Changing the Post-Marriage Compensation Guidelines

In the previous two months' issues, we began looking at a contentious proposal to replace New York's current post-marriage maintenance system with new “Post-Marital Income Guidelines.” These guidelines have been introduced in the legislature, sponsored by Assembly Member Amy Paulin, and they parallel a proposal by the Coalition for Post-Marital Income Guidelines. I have expressed some of my reservations about the proposed guidelines; following are a few more.

Child Support for Unemancipated Children

The post-marital income proposal omits consideration of child support from the mandatory calculations (other than the “poverty guidelines” base) and, therefore, does not produce an equitable result when there are unemancipated children involved in the divorce. The formula does not provide for recognition of child support payments and potential add-ons, of which the higher earner will be required to pay a greater share, and which could easily result in a large discrepancy between the amount of disposable income each party retains going forward.

Let's look at the problems through three examples.

Example 1

If the payor earns $100,000 and the payee earns $0, and there are two children of the marriage, the post-marital income award would work out as follows:

Post-Marital Income = $30,000 (i.e., 30% of $100,000 = $30,000; 20% of $0 = $0; $30,000 minus $0 = $30,000; and 40% of $100,000 + $0 equals $40,000; $30,000 is less than $40,000).

The Child Support Standards Act (CSSA) calculation is $100,000 in combined parental income x 25% (for two children) = $25,000.

The payor's pro rata share is 70% ($70,000 divided by $100,000).

The payee's pro rata share is 30% ($30,000 divided by $100,000).

The payor's basic child support obligation is $17,500 ($25,000 x 70%).

Assuming the post-marital income payment is tax-deductible (although this is not addressed in the Bill), the payor's taxable income would be $70,000. Taxed at the 30% rate, the payor's tax liability is approximately $20,000. The payor's after-tax income would be $80,000 ($100,000 ' $20,000). From the after-tax income of $80,000 the payor must make the $30,000 post-marital income payment and the $17,500 basic child support obligation payment. Now the payor has disposable income of $32,500. Assuming add-ons only for health insurance and unreimbursed expenses and for some extra-curricular activities, the add-ons may be around $4,000. The payor's pro rata share of $4,000 equals $2,800 ($4,000 x 70%). This results in the payor having $29,700 in disposable income.

Assume the $30,000 post-marital income payment is included in the payee's income for tax purposes. At a tax rate of about 17%, the payee has approximately $25,000 in after-tax income plus the $17,500 in basic child support obligation totaling $42,500. The payee's pro rata share of the add-ons totaling $4,000 is $1,200 ($4,000 x 30%). These payments result in the payee having $41,300 in disposable income.

Example Two

If the payor earns $350,000 and the payee earns $0, and there are two children of the marriage who both attend private schools costing $25,000 each, summer camp costing $4,000 apiece, participate in enrichment activities for $5,000 total, and have health insurance and unreimbursed expenses of $4,000 total, the proposed post-marital income award would work out as follows:

Post-Marital Income = $105,000 (30% of payor's income of $350,000 = $105,000 minus 20% of payee's income ($0); and 40% of $350,000 = $140,000; $105,000, is less than $140,000).

The CSSA calculation is $350,000 x 25% (for two children) = $87,500.

The payor's pro rata share is 70% ($245,000/$350,000).

The payor's basic child support obligation is $61,250 ($87,500 x 70%).

Assuming the post-marital income payment is tax-deductible, the payor's taxable income would be $245,000 ($350,000 ' $105,000). Taxed at a 33.3% rate, the payor's tax liability is approximately $80,000. The payor's after-tax income would be $270,000 ($350,000 ' $80,000). From the after-tax income of $270,000, the payor must make the post-marital income payment of $105,000 and the $61,250 basic child support obligation payment. Now the payor has disposable income of $103,750 ($270,000 ' $105,000 ' $61,250).

The payor still has to pay 70% of the add-ons, which total $67,000 (($25,000 x 2) + ($4,000 x 2) + $5,000 + $4,000)). The payor's portion comes out to $46,900. This leaves the payor with $56,850 in disposable income ($270,000 ' $105,000 ' $61,250 ' $46,900).

