(provided by Maury
D. Beaulier, Esq.)
"Alimony" is the term used in many states for
financial support paid to an ex-spouse after a divorce. In Minnesota
the term "alimony" has been replaced with the term "Spousal
Maintenance." The terms are synonymous.
Overview
As recent as 1984, Minnesota Statutes relating to awards
of spousal maintenance were interpreted by the Minnesota Courts of Appeal
as disfavoring awards of permanent spousal maintenance. At that time,
in order for the Court to award permanent spousal maintenance, it had
to find that exceptional circumstances existed warranting an award of
permanent financial support. To demonstrate that an exceptional case
existed, the party seeking the award of permanent maintenance had to
show that he/she had little likelihood of becoming self - sufficient.
Since 1984 Minnesota Statues have been modified by the
state legislature to favor permanent spousal maintenance awards when
certain circumstances exist. In 1985 amendments to Minnesota Statutes
modified the spousal maintenance statute to require trial courts to
consider the standard of living established during the marriage when
awarding spousal maintenance. The 1985 amendments also added language
requiring an award of permanent spousal maintenance where there is uncertainty
regarding the need for a permanent award. In short, if there was any
question whether permanent spousal maintenance was necessary, that uncertainty
was to be resolved in favor of a permanent spousal maintenance award.
Current Law
Unlike child support, there are no percentage guidelines set out in
Minnesota Statutes to determine when spousal maintenance is appropriate
or at what level. As a result, spousal maintenance often becomes one
of the most contested issues in divorce proceedings.
Currently, spousal maintenance awards are granted pursuant to Minnesota
Statutes S. 518.552 if the spouse seeking maintenance demonstrates that
he or she:
- Lacks sufficient property, including marital property
apportioned as part of the divorce to provide for the reasonable needs
of the spouse considering the standard of living established during
the marriage, especially, but not limited to, a period of training
or education; or
- Is unable to provide adequate self-support, after considering
the standard of living established during the marriage and all relevant
circumstance, through appropriate employment, or
- Is the custodian of a child whose condition and
circumstances make it appropriate that the custodian not be required
to seek employment outside the home.
In determining the amount and duration of spousal
maintenance, Minnesota statutes require that Courts address all
relevant factors. The statute specifically identifies the following
as relevant issues in determining spousal maintenance:
The financial resources of the spouse seeking
maintenance;
The amount of time that is necessary for the spouse seeking maintenance
to acquire necessary skills or education to find appropriate employment;
The age and physical and emotional health of the recipient spouse;
The standard of living established during the marriage;
The length of the marriage;
The contribution and economic sacrifices of a homemaker including
loss of seniority, retirement benefits and other employment opportunities
foregone while working at home;
The financial resources available to the spouse from whom maintenance
is sought.
No single factor is dispositive and the Courts must weigh all factors
giving appropriate weight to each.
Awards, Denials and Modifications of Maintenance
If the parties are unable to resolve disputes related
to spousal maintenance, after a trial that considers the factors set
out in the previous section, a court may:
- Award spousal maintenance;
- Reserve spousal maintenance (not award maintenance
currently but leave the matter open for further review);
- Deny spousal maintenance.
Awards of spousal maintenance may be "temporary or rehabilitative",
designed to rehabilitate the spouse so that he/she may become self-supporting,
or "permanent."
No matter whether spousal maintenance is awarded, denied
or reserved after a trial, the issue may be always be readdressed and
spousal maintenance modified upon a showing that there has been a substantial
change in circumstance making the original award (or denial) unreasonable
or unfair.
From a practical standpoint, it is unlikely that a Court
denying spousal maintenance would later change that determination absent
compelling circumstances. A compelling circumstance may include a critical
illness befalling the party seeking maintenance which renders that person
incapable of working or providing for their own support. There would
also have to be a showing that the person from whom maintenance is sought
has the ability to contribute.
Temporary awards of spousal maintenance usually dictate
factual presumptions on which the award is based. For example, maintenance
may be awarded for a period of five (5) years at a certain level predicated
on the recipient enrolling in and completed educational courses and
finding employment in that period of time. Either party may bring the
matter back before the Court if the recipient becomes self-supporting
at an earlier date or, through no fault of his/her own, fails to find
employment within the designated period. Orders setting forth detailed
educational and employment time lines on which the maintenance award
is based tend to favor the person paying spousal maintenance since the
recipient must demonstrate good cause why the time lines were not followed
or achieved to extend the spousal maintenance beyond that period.
Waivers of Spousal Maintenance
There are only one way to preclude the Court from having
jurisdiction to award spousal maintenance. Minnesota Statutes relating
to spousal maintenance awards specifically allow the parties to enter
into a private agreements that preclude or limit spousal maintenance
awards. These agreements may take the form of properly executed prenuptial
agreements or agreements reached as part of the divorce proceedings.
