The length of spousal support depends on several factors, but is largely
dependent on the length of your marriage among other factors.
Spousal Support Factors in Orange County CA
Income & Earning Capacity
The income of each spouse is one factor. Earning capacity is another. That
is, if one party doesn’t work, only works part-time, or is underemployed,
the court can consider what they could earn if they were working, working
full time, or working at a job that meets their skills. The court can
say, “we don’t care that you are not working, and we cannot
force you to work, but we can run a calculation based on a hypothetical
income that you should be making or that you’re choosing to not
make.”
For example, there is the famous case of a doctor who decided to be a priest.
He is going through a divorce, he finds God amid his divorce, and he wants
to become a priest. The judge said, “No problem! You’ll be
whatever you decide to be, but I’m going to look at your income.
You decided to become a priest, great, but your obligation to your spouse
and your child is the highest obligation that you have before you pay
your rent and your bills. Therefore, I am going to run your income based
on a hypothetical calculation.”
This is known as “imputation of income” and it goes back to
earning capacity. How about a younger couple who’s getting divorced?
One spouse is highly educated but stayed home to raise the children. They
are under 50, maybe they have a degree, at least a high school degree.
The court is going to expect them to go to work or get some kind of education
or training to freshen up and join the workforce.
Marital Standard of Living
The law says the person who will get alimony is entitled to live at, or
maybe below, the standard at which they lived when they were married.
However, they are not entitled to live beyond their marital standard of
living. Note: The marital standard of living ends at the date of separation,
and the marital standard of living is generally the description of someone’s
lifestyle, e.g. did they have a middle class, luxurious middle class,
or standard lifestyle?
They can consider how expensive their house was, the cars they drove, the
kind of birthday parties they had for their kids, the designer purses
they purchased, where they shopped and ate, whether they had multiple
cars and the latest cars, did they have servants, or import tiles from
Italy for their 12,000 square foot mansion in Newport Coast?
Forensic accountants or lawyers can mathematically calculate the marital
standard of living with two methods: an income approach and an expense approach.
With the
income approach, we look at the gross income of the family for the past three, or maybe
five years, before the date of separation to try to capture a sample of
their lifestyle during this time. The best, and most accurate, way to
do this is to look at tax returns because we assume they are true. We
gather their tax returns for a certain number of years during the marriage,
add up the income, and divide the total by the same amount of years to
get the average. Then we let look at how many people lived on that average.
For example, if the average is $100,000 a year, and there is a wife, a
husband, and two children, we first divide the $100,000 by 12 months.
Assuming kids don’t spend as much as adults, a fair division would
be to count each child as half of an adult, hence two children will account
for one adult and two adult spouses will equal a total of three. We can
now divide the $100,000 by 12 months and 3 adults, which is roughly $2,777
per person per month, which becomes the maximum average share of the income
for the spousal support seeker.
The attorney will advise the judge that the person is entitled to no more
than this amount per month based on their standard of living. However,
the attorney can also argue that the person is expected to work at some
point and the maximum amount should be offset by the amount of money the
spousal support seeker can earn. For example, the attorney could argue
that she can earn $1,000 a month, so the maximum amount their client should
be paying each month is $2,777 minus $1,000 for a total of $1,777.
Now, there could be all sorts of arguments about why the kids are being
arbitrarily counted as half an adult in terms of expenses. And another
argument will be the number of years we should average. No law says we
should go back three, five, ten years, or one year. It is whatever amount
of time the court finds sufficient to capture the standard of living.
For most people, if you chart their income from the date of marriage to
the date of separation, it is usually a straight line going up.
The attorney representing the person seeking spousal support will want
to average just the past few years. The attorney representing the person
paying spousal support will want to go as far back as possible to reduce
the average. Furthermore, the attorney representing the seeker might want
to argue that the other party is not being truthful on their tax return
and they will want to present a different number supplied by their accountant
based on the marital standard of living.
In this case, an accountant will do a retroactive cash flow calculation.
So, for example, if the date of separation is 2015, they would take their
tax return for 2015 and adjust it for what is supposedly the real income.
They will do the same for 2014 and 2013 and now they can find the average
income based on those numbers and suggest a different number for spousal
support. This is the “income approach.”
