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Maintenance (aka Alimony)
Yes. It is not uncommon for a former spouse to pay maintenance (Wisconsin’s term for alimony). There is a misconception that if both spouses are gainfully employed there is no basis for awarding maintenance. But in awarding maintenance the court considers more than merely whether both spouses work or are capable of work.
Maintenance has two objectives: first, to support the recipient spouse in accordance with the needs and earning capacities of the parties, and, second, to ensure a fair and equitable financial agreement between the parties.
Whether to award maintenance and, if so, the amount and duration of the term of maintenance, is a decision that involves a great deal of discretion by the judge. There are no legally-binding formulas, charts, or baseline standards.
There are many other misconceptions about maintenance. Some people believe that everything is automatically “split equally,” including the parties’ incomes. Whether this is true depends on the length of the marriage and myriad other factors. Some people believe that a spouse won’t receive maintenance if he or she is working full time and can meet his or her living expenses without an award of maintenance. Whether this is true depends on the previous marital standard of living. If that standard of living was opulent and only one spouse could afford to continue to live that lifestyle, then the other spouse could have a claim for maintenance even if the recipient spouse is working and can meet his or her basic living expenses. For example, one spouse should not be expected to shop for clothes at Kohls, Target and Walmart while the other spouse continues the marital standard of living by buying clothes from Prada, Burberry and Gucci.
In reality, in most cases, neither spouse will be able to continue to enjoy the pre-divorce standard of living and the court will have to determine a comparable – more affordable – standard of living for both parties when awarding maintenance.
The court may weigh many different factors in determining whether to award maintenance. The law specifies nine factors that the court must analyze in a maintenance claim, but the court is not limited to those nine factors. It can consider any fact, circumstance, and argument it deems relevant. The court has a great deal of wide latitude in determining whether to award maintenance.
The nine specified statutory factors the court will consider in awarding maintenance are:
The length of the marriage;
The age and physical and emotional health of the parties;
The division of property;
The educational level of each party at the time of marriage and at the time;
The educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children and the time and expense necessary to acquire sufficient education or training to enable the party to find appropriate employment;
The feasibility that the party seeking maintenance can become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage, and, if so, the length of time necessary to achieve this goal;
The tax consequences to each party;
Any agreement made by the parties before or during the marriage, according to the terms of which one party has made financial or service contributions to the other with the expectation of reciprocation or other compensation in the future, if the repayment has not been made, or any mutual agreement made by the parties before or during the marriage concerning any arrangement for the financial support of the parties; and
The contribution by one party to the education, training or increased earning power of the other.
The weight the court places on each factor depends on each judge’s approach, judicial philosophy, and the facts and circumstances in each case. In practice, the longer the marriage, the more likely the court will deem an award of maintenance appropriate.
Yes. Maintenance is modifiable upon a substantial change in circumstances, for both the payer and recipient. For example, if the payer of maintenance loses his employment due to a layoff and can no longer afford the maintenance payments, he or she could return to court to seek a suspension, reduction, or even termination of the maintenance payments. Conversely, if the payer is promoted or obtains employment at a much larger salary, the recipient former spouse could return to court to seek an increase in his or her maintenance payments. Finally, either party could return to court to shorten or extend the length of the maintenance payments. For example, if the term for maintenance is 10 years and at the 9th year, 11 months of payments, the recipient believes he or she still needs maintenance, he or she can return to court and seek an extension of those payments.
CAUTION: If the recipient spouse believes he or she will need to extend the period of the maintenance payments, he or she must file a motion with the court before the last payment of the maintenance. The court loses jurisdiction to extend the maintenance payments after the last payment of the original judgment or order.
Although the court cannot order it without the agreement of the parties, the parties can agree to nonmodifiable maintenance. In Wisconsin, this type of maintenance payment is known as “Section 71 Payments,” a term based on the IRS code for deductibility of maintenance payments. If the parties agree to “Section 71 payments,” the amount and length or term of the payments is nonmodifiable. The benefit of this approach for the payer of the maintenance is that he or she can earn substantially more in income without the concern that his or her former spouse will seek additional maintenance. The benefit of this approach to the payee recipient of the maintenance is that he or she is guaranteed this amount regardless if the former spouse becomes unemployed, disabled, or experiences a reduction in income. Both parties accept the risks associated with the nonmodifiable nature of the maintenance as well.
Generally, no. If a person waived maintenance, the waiver is nearly always permanent and irrevocable. In extremely rare circumstances, a person could seek to “reopen” the entire judgment of divorce and seek maintenance, but the fact that a person simply regrets his or her decision to waive maintenance is unlikely to meet the standards to reopen a judgment of divorce.
The court may allow a person’s claim to maintenance remain “open” for a period of time, but the court must have a reason why the present circumstances at the time of the divorce warrant leaving open a claim of maintenance. Courts often rely on the person’s health when leaving open a claim for maintenance.
Possibly. If the parties agree, the person who could be liable to pay maintenance could “buy out” the other spouse’s maintenance claim. This “lump sum buyout” most often consists of a cash payment, retirement transfer, or asset that is awarded to the other spouse in exchange for that spouse’s waiver of maintenance. Many considerations must be analyzed in a maintenance buyout, such as discounts for taxes, present value, remarriage, and death of either party. For example, if we assume that the recipient spouse would receive $1,000 per month for 5 years in maintenance, the buyout amount would likely not be $60,000. This is because the $1,000 per month would have been deductible to the payer and taxable income to the recipient. The buyout amount should reflect those tax consequences and thereby lower the amount from the $60,000. The other discounts also come into play in evaluating a lump sum buyout which may require the assistance of an accountant or a lawyer well versed in family law.
It depends. Each situation is different and even under these facts, the court may still order an award of maintenance to the wife. The court is instructed by our maintenance statute to consider the earning capacities of each party. In this situation, the husband may want to hire an expert to evaluate the earning capacity of his former wife. The husband then could argue at the time of trial that the court should impute income to the wife at her earning capacity even if she should choose to not work. For example, if the wife’s earning capacity is $36,000 a year, the husband could argue that any amount of maintenance should be based on the wife earning $36,000. Depending on the husband’s income and the other factors involved in the case, this could reduce or even eliminate entirely the wife’s claim for maintenance.