Unfortunately, such agreements are disfavored by Minnesota
Courts. Any court that is asked to enforce such an agreement must determine
that the stipulation is fair and equitable and supported by adequate
consideration after full disclosure of each party's financial circumstance.
Since the Court determines what is fair and equitable
at the time of the divorce, it is particularly unlikely that prenuptial
agreements executed years in advance will carry much weight. What is
fair and equitable at the time the marriage begins may not be fair and
equitable when it ends.
Spousal Maintenance Buy-outs
In most cases, the interests of persons asked to pay spousal
maintenance are better served by offering an immediate buy-out of spousal
maintenance in return for a waiver that would preclude the court from
modifying spousal maintenance in the future. This buy-out may occur
as part of a property settlement that favors the party seeking maintenance.
To determine what amount to offer or accept as a buy-out,
it is important to consider two factors:
- the present value of the asset
- the tax consequences
Present value refers to the value of a dollar today as
compared to the value at some point in the future. Remember, a dollar
paid today is more valuable than a dollar received next year or even
next week since the money properly invested would gain interest over
that period. As a direct result, a buy-out of spousal maintenance will
always be less than the total value of the spousal maintenance paid
over time.
Tax Consequences of Spousal Maintenance
In deciding whether to "buy-out" the other party's
spousal maintenance, it is important to consider the tax consequences.
Property or proceeds exchanged as part of a property settlement is not
taxable event. The proceeds paid are not deductible to the payer or
taxable to the recipient. By contrast, the payment of spousal maintenance
is a taxable event. Spousal maintenance is tax deductible by the person
paying. It is not included as income for the obligor giving that party
a dollar for dollar offset against his/her earnings. By contrast, spousal
maintenance that is paid is included as taxable income by the person
that receives it.
It is also important to note that attorney's fees incurred by a party
seeking spousal maintenance may be tax deductible as an expense incurred
for the production of income. You may wish to speak with your attorney
regarding that issue.
Vocational Evaluations
To determine the skill level of a spouse seeking spousal
maintenance, it may be necessary to have a vocational evaluation performed.
If requested by a party, it is likely that a Court will require the
party seeking spousal maintenance to cooperate with such an assessment.
A vocational evaluation is conducted by a Qualified Rehabilitative
Consultant (QRC). During the evaluation stage, the QRC will administer
a series of questionnaires designed to highlight the vocational strengths
and weaknesses of the party being tested. With theses test results,
the QRC examines the fields of employment in which the person examined
is likely to have the most success.
The evaluation also analyzes the past work and educational
history of the individual as well as that person's employment goals.
After the evaluation has been performed, the QRC drafts a report that
identifies the fields in which the tested person has demonstrated strengths.
The report then analyzes the field to determine what additional education
is necessary, if any; the likely period of time for completing that
education; the costs associated with the education; and the likely wage
that the tested person is likely to achieve after education and training.
The results of a vocational evaluation may be challenged
at trial. However, these independent experts hold great sway with the
Court in determining the amount and duration of spousal maintenance
awards.
How to Present Your Maintenance Case
As previously stated, some relevant factors considered
by the court in deciding whether to award spousal maintenance include
the finances of the parties, the education levels of the parties, the
work histories of the parties, the health of the parties and the standard
of living the parties established during the marriage. In order to properly
document these issues at trial you should provide the following:
- A written history of employment for both parties including
a job description, the name of the employer, the wage paid and period
of time worked;
- A written history of each party's educational background
including schools attended, years attended and degrees or certifications
achieved;
- Tax returns for each year of marriage including W-2
and 1099 forms for each party;
- A written chronology of vacations taken during the
marriage;
- Photographs and post cards of vacations taken during
the marriage may provide a pictorial history to supplement the written
history;
- A written list of assets and luxury items owned at
any time during the marriage (even if not presently owned) including
the date that each item was acquired, its value and the date of disposition.
You should include items such as jewelry, recreational vehicles, real
estate, condos, interests in businesses or corporations, and time
shares;
- Financial documents verifying the value of luxury assets;
- Financial account records demonstrating the value of
each item;
- Checking account registers and credit card statements
demonstrating the spending habits of the parties;
- A written list of necessary monthly expenses.
ENDNOTES:
1. McClelland v. McClelland, 359 N.W. 2d 7 (Minn.
1984)
2. Minnesota Statutes S. 518.552, subd. 1, 2.
3. Minnesota Statutes S. 518.552, subd. 3.
4. Minnesota Statutes S. 518.552, subd. 1 (1998).
5. Minnesota Statutes S. 518.552, subd. 2.
6. Minnesota Statutes S. 518.552, subd. 5.