Assuming the post-marital income payment is included in the payee's income for tax purposes, the payee has $105,000 in income taxed at approximately 25%, leaving the payee with approximately $78,500 ($105,000 ' $26,500). The payee will also receive the $61,250 in basic child support obligations totaling $139,750. From that the payee is responsible for his or her 30% pro rata share of add-ons totaling $20,100 ($67,000 x .30). This leaves the payee with $119,650 of disposable income ($139,750 ' $20,100).

Example 3

As per proposed Paragraph (2) (D) of the Bill, the “cap” is the combined income of the parties up to $1 million, increased by a Consumer Price Index-based (CPI-based) cost-of-living allowance (COLA). And, as per proposed DRL ' 240(1-b)(5-A), the “income cap” under CSSA shall mean the combined income of the parties up to $500,000, adjusted by a CPI-based COLA. Therefore, if the payor earns $900,000 and the payee earns $50,000 and there are three children of the marriage who attend private schools costing $30,000 each, summer activities costing $6,000 each, participate in enrichment activities for $7,000 in total, and there are health insurance and unreimbursed medical/dental expenses totaling $5,000 for the three children, the proposed awards would be as follows:

Post-marital income = $290,000 ($300,000 ' $10,000). The payee's income plus the post-marital income does not exceed 40% of the combined parental income.

The CSSA calculation is $500,000 x 29% (for three children) = $145,000.

The payor's pro rata share is 64% ($610,000/$950,000).

The Basic Child Support Obligation is $145,000 x 62% = $92,800. The total child support add-ons are $150,000.

Assuming the Post-Marital Income is tax-deductible, the payor's taxable income is $610,000; taxed at a 40% rate, the payor's taxes are $244,000; the payee's taxable income is $340,000; taxed at a 30% rate, the payee's taxes are $102,000. The cash flows are seen in Table 1 on page 5.

Proposed Post-Marital Income and the Rationale for Maintenance Payments

The historical rationale for alimony payments does not merit continuing post-marital income payments according to the proposed schedule.

Alimony rules in New York were established under the fault-based system of divorce. From 1789 to 1966, New York recognized adultery as the only grounds for divorce. A wife who was a defendant in a divorce action was not entitled to alimony payments, and even when the husband's conduct was the reason for a divorce proceeding, the wife's conduct during the marriage was evaluated by the court to determine the award of alimony.

In 1980, New York enacted a divorce law reform that established an equitable property distribution rule, provided for “maintenance“ instead of “alimony,“ and eliminated fault as a basis for denying payments. Under the reformed law, the courts were to consider a number of factors when making an award. The objective of the maintenance law was now to give the dependent spouse the opportunity to become self-supporting. According to a legislative memorandum explaining the new statute, maintenance was to “award the recipient spouse an opportunity to achieve independence,“ suggesting that courts should generally award maintenance for short-term “rehabilitative“ purposes.

The 1980 reforms led to intense debate and, as a result, the spousal maintenance rules were again amended in 1986. The new reform expanded the factors to be considered when calculating an award of maintenance to include consideration of the ability of the spouse to become self-supporting, rather than the older version that just considered the time and training necessary to become self-supporting. The court was also newly required to consider lost earnings as a result of one spouse foregoing or abandoning education, training, employment, or career opportunities during the marriage. The new reform also added a provision explicitly authorizing permanent maintenance.

The rationale for maintaining these payments in the form of post-marital income is unclear. If the rationale is to enable the receiving spouse to gain financial independence, then many factors become even more important, such as the spouse's level of education, time out of the workforce, age, location and the number of unemancipated children in their care. Additionally, if post-marital income is awarded to enable financial independence, then any change in either party's economic or marital status post-separation should come into consideration, which as noted above, is not considered in the proposed Bill.

Equitable Distribution Is Erroneously Not Considered

The proposal does not include any consideration of equitable distribution as part of the mandatory calculations. Divorcing parties with similar incomes but vastly different resources from assets will be treated the same under this proposal. Moreover, equitable distribution may be effectuated using a future payment stream. This would not be picked up as income under the formula. Similarly, the assets distributed to, and the separate property of, the less wealthy spouse may be sufficient to make him or her fully self-supporting, which is not taken into consideration by the mandatory calculations.

