Lake Tahoe Family Law | Attorney Craig C. Weaver

SPOUSAL SUPPORT

California Spousal Support

What was once referred to as alimony in California is now referred to as spousal support. In a divorce or legal separation proceeding, the court may order one spouse to pay to the other spouse a certain amount of support each month to provide for the financial needs of the other spouse. Generally, spousal support awards are based on one spouse’s need and the other’s ability to pay. There are two distinct and different types of spousal support in California. We have temporary spousal support and permanent spousal support. The purposes of temporary spousal support and permanent spousal support are different and the appropriate amount of each type of support is calculated differently by the court. The term “permanent” is also misleading as a permanent spousal support is not necessarily permanent. In fact, even when permanent spousal support is ordered by the court, there is still a statutory goal that the supported party become self-supporting within a reasonable period of time. Consequently, while permanent spousal support may be payable until the death of either party or the remarriage of the supported party, many permanent spousal support orders do not remain in place that long. Therefore, a more appropriate term would be perhaps “post-judgment” or “long-term” spousal support. However, the courts have elected to use the term “permanent” so that is the term that will be used here.

Temporary Spousal Support vs. Permanent Spousal Support

The purpose of temporary spousal support is to maintain the status quo as much as possible pending trial. By contrast, permanent spousal support is supposed to reflect a complex variety of factors established by statute and legislatively committed to the trial judge’s discretion, including several factors which tend to favor reduced support, such as the goal that the supported party should become self-supporting within a reasonable period of time. Furthermore, not only are the legal bases for the two (2) kinds of support different, there is also a disparity in practice. Because a dissolution of marriage is, in the mathematical sense, a negative-sum game where each party will not have the same access to the whole of the marital property he or she had during the marriage, permanent support orders will usually be lower than temporary orders. While most counties base temporary spousal support on a guideline formula similar to child support, permanent spousal support cannot be reduced to a formula because permanent support must be fixed only after consideration of the applicable statutory factors that are discussed below and in Family Code section 4320.

Long-Term vs. Short-Term Marriages

There is often a misconception that spousal support will be payable for life in a long-term marriage. Conversely, there is also often a misconception that spousal support will only be payable for one-half (1/2) the length of the marriage. Whether you are in a short-term or a long-term marriage can have a significant impact on the duration of a spousal support order. Pursuant to California law, there is a presumption that a marriage of ten (10) years or more, from the date of marriage to the date of separation, is a long-term marriage. However, the court may consider periods of separation during the marriage in determining whether the marriage is in fact long-term. Naturally, there is also a presumption that a marriage less than ten (10) years is a short-term marriage. It is important to note, however, that the ten (10) year mark is not a hard cutoff date. The court has discretion to determine whether the marriage is properly characterized as long-term or short-term based on the facts and circumstances of the particular case. In the case of both a long-term and a short-term marriage, there is a statutory goal that the supported party become self-supporting within a reasonable period of time. In a short-term marriage, usually a marriage of less than ten (10) years, generally a “reasonable period of time” will be deemed to be one-half (1/2) the length of the marriage. However, in a long-term marriage, usually a marriage of ten (10) years or more, the “reasonable period of time” for the supported party to become self-supporting is not defined, i.e. there is no presumption as to the appropriate duration. Accordingly, under some circumstances, a spousal support order in a long-term marriage may continue until the death of either party or the remarriage of the supported spouse. Spousal support orders are sometimes also secured with life insurance policies to ensure that the supported spouse will be provided for in the event of the death of the payor spouse. Further, there is also a rebuttable presumption of a decreased need for spousal support if the supported party is cohabiting with a nonmarital partner. Holding oneself out to be the spouse of the person with whom one is cohabiting is not necessary to constitute cohabitation.

However, by no means do all spousal support orders stemming from a long-term marriage remain in place until the death of either party or the remarriage of the supported spouse. Gavron Warnings can be issued to place a supported spouse on notice of his or her duty to make efforts to become self-supporting. Vocational evaluations can be ordered to identify lucrative career paths and training necessary for a supported spouse to become self-supporting, and “seek-work orders” can be issued by the court requiring a supported spouse to seek out employment and make a specified number of contacts with prospective employers on an ongoing basis. Spousal support orders are made based on need and ability to pay. When a supported party becomes self-supporting, or at least partially self-supporting, there will either no longer be a need for support or a lesser need for support.

To learn more about Gavron Warnings, vocational evaluations, seek-work orders, or spousal support buy-outs or stepdown orders please call (530) 214-8700 today to schedule a consultation.

Temporary Spousal Support

Under California law the purpose of temporary spousal support is to preserve the financial status quo to the greatest extent possible. A court may order temporary spousal support in any amount after considering the needs of the spouse requesting it and the other spouse’s ability to pay. In practice, however, courts commonly use formulas for calculating temporary support, such as the Alameda and Santa Clara County formulas, which arrive at a figure by subtracting 50% of the lower earner’s net income from 40% of the higher earner’s net income, with adjustments for tax consequences and child support payments. However, each formula calculates net income slightly differently, and therefore the Alameda County formula sometimes results in a lower guideline support payment amount. Nevada, Placer, El Dorado, Plumas, and Sierra counties all use the Alameda County formula whereas Sacramento County uses the Santa Clara County formula.

