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Divorce Mediation Blog

Much Ado About Double Counting: Massachusetts Alimony and Child Support - Part 3

Wednesday, May 21, 2014

Previously, we blogged (December 4th and December 11th, 2013) about controversy regarding the interaction between the 2013 Child Support Guidelines (CSG) and M.G.L., chapter 208, section 53(c)(2). Specifically, we explored conflict that appear in applying statutory exclusion of income that has already been used to calculate child support to calculate income for alimony purposes, in tandem with the CSG provision that permits a judge to calculate alimony first, and then child support. In Part 2, we reviewed competing arguments and concluded the conflict is not fatal, and that as divorce mediators, we see the silver lining of a conflict that broadens our clients’ discussion and encourages them to examine the economics and efficiency of their support arrangement more openly and carefully.

We were gratified when reader (we are always glad to hear about readers) and Falmouth Mediation’s, Alan Jacobs, phoned in a fact pattern that that he recently encountered, that resonated with our March 11th entry. With Alan’s permission, we relate the facts, slightly obscured for confidentiality reasons.

After 23 years of marriage a primary care parent earns $225,000.00 per year. A partially disabled non-custodial parent earns $25,000.00 per year. The parties have one child. By calculating the CSG first, the non-custodial parent is to pay $3,016.00 per year as child support. Since the aggregate family income is $250,000.00, the inquiry regarding alimony never occurs because of Section 53(c)(2).

Net result: the custodial parent has $225,000.00 of gross earnings plus $3,016.00 to support a two-person household; and the non-custodial parent lives on a gross $25,000.00 minus $3,016.00 of child support. After 23 years marriage and a disability-impacted income capacity, this literal application of the alimony statute results in an inequitable and unworkable result, in our view.

Alan felt the same way, and he wondered how the result would differ if support were determined, beginning with alimony. Using the .325 mid-range of Section 53(b) the custodial parent has an alimony obligation to the other spouse of $65,000.00 per year. By applying the resulting reallocated income figures ($90,000.00 and $160,000.00) to the CSG, the alimony recipient would pay primary care parent $14,040.00 of annualized child support.

Net result: the custodial parent has $160,000.00 of post-alimony gross earnings plus $14,040.00 of non-taxable child support for a two-person household; and the non-custodial parent lives on a gross $90,000.00 minus $14,040.00 of child support. Using estimated tax rates, the net income split is about $130,000.00 (71.5%) v. $52,000.00 (28.5%).

Which seems fairer to you?

As we said earlier, the CSG does not license confiscatory results, which may well result from application of vastly different income proportions to the alimony statute and child support rules; but don’t we need flexibility to achieve sensible results?

Thanks to Alan Jacobs for his thoughtful input.

 

Imagine Our Surprise

Wednesday, November 13, 2013

We attended the 27th Massachusetts Bar Association Family Law Conference in Chatham. MA, November 1-2, 2013. We arrived, received our materials for the educational program and settled in to learn. Upon opening the notebook, we were surprised to see two entries from the LDRC blog, about Massachusetts alimony.

And we thought that our blog pieces were private musings for ourselves and our readers. Guess not.

Thanks, MBA!

 

Alimony in Massachusetts: The Appeals Court Speaks First in Green v. Green

Tuesday, October 01, 2013

The first appellate case on the "new" Massachusetts alimony statute (eff. 3/1/12), has emerged from the Appeals Court. In the case Green v. Green, the court addressed a provision that many think was central to the bill's passage: the presumption that when an alimony payor reaches a defined "retirement age" support should usually end, whether or not actual retirement has occurred.

Since enactment, lawyers and judges have wondered about the hard cases presented by very long-term marriages that may have the most entrenched economic dependencies and the shortest runs to retirement age. They correctly understood that a presumption may be overcome by compelling facts, empowering judges to "deviate" from the retirement age cut off. Most expect judges to be undeterred from exercising sound discretion in extending alimony in appropriate cases.

So, it is not very surprising that the first case (a so-called “unreported” or “Rule 1:28” case, but influential nonetheless) deals with this issue, but with a twist. The Greens were married for 47 years -- long-term by any measure. Both parties were already past the statutory retirement age, and Mr. Green was still working; and if the Appeals Court's reported facts are correct, he did not object to paying alimony for the rest of his actual working life. The problem was that the Probate and Family Court judge who tried the case set a different "date" for termination than required in the deviation section of the alimony law, namely the date upon which the Husband actually retires, at an indeterminate point in the future.