Tax Treatment Is Not Addressed

The proposed definition of post-marital income in Sections B(2)(A) and B(2) (B) of the Bill refers to a “sum derived and a sum to be paid.” The Bill does not address, much less provide for, tax treatment of the post-marital income payments. Since the enactment of ' 71 of the Internal Revenue Code, spousal support, in the form of alimony and under DRL 236B(6) by way of spousal maintenance, has been tax-deductible by the payor and tax-includible to the payee. This tax treatment enables the parties to structure support in a tax-advantageous manner. Inasmuch as the payee is often in a significantly lower tax bracket than the payor, $1 in spousal maintenance will “cost“ the payor (perhaps in a 40% tax bracket) $.60 after taxes, but provides the payor (perhaps in a 20% tax bracket) $.80 after taxes. Also, the payee may have corresponding tax deductions ' for example, in the form of mortgage interest on a residence ' to offset or shelter the spousal maintenance received as taxable income, so that there is no taxable income and no tax liability for the payee.

Furthermore, the proposed Bill has built-in Internal Revenue Code recapture problems because the mandatory duration formula in many instances will result in pay-out periods of less than three years. “Recapture“ is the method by which the IRS safeguards against payments intended as property distributions but characterized as support receiving preferential tax treatment. The Internal Revenue Code provides that if support deceases or stops within the first three payment years (other than due to death, remarriage, or formulas tied to variable wages), then the amount of support above the specified limits (essentially $15,000 per year) is “recaptured” as income to the payor. The post-marital income proposal requires pay-out streams which would terminate within the first three payment years, and necessarily invokes recapture complications.

The inclusion or deductibility of the post-marital income payments will make a significant difference in the resulting disposable income for each party and, as such, it is not possible to accurately calculate the financial consequences of the proposed Bill and spousal maintenance awards without considering the tax consequences to each party.

More Things the Bill Leaves Out

There is no justification for applying to couples with income over $1 million factors that differ from the factors for deviation from the formula for those couples with income of less than $1 million. The difference in the factors applied to families earning less than $1 million in contrast to those applied to families having income greater than $1 million has no apparent rational justification and smacks of economic discrimination.

Perhaps the most glaring deficiency in the deviation factors is the lack of any consideration of “the standard of living of the parties established during the marriage.” Yet, under our current statutory scheme for determining spousal maintenance “standard of living” is both the primary and over-riding factor, and it is the first of the factors to be considered when addressing awards in families with incomes exceeding $1 million under the proposed legislation.

Likewise, why exclude “present” earning capacity from the duration factors and, instead, limit their applicability to “future” earning capacity.

Other factors that are excluded are: the duration of the marriage; the need of one party to incur education or training expenses; extreme differences in the incomes of the parties; reduced or lost lifetime earning of the party seeking post-marital income as a result of having forgone or delayed education, training, employment or career opportunities during the marriage; and, the contributions and services of the party seeking post-marital income as a spouse, parent, wage earner and homemaker and to the career or career potential of the other party. (Perhaps the proponents of the legislation can provide an explanation for this discriminatory approach based on economic status as this writer cannot conceive of a logical rationale for it.)

Reintroduction of Marital Fault As a Consideration

One of the widely hailed elements of the enactment of Equitable Distribution Law in 1980 was the elimination of the “fault” concept in awarding alimony. Previously, fault had been used to deny alimony to guilty spouses, often with horrific results. Under the proposed legislation, both the deviation factors and the factors applied to families with incomes exceeding $1 million include as a consideration “the history of abuse by one party against the other.” In the view of this writer, “abuse” is no different than “fault” in the context of this legislation. Allegations of abuse will find their way into virtually every litigation where spousal support is at issue. Unscrupulous spouses and attorneys will attempt to paint one or the other of the spouses with the label of “abuser.” Standards for the definition of “abuse” in this context will assuredly differ from county to county, if not from judge to judge, or department to department, once again making awards unpredictable. Thus, one of the basic premises of the proposed legislation will be destroyed by the very specifics of the language contained in that proposal.

Certainly, no one can quarrel with the fact that domestic violence is a scourge that requires some form of remediation, but creating a broad standard of “abuse” is not the right approach, particularly in the context of creating an appropriate means of constructing an alimony award. Instead, the better approach would be to consider the elimination of immunity in the context of interspousal torts involving acts of physical violence perpetrated by one spouse upon the other.