The two (2) main software programs used to calculate temporary spousal support are:

These are propriety software programs developed by private companies that have been approved by the California Judicial Council. They are available for purchase and free trials are sometimes offered. Essentially, these programs collect certain input information regarding the parties’ income and expenses, take into consideration the tax consequences, and then apply the selected formula. Courts will rarely deviate from guideline when ordering temporary spousal support.

To learn more about the calculation of temporary guideline spousal support, please call (530) 214-8700 today to schedule a consultation.

Permanent Spousal Support

Unlike temporary support, permanent spousal support is ordered based on the Family Code section 4320 factors set forth below. The court is required to consider each and every one of the following factors when issuing a permanent support order:

The extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage, taking into account all of the following:
The marketable skills of the supported party; the job market for those skills; the time and expenses required for the supported party to acquire the appropriate education or training to develop those skills; and the possible need for retraining or education to acquire other, more marketable skills or employment.
The extent to which the supported party’s present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party to devote time to domestic duties.
The extent to which the supported party contributed to the attainment of an education, training, a career position, or a license by the supporting party.
The ability of the supporting party to pay spousal support, taking into account the supporting party’s earning capacity, earned and unearned income, assets, and standard of living.
The needs of each party based on the standard of living established during the marriage.
The obligations and assets, including the separate property, of each party.
The duration of the marriage.
The ability of the supported party to engage in gainful employment without unduly interfering with the interests of dependent children in the custody of the party.
The age and health of the parties.
Documented evidence of any history of domestic violence, as defined in Section 6211, between the parties or perpetrated by either party against either party’s child, including, but not limited to, consideration of emotional distress resulting from domestic violence perpetrated against the supported party by the supporting party, and consideration of any history of violence against the supporting party by the supported party.
The immediate and specific tax consequences to each party.
The balance of the hardships to each party.
The goal that the supported party shall be self-supporting within a reasonable period of time. Except in the case of a marriage of long duration as described in Section 4336, a “reasonable period of time” for purposes of this section generally shall be one-half the length of the marriage. However, nothing in this section is intended to limit the court’s discretion to order support for a greater or lesser length of time, based on any of the other factors listed in this section, Section 4336, and the circumstances of the parties.
The criminal conviction of an abusive spouse shall be considered in making a reduction or elimination of a spousal support award in accordance with Section 4324.5 or 4325.
Any other factors the court determines are just and equitable.

The court’s interpretation of these factors and the determination of the marital standard of living can have a significant impact on the issuance of a permanent spousal support order.

Call (530) 214-8700 today to schedule a consultation to learn more about permanent support orders so you are able to better understand your rights, responsibilities, and options moving forward.

Tax Impact of Spousal Support

For spousal support orders issued on or before December 31, 2018, the Internal Revenue Code provides that, as long as certain conditions are satisfied, spousal support payments are tax-deductible by the paying spouse and taxable to the recipient spouse as “ordinary income.” To receive this favorable tax treatment, the payments must be: made in cash; incident to a divorce or legal separation instrument that does not explicitly change the tax treatment; the payments must end upon the death of the recipient spouse; the spouses must not be members of the same household when the payments are made; and the spouses must file their taxes separately.

Consequently, if these conditions are satisfied, and if your spousal support order was issued on or before December 31, 2018, if you are receiving spousal support payments, then you need to ensure that you are setting aside a sufficient amount of funds to offset the tax burden of receiving support. A party’s failure to consider the tax consequences of receiving support can result in unfavorable consequences with the Internal Revenue Service (“IRS”) and/or Franchise Tax Board. However, the tax treatment of spousal support can be modified by the parties, whether intentionally or not, through a written agreement contained in an order for support. For orders issued on or before December 31, 2018, Issues concerning the “recapture” of spousal support can also result in unintended tax consequences to uninformed parties. Recapture can occur when there are significant changes in the amounts payable in support during the first few years of an order. If certain rules are not strictly complied with, recapture can result in what otherwise would have been tax-deductible support payments losing their favorable tax treatment and being treated as a tax neutral event, the same as child support. Likewise, under the IRS rules, if spousal support is tied to a “contingency relating to a child,” such as the child’s birthday or graduation from high school, it may also lose its favorable tax treatment and be treated as a tax neutral event.

Importantly, for all spousal support orders issued on or after January 1, 2019, based on the recent tax reform bill passed by Congress, spousal support payments will no longer receive favorable tax treatment, and the payments will be treated as a tax neutral event. While generally most family law practitioners, myself included, are opposed to this change, there are some benefits. Most family law practitioners oppose to the change because after December 31, 2018, there will be less money to divide between parties. Typically, the recipient of support will be in a lower tax bracket than the spouse paying support. Therefore, the spouse receiving the money will have it taxed at a lower rate. After December 31, 2018, the spouse paying support will be taxed on the money at a higher rate, meaning, in most cases, there will be less money to go around. However, the good news is that for new orders we will no longer need to be concerned with issues of “recapture” or spousal support being tied to a “contingency relating to a child,” because, for orders issued on or after January 1, 2019, both child support and spousal support will receive the same tax treatment.

For orders issued on or before December 31, 2018, with support payments continuing into 2019 and subsequent years, the tax treatment is being grandfathered and the payments will continue to receive favorable tax treatment. However, at this point, it is unknown whether the favorable tax treatment will be lost if the orders are modified on or after January 1, 2019.

Call (530) 214-8700 today to schedule a consultation to learn more about both temporary and permanent spousal support awards and your rights, responsibilities, and options moving forward.