By: Abby Tolchinsky and Ellie Wertheim
April 13, 2016
As of Jan. 25, 2016, divorcing parties may rely on new provisions in the Domestic Relations Law pertaining to post-divorce spousal support.1 For years, attorneys and judges have grappled with creating a standard of fairness upon which parties may rely that provides sufficient flexibility so that cases may be tailored to each family’s unique budgetary needs.
Until now, professionals have been guided by the list of factors2 to be considered when awarding support, as well as a “rule of thumb” with regard to duration of such support—roughly one year of support for every two to three years of marriage. When clients would inevitably ask their lawyers, “how much maintenance should I anticipate paying/receiving?” practitioners could not say, with any measure of certainty, the extent to which a judge might weigh or value one factor more than another.
Even best guesses by the most seasoned litigators would be delivered to clients with caveats, as they could very well be at variance when measured against a final result handed down by a judge. Practitioners did not want to create unrealistic expectations nor a sense of a promised outcome, given the lack of uniformity of decisions, not to mention scant guidance for the basis of such decisions in reported cases. Intangibles such as the likability or bad actions of a litigant often seemed to serve as an additional “X” factor furthering the unpredictability of results, in what is already often an emotion-laden and stressful experience.
The new law provides a specific formula for calculating spousal support and then considering the spousal support award when calculating child support. This establishes a legal framework for discussion on the myriad individualized considerations for spousal and child support.
As mediators, we have similarly struggled over the years to provide an accurate framework around the questions of “what do I owe/get and for how long?” Our guideposts, in addition to the factors in DRL §236B(6)(a) are: working with the parties to assess budgets; the needs of the children and of each party; their earning histories and potential, including the “on ramp” to becoming self-supporting for the party who may have served as a stay-at-home parent; their values and hopes for the future; their willingness to make budgetary cuts, take on a measure of debt or try to earn more, during a transition period.
Issues and Considerations
When parties in mediation have completed their statements of net worth, we find that almost uniformly, they wish to focus on how to provide financially for the children’s needs. Thereafter, they turn to distributing the net dollars to be shared between them—in some proportion. Anecdotally, child support, even where there is a great disparity in earnings between the parents, is a much less fraught conversation than is spousal support. A payor is almost always more willing to provide for a child’s piano lessons or summer camp experiences, than they are to write a check for a sum certain which their ex-spouse then spends as he or she sees fit. At times, concerns of how the dollars may actually be spent leads to a conversation about making payments, for certain of the children’s needs, directly to a provider.
When addressing the children’s budget, parties in mediation have an opportunity to discuss their priorities for their kids’ upbringing as well as how they will make decisions. That is, do they value public or private education? Will they try to seek treatment with only in-network physicians? Can their children carry some college debt? These decisions have both emotional and financial implications. And, in considering all of the above, couples may not yet have even examined the Child Support Standards Act (CSSA). This is because, for most families in mediation, the legal formula is merely a frame of reference, one from which they often deviate in favor of meeting their children’s actual month-to-month budget, whether that means providing more or less than the basic child support formula may yield.
After a discussion determining a reasonably likely amount of child support, parties in mediation turn their attention to their own personal budgets. Various details are examined—most importantly, looking at the standard of living all had enjoyed.3 Uniformly, adjustments are needed as families shift from a budget supporting the entire family under one roof to one that supports the family in two distinct homes. Ideally, one hopes, the non-monied spouse rehabilitates a career over time, as the children mature and earnings increase. A component of this maintenance conversation is how the non-monied spouse may require some additional education, work experience, not to mention added expenses of child-care, all in order to become financially independent.
Because of the greatly varying outcomes of maintenance decisions over the years, a committee worked together to draft a law providing a formula for calculating spousal support. Unable to reach such an agreement with respect to post-divorce support, in October 2010 then-Governor David Paterson signed into law DRL§236B(5-a), a compromise bill that provided a formula for temporary maintenance while the action was pending in court only.4 For mediators, this provided little guidance, since parties mediating their conflict were, by definition, negotiating out of court. Therefore, the law simply provided parties a sense of their best alternative to a negotiated agreement, while they worked to negotiate directly. Few, if any, looked to the formula in settling their final durational maintenance award. When legal fees were provided by the monied spouse, it was to create balance, fairness and a full review of the mediated agreements.