Conclusion

The proposed post-marital income formula does not lead to equitable results when it is applied to a number of situations. As the three examples above demonstrate, application of the post-marital income formula results in skewed disposable income for each party. Part of the problem with the post-marital income formula that leads to inequitable results is the failure to address numerous variables that significantly affect the resulting disposable income of the parties. Specifically, the post-marital income proposal fails to adequately address the tax consequences to each party, the treatment of child support and payments of child-related expenses, and adjustments for changes in circumstances of the parties.

Additionally, the formula fails to provide adequate flexibility for each individual case. While the proposal gives courts discretion to vary from the formula and lists factors that judges should consider when doing so, history has shown that it is unlikely that judges will in fact deviate from the formula. The judiciary's reluctance to stray from the guidelines will result in more unfair rulings than may already exist.

Finally, the proposed legislation would create mischief of untold proportions by tinkering with discrete portions of the financial aspects of our divorce laws without making adjustments to other aspects of those laws, so as to allow a court to piece together all of the parts in an equitable fashion.

Instead of springing legislation of this nature on the public without any empirical justification for its enactment, a commission ought to be formed to review the state of spousal support awards in matrimonial actions in New York State. The Office of Court Administration should be charged with the obligation to maintain and compile detailed statistics on the outcome of matrimonial actions. The commission should examine the current climate in each of the four Judicial Departments, gain the perspective of judges, lawyers and former litigants, and then determine whether we should change the way in which our courts award spousal maintenance. Along the way, the commission should seek to answer the questions of: whether guidelines for spousal maintenance are necessary to ensure uniformity of awards in cases of similarly situated divorcing couples; whether such guidelines should be mandatory or discretionary; whether those guidelines should vary based on the region of the state in which the parties reside; and, whether New York is a jurisdiction that could benefit from the promulgation of such guidelines.

Alton L. Abramowitz, a member of this newsletter's Board of Editors, is a partner with New York's Mayerson Stutman Abramowitz Royer LLP.

In the previous two months' issues, we began looking at a contentious proposal to replace New York's current post-marriage maintenance system with new “Post-Marital Income Guidelines.” These guidelines have been introduced in the legislature, sponsored by Assembly Member Amy Paulin, and they parallel a proposal by the Coalition for Post-Marital Income Guidelines. I have expressed some of my reservations about the proposed guidelines; following are a few more.

Child Support for Unemancipated Children

The post-marital income proposal omits consideration of child support from the mandatory calculations (other than the “poverty guidelines” base) and, therefore, does not produce an equitable result when there are unemancipated children involved in the divorce. The formula does not provide for recognition of child support payments and potential add-ons, of which the higher earner will be required to pay a greater share, and which could easily result in a large discrepancy between the amount of disposable income each party retains going forward.

Let's look at the problems through three examples.

Example 1

If the payor earns $100,000 and the payee earns $0, and there are two children of the marriage, the post-marital income award would work out as follows:

Post-Marital Income = $30,000 (i.e., 30% of $100,000 = $30,000; 20% of $0 = $0; $30,000 minus $0 = $30,000; and 40% of $100,000 + $0 equals $40,000; $30,000 is less than $40,000).

The Child Support Standards Act (CSSA) calculation is $100,000 in combined parental income x 25% (for two children) = $25,000.

The payor's pro rata share is 70% ($70,000 divided by $100,000).

The payee's pro rata share is 30% ($30,000 divided by $100,000).

The payor's basic child support obligation is $17,500 ($25,000 x 70%).

Assuming the post-marital income payment is tax-deductible (although this is not addressed in the Bill), the payor's taxable income would be $70,000. Taxed at the 30% rate, the payor's tax liability is approximately $20,000. The payor's after-tax income would be $80,000 ($100,000 ' $20,000). From the after-tax income of $80,000 the payor must make the $30,000 post-marital income payment and the $17,500 basic child support obligation payment. Now the payor has disposable income of $32,500. Assuming add-ons only for health insurance and unreimbursed expenses and for some extra-curricular activities, the add-ons may be around $4,000. The payor's pro rata share of $4,000 equals $2,800 ($4,000 x 70%). This results in the payor having $29,700 in disposable income.