The
expense approach is the other option. It is very time-consuming and expensive because they
have to go through receipts, credit card statements, bank statements,
and more. They have to track every dollar the couple has spent over the
past few years of their marriage. What they spend is net income. Thus,
if we do an expense calculation, these are assumed to be numbers after
taxes are paid.
With an income approach, on the other hand, we perform calculations based
on numbers before they pay taxes and Spousal Support is paid gross. They
are being paid the gross amount and they will pay taxes on it. So, if
they are going to use an expense approach, they will need to adjust the
income up. This means that once they agree on how much per month they
were spending, they have to bump it up to a higher number hypothetically
calculated, i.e. based on the receiver’s taxable rate and how much
support would be needed (gross) to end up with that number. As a consequence,
we now have to determine what the receiver’s tax rate is and both
sides will most likely disagree on what that taxable rate is because they
don’t yet know what property each party will have which will affect
their taxable rate.
Age & Health
If someone is 70 years old, we can’t expect them to go back to work
and argue earning capacity for them. What if they are paraplegic or have
a medical condition that prevents them from working? The judge will consider
these factors when determining the amount and length of Spousal Support.
Other factors are the assets and liability of each party and what each
party ends up with after the divorce. The judge will not rule on long-term
spousal support until they have ruled on the division of assets.
Balance of Hardship
After all these factors are considered, the judge can ask whether the court
is being fair to both parties. The judge can ask questions such as, “If
I make this spouse pay this much, what will that do to them? What are
their expenses? Do they have kids from another marriage? Are they going
to be left with enough to pay for the bare necessities of life such as
rent?” On the other side, they will ask, “This spouse has
passed the age of retirement with very little, yet the other has lots
of property, etc.” Balance of hardship is a way to ensure that the
court is being fair to both sides.
Length of Marriage
In California, you have a short-term marriage if you have been married
for less than 10 years. In this case, the law presumes the length of time
you will be paying or receiving alimony is about half the length of the
marriage. Therefore, if you were married for eight years, you will presumptively
pay or receive spousal support for about four years.
If your marriage lasted more than 10 years, it is considered a long-term
marriage and there is no rule for how long you will pay or receive spousal
support. That is not to say that it is indefinite. It can end if the person
who receives Spousal gets remarried, or one spouse passes away, or “until
further order of the court.” This means that it is not lifetime/permanent
spousal support. Either side can go back to court if they want changes
made to the order. If they don’t do anything and they are both alive
and the receiver of spousal support is not remarried, everything remains the same.
Gavron Warning
A Gavron Warning means the receiver of spousal support is expected to be
self-sufficient within a certain amount of time. Under a short-term marriage,
a reasonable amount of time is defined as half of the length of the marriage.
Family Support in California
Family support is different than child support or spousal support. Family
support is a way to get more support from the supported party. It bumps
up the number. If you run the computer program, in one scenario you might
have one number for child support and a separate number for alimony, and
in another scenario, you run different calculations and get the family
support amount. That family support number will generally be higher than
the child support and spousal support numbers combined.
One may assume that if they want more money, it would make sense to agree
to family support. The problem with family support, however, is that it
is not allocated as to what part is child support and what part is spousal
support. The problem with family support is that it is not deductible
on tax returns. Spousal support is deductible, so the payor deducts it
on their tax return. This means that if you agree to pay family support
of $5000 a month, you may be asking for problems later, because, after
months of paying, when you get to the end of the case, you need to go
back to the first payment you made for family support and determine how
much of the $5,000 is child support and how much is spousal support.
The spouse paying family support is going to want to claim the tax benefits
and the person who receives support will likely say, “Wait a second,
I didn’t know that I was supposed to pay taxes on some part of the
family support and I never file a tax return because I have no income.
I was getting family support. What are you telling me? I now have to tell
the IRS that I didn’t pay the taxes I was supposed to pay on the
family support and pay penalties? No! I don’t want to do that, and
I didn’t keep any money to pay the taxes! I don’t want to
do it.” So that’s the problem with Family Support.
Consultation with a Spousal Support Lawyer in Orange County
At Moshtael Family Law, our team includes an in-house CPA to help handle
the complex financial aspects of your divorce, including alimony. With
our dedicated CPA, we bring a high level of analysis and detail-oriented
focus to the spousal support/alimony process and also the ability to conduct
a preliminary analysis of income available for support.
Contact
Moshtael Family Law today to meet with one of our Orange County alimony
attorneys.
Call or send a message via our private online contact form.