Toward a Standard of Fairness
As of Jan. 25, 2016, we are firmly in the era of DRL §236B(6)—that is, a formula for post-divorce maintenance and guidelines for duration thereof. At this juncture, before there have been any written decisions on the new law, our best guess is that, in the context of mediation, this provision will serve as a societal standard of fairness, a frame of reference for spousal support, just as the CSSA has been for mediated child support agreements. According to Justice Jeffrey Sunshine, chair of the Chief Administrative Judge’s Matrimonial Practice Advisory and Rules Committee, “The guidelines provide not only a starting point for negotiations, I believe they are an effective tool for providing a sense of structure and predictability in reaching settlements.”
What has become clear with the new maintenance law is the order in which support calculations are to be conducted. That is, first, spousal support is determined in accordance with the new, income-based formula which considers both parties’ incomes and uses the lower of two calculations to determine the maintenance award. Thereafter, the monies paid as spousal support are added to the payee’s income for the purposes of calculating basic child support as well as each party’s pro-rata obligation of add-ons.5 In other words, this contrasts with the way negotiations have been conducted in mediation, with child support as the primary focus and spousal support as the subsequent analysis.
From our perspective, the court formula adds a dimension to the conversation of how parties shall provide for themselves and for the children. Previously, the negotiations around spousal support were speculative and budget-based as opposed to the knowable formula for child support. For practitioners, the new maintenance law is a helpful guideline; however, best practice still requires a full analysis of the family budget and parties are free to deviate from the guidelines.
Finally, we are left to consider how to frame a conversation around income above the statutory cap of $178,000. Parties in mediation discuss their values, including the standard of living the family has enjoyed. We have already noticed in our practice that, in order to create parity between the homes in which children will be residing post-divorce, as well as a desire to be fair to one another and honor the family’s history, income above the cap is often factored into the discussions of each party’s post-divorce budget and support obligations.
With respect to duration, the new law provides guidelines for the length and modification of support, rather than a fixed formula. Unlike the support calculations—a watershed moment for the matrimonial bar—durational guidelines seem, in many ways, to codify the “rules of thumb” that were informally in place before January 2016. One interesting component is the mandatory consideration of the impact of retirement on support awards. The law now provides consideration of: anticipated retirement assets, retirement benefits and the retirement eligibility ages of both parties. A full or partial retirement of the payor, with a substantial diminution of income shall be a basis for modifying spousal support. As mediators, we see this as a natural outgrowth of the conversation around adjusting support over time, as income and needs may change.
For couples negotiating a prenuptial agreement, whether or not to consider including a maintenance waiver, an originally crafted formula or to remain silent on future maintenance, thereby deferring to the law at the date of a termination event, the new law provides concrete predictability. Therefore, as we discuss how the couple plans to handle finances during the marriage, such as whether one may take time off when children are young, or whether one may set out on an independent business venture, for example, their potential financial obligations become easier to predict. For mediators, this serves to facilitate informed decision-making—both in crafting a prenuptial agreement and in helping the parties in structuring their lives together.
1. The new law also makes a minor change to the formula for temporary maintenance calculations.
2. DRL§236B(6)(a) inter alia: age and health of the parties; the equitable distribution of marital property; the length of the marriage.
3. In particular, for residents of New York City, housing is the single largest line item and basic need couples need to accommodate.
4. Also part of the 2010 bill was a provision that the monied spouse pay counsel fees, thereby correcting the financial advantage a monied spouse could employ in a litigated divorce. That is, hiring a very expensive attorney and protracting the negotiations and motion practice such that the non-monied spouse could not reasonably participate in the action and therefore, had to capitulate. At least while the action was in court, the non-monied spouse received a monthly sum due.
5. As per DRL§240(1-b)(c)(5-7), this includes, generally, health insurance, health-care expenses not covered by insurance, educational expenses and reasonable child-care expenses.
Reprinted with permission from the New York Law Journal 2016 ALM Media Properties, LLC. All rights reserved.