Assume the $30,000 post-marital income payment is included in the payee's income for tax purposes. At a tax rate of about 17%, the payee has approximately $25,000 in after-tax income plus the $17,500 in basic child support obligation totaling $42,500. The payee's pro rata share of the add-ons totaling $4,000 is $1,200 ($4,000 x 30%). These payments result in the payee having $41,300 in disposable income.

Example Two

If the payor earns $350,000 and the payee earns $0, and there are two children of the marriage who both attend private schools costing $25,000 each, summer camp costing $4,000 apiece, participate in enrichment activities for $5,000 total, and have health insurance and unreimbursed expenses of $4,000 total, the proposed post-marital income award would work out as follows:

Post-Marital Income = $105,000 (30% of payor's income of $350,000 = $105,000 minus 20% of payee's income ($0); and 40% of $350,000 = $140,000; $105,000, is less than $140,000).

The CSSA calculation is $350,000 x 25% (for two children) = $87,500.

The payor's pro rata share is 70% ($245,000/$350,000).

The payor's basic child support obligation is $61,250 ($87,500 x 70%).

Assuming the post-marital income payment is tax-deductible, the payor's taxable income would be $245,000 ($350,000 ' $105,000). Taxed at a 33.3% rate, the payor's tax liability is approximately $80,000. The payor's after-tax income would be $270,000 ($350,000 ' $80,000). From the after-tax income of $270,000, the payor must make the post-marital income payment of $105,000 and the $61,250 basic child support obligation payment. Now the payor has disposable income of $103,750 ($270,000 ' $105,000 ' $61,250).

The payor still has to pay 70% of the add-ons, which total $67,000 (($25,000 x 2) + ($4,000 x 2) + $5,000 + $4,000)). The payor's portion comes out to $46,900. This leaves the payor with $56,850 in disposable income ($270,000 ' $105,000 ' $61,250 ' $46,900).

Assuming the post-marital income payment is included in the payee's income for tax purposes, the payee has $105,000 in income taxed at approximately 25%, leaving the payee with approximately $78,500 ($105,000 ' $26,500). The payee will also receive the $61,250 in basic child support obligations totaling $139,750. From that the payee is responsible for his or her 30% pro rata share of add-ons totaling $20,100 ($67,000 x .30). This leaves the payee with $119,650 of disposable income ($139,750 ' $20,100).

Example 3

As per proposed Paragraph (2) (D) of the Bill, the “cap” is the combined income of the parties up to $1 million, increased by a Consumer Price Index-based (CPI-based) cost-of-living allowance (COLA). And, as per proposed DRL ' 240(1-b)(5-A), the “income cap” under CSSA shall mean the combined income of the parties up to $500,000, adjusted by a CPI-based COLA. Therefore, if the payor earns $900,000 and the payee earns $50,000 and there are three children of the marriage who attend private schools costing $30,000 each, summer activities costing $6,000 each, participate in enrichment activities for $7,000 in total, and there are health insurance and unreimbursed medical/dental expenses totaling $5,000 for the three children, the proposed awards would be as follows:

Post-marital income = $290,000 ($300,000 ' $10,000). The payee's income plus the post-marital income does not exceed 40% of the combined parental income.

The CSSA calculation is $500,000 x 29% (for three children) = $145,000.

The payor's pro rata share is 64% ($610,000/$950,000).

The Basic Child Support Obligation is $145,000 x 62% = $92,800. The total child support add-ons are $150,000.

Assuming the Post-Marital Income is tax-deductible, the payor's taxable income is $610,000; taxed at a 40% rate, the payor's taxes are $244,000; the payee's taxable income is $340,000; taxed at a 30% rate, the payee's taxes are $102,000. The cash flows are seen in Table 1 on page 5.

Proposed Post-Marital Income and the Rationale for Maintenance Payments

The historical rationale for alimony payments does not merit continuing post-marital income payments according to the proposed schedule.

Alimony rules in New York were established under the fault-based system of divorce. From 1789 to 1966, New York recognized adultery as the only grounds for divorce. A wife who was a defendant in a divorce action was not entitled to alimony payments, and even when the husband's conduct was the reason for a divorce proceeding, the wife's conduct during the marriage was evaluated by the court to determine the award of alimony.

