What Happens to Alimony When Income Changes After Divorce?
Can alimony be changed after divorce? Can spousal maintenance be reduced? Can I modify alimony?
The Forensic Accounting Deskbook by Miles Mason, Sr. JD, CPA, published by the ABA Family Law Section
For a much more detailed discussion regarding proving income and changes thereof, see The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers, Second Edition, authored by Miles Mason, Sr. and published by the ABA Family Law Section. This updated edition of one the ABA’s most popular resources explains the practice of forensic accounting and business valuation and how to apply it in family law cases. It provides a practice-focused introduction to the core financial concepts in divorce, such as asset identification, classification, and valuation, income determination, expenses, and more.
See Mason’s complete list of the 10 Big Divorce Financial Mistakes.
VIDEO TRANSCRIPT:
Tracy Coenen: What happens if during the divorce the spouse is agreeing to a certain amount of spousal support, they’re granted a divorce, and then later one of the spouse’s income changes?
Miles Mason: Well, it depends on a couple of different things. First, obviously, the state law and what type of spousal support was ordered. Most states have very definitive rules on whether or not alimony, spousal support, or maintenance can be modified. Today, most people are trying to settle divorces where the spousal support is non-modifiable. You owe what you owe, you’re going to get what you’re supposed to get. The difficult question comes in when the supporting spouse can no longer pay that amount due to a low income going from say $300,000 to $100,000. If they’re supposed to be paying close to $50,000 a year in alimony, they may not be able to make that amount.
So modification of alimony, spousal support, or maintenance is a big, big issue, and always very, very challenging and very expensive to deal with. So then the question becomes how long is there going to be for a modification? If somebody just loses a job, what most courts will do with that case is maybe abate or delay payments being due for a period of time where that spouse has to come back to court and prove that they’re trying to get a job. They may have to report back on where they’ve applied for work, what applications have been filled out, have they met with the headhunter, depending of course, on the salary of the person.
But in general, a person can’t be voluntarily underemployed or unemployed by just choosing to be unemployed, and that can be a very difficult situation, because there are times when a court will send somebody to jail for not working.
Thank you to Tracy Coenen, CPA, CFF for inviting me to join her in this video series. Tracy is a nationally recognized forensic accountant practicing in Milwaukee and Chicago.
