard of Living is Often an Open-Ended Concept
Courts across the United States may approach MSOL (marital standard of living) in different ways. There is no set definition for MSOL, and the standards when assessing this concept vary considerably. In some cases, courts may assign vague terms like “high” or “medium-high” to the MSOL. In other situations, they may assign a specific dollar amount. There are also no real standards for the amount of time that is considered when determining MSOL, although a period of three years prior to separation is generally used.
On the other hand, divorce courts may also approach this situation with a logical and standardized mindset. Many courts use a family’s net income over a period of three years to determine the marital standard of living. This means that the standard of living is a reflection of their after-tax income.
In addition, most experts agree that non-recurring expenditures should not be included in MSOL calculations. Examples include renovations, costs associated with natural disasters, weddings, and other things of that nature. This makes sense, as someone’s “lifestyle” should be defined as an ongoing standard of living that is maintained over a long period of time, and not a sudden surge of spending.
“Permanent Alimony” is Becoming Less Common
With all that said, permanent alimony is becoming less common in the United States. It is more likely for spouses to receive alimony payments for a set amount of time, rather than in perpetuity. Florida is one of the newest states to introduce legislation that would ban permanent alimony altogether. If the legislation passes, the Sunshine State would join 44 other states that have already banned perpetual alimony. Because permanent alimony is not very common in the modern era, proving marital standard of living may be less of a priority for spouses than it has been in the past.