In 1980, New York enacted a divorce law reform that established an equitable property distribution rule, provided for “maintenance“ instead of “alimony,“ and eliminated fault as a basis for denying payments. Under the reformed law, the courts were to consider a number of factors when making an award. The objective of the maintenance law was now to give the dependent spouse the opportunity to become self-supporting. According to a legislative memorandum explaining the new statute, maintenance was to “award the recipient spouse an opportunity to achieve independence,“ suggesting that courts should generally award maintenance for short-term “rehabilitative“ purposes.

The 1980 reforms led to intense debate and, as a result, the spousal maintenance rules were again amended in 1986. The new reform expanded the factors to be considered when calculating an award of maintenance to include consideration of the ability of the spouse to become self-supporting, rather than the older version that just considered the time and training necessary to become self-supporting. The court was also newly required to consider lost earnings as a result of one spouse foregoing or abandoning education, training, employment, or career opportunities during the marriage. The new reform also added a provision explicitly authorizing permanent maintenance.

The rationale for maintaining these payments in the form of post-marital income is unclear. If the rationale is to enable the receiving spouse to gain financial independence, then many factors become even more important, such as the spouse's level of education, time out of the workforce, age, location and the number of unemancipated children in their care. Additionally, if post-marital income is awarded to enable financial independence, then any change in either party's economic or marital status post-separation should come into consideration, which as noted above, is not considered in the proposed Bill.

Equitable Distribution Is Erroneously Not Considered

The proposal does not include any consideration of equitable distribution as part of the mandatory calculations. Divorcing parties with similar incomes but vastly different resources from assets will be treated the same under this proposal. Moreover, equitable distribution may be effectuated using a future payment stream. This would not be picked up as income under the formula. Similarly, the assets distributed to, and the separate property of, the less wealthy spouse may be sufficient to make him or her fully self-supporting, which is not taken into consideration by the mandatory calculations.

Tax Treatment Is Not Addressed

The proposed definition of post-marital income in Sections B(2)(A) and B(2) (B) of the Bill refers to a “sum derived and a sum to be paid.” The Bill does not address, much less provide for, tax treatment of the post-marital income payments. Since the enactment of ' 71 of the Internal Revenue Code, spousal support, in the form of alimony and under DRL 236B(6) by way of spousal maintenance, has been tax-deductible by the payor and tax-includible to the payee. This tax treatment enables the parties to structure support in a tax-advantageous manner. Inasmuch as the payee is often in a significantly lower tax bracket than the payor, $1 in spousal maintenance will “cost“ the payor (perhaps in a 40% tax bracket) $.60 after taxes, but provides the payor (perhaps in a 20% tax bracket) $.80 after taxes. Also, the payee may have corresponding tax deductions ' for example, in the form of mortgage interest on a residence ' to offset or shelter the spousal maintenance received as taxable income, so that there is no taxable income and no tax liability for the payee.

Furthermore, the proposed Bill has built-in Internal Revenue Code recapture problems because the mandatory duration formula in many instances will result in pay-out periods of less than three years. “Recapture“ is the method by which the IRS safeguards against payments intended as property distributions but characterized as support receiving preferential tax treatment. The Internal Revenue Code provides that if support deceases or stops within the first three payment years (other than due to death, remarriage, or formulas tied to variable wages), then the amount of support above the specified limits (essentially $15,000 per year) is “recaptured” as income to the payor. The post-marital income proposal requires pay-out streams which would terminate within the first three payment years, and necessarily invokes recapture complications.

The inclusion or deductibility of the post-marital income payments will make a significant difference in the resulting disposable income for each party and, as such, it is not possible to accurately calculate the financial consequences of the proposed Bill and spousal maintenance awards without considering the tax consequences to each party.

More Things the Bill Leaves Out

There is no justification for applying to couples with income over $1 million factors that differ from the factors for deviation from the formula for those couples with income of less than $1 million. The difference in the factors applied to families earning less than $1 million in contrast to those applied to families having income greater than $1 million has no apparent rational justification and smacks of economic discrimination.

