Throughout the divorce process, parties will commonly discuss “spousal support” or the award of maintenance of support for a former spouse, commonly known as “alimony” in other states. Spousal support is ordered in circumstances where there is a disparity in income between the parties and the payee is able to establish a need for support and that the paying spouse has an ability to pay support. The court considers several factors when determining whether or not a spouse should be entitled to support, pursuant to Virginia Code §20-107.1:
- The obligations, needs and financial resources of the parties, including but not limited to income from all pension, profit sharing or retirement plans, of whatever nature;
- The standard of living established during the marriage;
- The duration of the marriage;
- The age and physical and mental condition of the parties and any special circumstances of the family;
- The extent to which the age, physical or mental condition or special circumstances of any child of the parties would make it appropriate that a party not seek employment outside of the home;
- The contributions, monetary and nonmonetary, of each party to the well-being of the family;
- The property interests of the parties, both real and personal, tangible and intangible;
- The provisions made with regard to the marital property under § 20-107.3;
- The earning capacity, including the skills, education and training of the parties and the present employment opportunities for persons possessing such earning capacity;
- The opportunity for, ability of, and the time and costs involved for a party to acquire the appropriate education, training and employment to obtain the skills needed to enhance his or her earning ability;
- The decisions regarding employment, career, economics, education and parenting arrangements made by the parties during the marriage and their effect on present and future earning potential, including the length of time one or both of the parties have been absent from the job market;
- The extent to which either party has contributed to the attainment of education, training, career position or profession of the other party; and
- Such other factors, including the tax consequences to each party and the circumstances and factors that contributed to the dissolution, specifically including any ground for divorce, as are necessary to consider the equities between the parties.
A major consideration for many parties when considering spousal support awards is factor 13, the tax consequences to each party. Prior to December 31, 2018 spousal support awards were deductible to the paying spouse and includable as income to the payee. Though the Tax Cuts and Job Act (TCJA) passed in December 2017 by the federal government eliminated the deductibility of spousal support payments by the paying spouse and further eliminated the includability as income for the payee causing a major shift in the tax consequences to all parties.
This change in tax law applies to any marital separation agreement entered into after December 31, 2018; any Final Decree of Divorce entered into after December 31, 2018 and/or an agreement between the parties that was executed on/or before December 31, 2018 and was modified after December 31, 2018 and states that the TCJA applies to the subsequent modification.
Further, either the paying spouse or payee of a previously ordered spousal support award should be aware of the circumstances that allow for the modification and/or termination of spousal support and maintenance. Pursuant to Virginia Code § 20-109, “upon petition of either party the court may increase, decrease or terminate the amount or duration of spousal support and maintenance that may thereafter accrue, whether previously or hereafter awarded as the circumstances make proper. Several of the circumstances the court considers based on Virginia Code §20-109 are as follows:
- Upon clear and convincing evidence that the spouse receiving support has been habitually cohabiting with another person in a relationship analogous to a marriage for one year or more
- Upon evidence that there has been a material change in the circumstances of the parties, not reasonably in the contemplation of the parties when the award was made or an event which the court anticipated would occur during the duration of the award and which was significant in the making of the award
- If the payor of spousal support reaches “full retirement age” meaning the normal retirement age at which a person is eligible to receive full retirement benefits under the federal Social Security Act
- Unless otherwise stipulated or contracted to, spousal support shall terminate upon the death of either party or the remarriage of the spouse receiving support.
The Attorneys at Strentz, Greene & Coleman, PLC have extensive knowledge regarding the spousal support factors and recent tax law changes and would enjoy speaking with you about spousal support in the context of your marriage or previous spousal support award that you are currently ordered to pay or receive.