In critiquing the judge's decision, the appellate panel wrote that the judge apparently thought that the wife's loss of alimony at the time of the husband's retirement would be offset by the onset of payments from the husband's teacher pension, of which the wife will receive half under the divorce judgment. The Appeals Court apparently assumed that the wife's needs and other resources, and all other relevant factors would remain steady; and that therefore, the Probate judge's assumed expectation was unjustified on the record, as lacking factual assessment of how much the retirement pay will actually be. They sent the case back with the order that the judge determine this one expectation only, then presumably to reconsider the termination part of the judgment.

It seems to us that the Appeals Court made an assumption about the trial judge's motivation that is not necessarily right; and then they built an infirm conclusion on that shaky premise. Maybe, the trial court was not thinking of the pending pension payments as a surrogate for the adjudged alimony sum. Maybe, instead, the judge was regarding the statutory framework, the significance of the retirement age presumption in the new law and the mandate that when deviating from presumed termination, she must set a new termination date. In this case, she picked a logical one, the point of actual retirement.

Maybe, too, the trial court was mindful of the fact that she does not have a crystal ball to foretell the myriad relevant circumstances that will accompany the Mr. Green's retirement, beginning with the assumption that he outlives his career. The respective financial needs of the parties will change: it is not uncommon for seniors to cut back on their lifestyle expenses; nor is it unusual to be swamped by medical costs or other calamities. Investments may fail or flourish.

The legislature did not repeal the historic concept that court-made modifications need generally occur when actual relevant facts are known, and not at some earlier, indeterminate time based on hypothetical circumstances. Had the Appeals Court let the trial court decision stand, at the time of the Husband's actual retirement date, when the relevant facts are in, the wife could have sought to extend the alimony if then justified by the facts and circumstances. This, it seems, would have been more consistent with the legislature's most likely intent; and respect the appellate courts' own precedents. Instead, we fear that Green begins the shaping of the appellate response to this incredibly complex and important statute, on a surmise and a half-measured remedy.

Earlier, we wrote about how we, as divorce mediators felt advantaged in our freedom to explore this statute with clients and their counsel, free of confusing and contradictory appellate law. Today, we are a little bit disappointed, and a little more apprehensive about what is to come.

 

2013 Child Support Guidelines Preview Part 2: Which Comes First? The Alimony or The Child Support?

Wednesday, July 17, 2013

In an earlier blog entry, we wondered about how various judges might apply what are arguably competing aspects of the presumptive formulae for alimony and child support. Since 2009, the Child Support Guidelines (CSG) have presumptively absorbed the first $250,000.00 of combined family income, while the Massachusetts alimony “reform” statute (eff. 3/1/12), forbids the use of dollars for alimony analysis, when they have already been exposed to CSG treatment. Since neither specifies which calculation comes first, which is the chicken and which the egg?

This is no idle wondering. Given the opposite tax impacts of alimony (taxable/deductible) and child support (not taxable/not deductible), the economic differences in the two approaches can be substantive, even substantial. We noted earlier that judges addressing lawyers’ groups about their own practices in this regard seemed open minded to hearing both sides of the equation. Meanwhile, as Greater Boston and Western Massachusetts divorce and family law mediators, we have been running the calculations both ways all along, not in an undereducated effort to mirror judicial thinking, but to help inform our clients of the differing possible economic outcomes, in seeking consensus on fair and tax-efficient family support arrangements.

The 2013 CSG resolves the question expressly, if not definitively. They state that neither approach is improper, and that under appropriate circumstances, judges may apply either approach. We applaud this approach as it maximizes flexibility, elevating inquiry and analysis over form, in the search for equity and efficiency.

 

Musing on Massachusetts Alimony: Is Indefinite Duration Alimony Indefinite?

Wednesday, May 01, 2013

The Massachusetts alimony statute is a confection of inconsistent terms, Most likely representing differing views of stakeholders involved in its creation. In a recent entry, we noted that this presents opportunities for divorce mediators, at least until the appellate courts begin to "clarify" competing terms. Here, we focus on three parts of the law that we have already encountered in our practice.

First, the statute gives discretion to a judge to award indefinite duration alimony (that is, no fixed termination date other that the death of a party, or the remarriage of the recipient) for marriages of 20+ years’ length – a departure form the general thrust that judge’s must set termination dates. Yet, it also provides that alimony shall terminate upon the payor’s attainment the right to receive full social security old age benefits, for most people now between 66 and 67 years.