Perhaps the most glaring deficiency in the deviation factors is the lack of any consideration of “the standard of living of the parties established during the marriage.” Yet, under our current statutory scheme for determining spousal maintenance “standard of living” is both the primary and over-riding factor, and it is the first of the factors to be considered when addressing awards in families with incomes exceeding $1 million under the proposed legislation.

Likewise, why exclude “present” earning capacity from the duration factors and, instead, limit their applicability to “future” earning capacity.

Other factors that are excluded are: the duration of the marriage; the need of one party to incur education or training expenses; extreme differences in the incomes of the parties; reduced or lost lifetime earning of the party seeking post-marital income as a result of having forgone or delayed education, training, employment or career opportunities during the marriage; and, the contributions and services of the party seeking post-marital income as a spouse, parent, wage earner and homemaker and to the career or career potential of the other party. (Perhaps the proponents of the legislation can provide an explanation for this discriminatory approach based on economic status as this writer cannot conceive of a logical rationale for it.)

Reintroduction of Marital Fault As a Consideration

One of the widely hailed elements of the enactment of Equitable Distribution Law in 1980 was the elimination of the “fault” concept in awarding alimony. Previously, fault had been used to deny alimony to guilty spouses, often with horrific results. Under the proposed legislation, both the deviation factors and the factors applied to families with incomes exceeding $1 million include as a consideration “the history of abuse by one party against the other.” In the view of this writer, “abuse” is no different than “fault” in the context of this legislation. Allegations of abuse will find their way into virtually every litigation where spousal support is at issue. Unscrupulous spouses and attorneys will attempt to paint one or the other of the spouses with the label of “abuser.” Standards for the definition of “abuse” in this context will assuredly differ from county to county, if not from judge to judge, or department to department, once again making awards unpredictable. Thus, one of the basic premises of the proposed legislation will be destroyed by the very specifics of the language contained in that proposal.

Certainly, no one can quarrel with the fact that domestic violence is a scourge that requires some form of remediation, but creating a broad standard of “abuse” is not the right approach, particularly in the context of creating an appropriate means of constructing an alimony award. Instead, the better approach would be to consider the elimination of immunity in the context of interspousal torts involving acts of physical violence perpetrated by one spouse upon the other.

Conclusion

The proposed post-marital income formula does not lead to equitable results when it is applied to a number of situations. As the three examples above demonstrate, application of the post-marital income formula results in skewed disposable income for each party. Part of the problem with the post-marital income formula that leads to inequitable results is the failure to address numerous variables that significantly affect the resulting disposable income of the parties. Specifically, the post-marital income proposal fails to adequately address the tax consequences to each party, the treatment of child support and payments of child-related expenses, and adjustments for changes in circumstances of the parties.

Additionally, the formula fails to provide adequate flexibility for each individual case. While the proposal gives courts discretion to vary from the formula and lists factors that judges should consider when doing so, history has shown that it is unlikely that judges will in fact deviate from the formula. The judiciary's reluctance to stray from the guidelines will result in more unfair rulings than may already exist.

Finally, the proposed legislation would create mischief of untold proportions by tinkering with discrete portions of the financial aspects of our divorce laws without making adjustments to other aspects of those laws, so as to allow a court to piece together all of the parts in an equitable fashion.

Instead of springing legislation of this nature on the public without any empirical justification for its enactment, a commission ought to be formed to review the state of spousal support awards in matrimonial actions in New York State. The Office of Court Administration should be charged with the obligation to maintain and compile detailed statistics on the outcome of matrimonial actions. The commission should examine the current climate in each of the four Judicial Departments, gain the perspective of judges, lawyers and former litigants, and then determine whether we should change the way in which our courts award spousal maintenance. Along the way, the commission should seek to answer the questions of: whether guidelines for spousal maintenance are necessary to ensure uniformity of awards in cases of similarly situated divorcing couples; whether such guidelines should be mandatory or discretionary; whether those guidelines should vary based on the region of the state in which the parties reside; and, whether New York is a jurisdiction that could benefit from the promulgation of such guidelines.

Alton L. Abramowitz, a member of this newsletter's Board of Editors, is a partner with New York's Mayerson Stutman Abramowitz Royer LLP.