These two parts of the law collide in the cases where it may matter most -- long or very long marriages -- in which patterns of dependency are the most entrenched and dependent parties are least equipped to become significant earners by advanced age and all that that implies.

A third provision of the law seems to provide a savings option for the recipient, permitting a judge to deviate from the retirement age cut-off "for good cause shown" (whatever that may mean), by setting a different alimony termination date. It does not state that the court may set an indefinite alimony duration term when bypassing retirement age termination.

So, how do we reconcile these three terms?

One reading of the statute seems to be that in a long marriage, indefinite term alimony may continue beyond the payor's retirement age, if recipient need and ability to pay continue, the court may justifiably provide alimony to a date beyond the payor's social security retirement date; but that it must then terminate at a different date, despite the indefinite duration discretion noted above.

That statutory construction does seem to subjugate the indefinite duration statute to the retirement termination one, even in the act of deviation from the latter; and recently, an excellent lawyer argued in a lawyer-attended mediation session with us that once a judge opts for indefinite term alimony, the retirement clause is nullified. Our guess is that this might be a minority reading, knowing that post-retirement alimony was a major political target in the statute negotiations. But, who is to say that it is wrong, other than an appellate court? For now, it is simply an example of the perils of broad "reform" drafting and good lawyering.

As noted by us earlier, we are free as divorce mediators, at least for now, to use the legislature's work as an invitation for creative interest-based negotiation.

What should an appellate court say when this conflict inevitably winds its way there?

 

Massachusetts Alimony: Watching the Pot - Part 2 A Mediator’s Perspective

Wednesday, April 17, 2013

In the last entry we reflected on divorce lawyers’ impatient wait for “clarification” of the complex Massachusetts alimony “reform” statute from the Supreme Judicial Court and Appeals Court. They hope that with appellate “guidance”, they may be better able to prepare their clients for what may happen in court in what are otherwise unclear scenarios. Ambiguity causes anxiety in lawyers and their clients alike. Given the number of cases in the appellate “pipeline” a year out, 2013 is the year when interpretive case law will begin to trickle, or perhaps, flood out of the appellate courts in downtown Boston. This flow may be edifying or confusing, consistent or scattered, but to lawyers, it is essential.

In the meantime, for facilitative divorce mediators, appellate silence is a form of opportunity. Clients frequently turn to mediators and ask: what would happen in court? Three possible answers are:

  1. I know, but I’d rather that the two of you try to figure this out for yourselves.
  2. I don’t know because the case law is confusing and inconsistent.
  3. The statute leaves it up to you to decide what makes sense for you and your family.

The first answer, while true to principles of facilitative mediation, is often frustrating for clients. It can also pose a struggle for the mediator who is trying to foster discussion rather than shut it down, especially in a way that might suggest potential bias; yet the knowledge of appellate interpretation may be important to the parties’ understanding. The second answer is negative, may discourage the spouses and undermine confidence in the knowledge of the mediator.

Answer number 3 is positive and puts the focus back on the parties themselves. Where the legislature left discretion, the parties are left to exercise it by consensus, untrammeled by the imperfect analogies of different appellate panels in other peoples’ scenarios where too few facts are known. Instead of shutting down discussion and limiting options, the clients are free to explore and agree; and so long as they find the “range of reason”, a judge should approve their work.

Take an example. The parties have a long-term marriage but an alimony payor who is close to the federally defined retirement age. The strong language of the alimony statute suggests that alimony should terminate when that age is reached, regardless of other circumstances or equities. But, the statute then provides a “deviation” opportunity: to set a different alimony termination structure for “good cause shown”. What then is good cause?

For the moment, mediators can encourage a wide open conversation on “what is good cause to you?”, free of the knowledge that hypothetical cause a, b or c may have already been ruled “in” or “out”, by one appellate court or another. When the clients can freely list all the factors that seem relevant to them, they can then move on to evaluate them, weigh them, discard them or trade them. The result is an exchange of ideas that can result in an individually tailored suit of good cause: the parties’ own, and not someone else’s or something off the rack.

Once the appellate courts begin to speak, we as mediators will be charged with the knowledge and tasked with deciding in each case what to or not to disclose of the emerging clarity or confusion that the cases bring. From that perspective, we might say “take your time”.

The viewpoint of a family law arbitrator is quite different. We will discuss that in our next entry.


 



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