Changes Afoot: Spousal Maintenance Legislation

Pending in New York StateLydia S. Antoncic, Esq. Virginia A. LoPreto Esq.Lydia S. Antoncic, P.C. Virginia A. LoPreto, LLC

Spousal Maintenance: How are Courts Making Decisions Now?

•Temporary Maintenance Guidelines: DRL Section 236 B(5-a) Less-monied spouse has a presumptive entitlement to support•Change from Prior Law to “tide over the more needy spouse.”

Temporary Maintenance: How are Courts Making Decisions Now?

•The Formula: Two Calculations, the Lower Amount Prevails •Determine Payor’s Income up to current cap of $543,000•Determine Payee’s Income•Multiply Payor’s Income by 30% =X•Multiply Payee’s Income by 20% =Y •Subtract Y from X

Temporary Maintenance: How are Courts Making Decisions Now?• Second Calculation: Add Payor’s Income

and Payee’s Income•Multiply by 40%• The Lower Amount of the two calculations

prevails and is presumptive amount• The Low Income Adjustment-applying a self

support reserve amount similar to CSSA

Temporary Maintenance: How are Courts Making Decisions Now?

•Consideration of Payor’s Income Over Income Cap, Now$543,000•19 Factors DRL Section 236 B (5-A)(C)(2)(A)

• Length of Marriage•Differences in Income• Standard of Living• Separate or Joint Households• Any other Factor: Just and Proper

Application of the Current Temporary Guidelines• Example: Payee spouse earns $60,000 and the payor earns $500,000Two calculations:• 20% of $60,000 = $12,000• 30% of $500,000 = $150,000• $150,000 - $12,000 = $138,000• 40% of $560,000 = $224,000 minus $60,000 = $164,000• The presumptively correct amount is the lower of the two: $138,000

per year, or $11,500 per month

Application of the Current Temporary Guidelines• Example Continued with Income over the Cap. Payor Spouse Earns

$900,000• Court considers the Presumptive Amount of $11,500 per month• Reviews the 19 Factors• Seeks to Determine whether $11,500 maintains Standard of Living-

covers carrying charges, medical expenses• Court’s Decision MUST go through each of the 19 factors that are

applicable before awarding maintenance over the cap.

Application of the Current Temporary Guidelines• Prevailing Factors Supporting Award over the Cap: • Payor spouse has income well in excess of the cap, which is now $543,000• Standard of Living. In Brown v. Brown, 123 AD3d 596 (1st Dept. 2014) the

Court affirmed an increase in temporary maintenance from $13,100 to $37,000 per month. • See also Lennox v. Weberman, 109 AD3d 703 (1st Dept. 2013)(increase from

$12,500 to $38,000 affirmed).• Lack of reliable income information from payor spouse. Zito v. Zito, 43 Misc3d

1236(A) wherein court deviated from presumptive amount.

Temporary Maintenance: How are Courts Making Decisions Now?

• Unjust or Inappropriate Awards :17 Factors DRL Section 236 B (5-A)(E)(1)

• Guidelines do not apply to FCA Section 412 petitions where standard remains “fair and reasonable sum” based on circumstances.

Application of the Current Temporary Guidelines

• Carrying Charges.• In H.K. v. J.K. 32 Misc3d 1226(A) (NY Sup Ct. NY Co. 2011) the court followed

the two calculations arriving at the monthly sum of $12,500. In its analysis of income in excess of $500,000 and after reviewing the factors, directed that additional support be paid equal to the wife’s monthly rent.• Lower court’s award reversed where the presumptive amount was awarded

but no consideration was given to fact that payor spouse was paying all of carrying charges. Francis v. Francis, 111 AD3d 454 (1st Dept. 2013)• Payment of mortgage and real estate taxes based on income exceeding cap in

addition to award of temporary maintenance upheld. Vistocco v. Jardine, 116 AD3d 842 (2d Dept. 2014)

Application of the Current Temporary Guidelines

• The Appellate Division, First Department has strictly adhered to the requirement that the 19 enumerated factors be specifically considered. See, Khaira v. Khaira, 93AD30d 194 (1st Dept. 2012)(the Court therein noted that the actual amount of the award may be correct but that the lower court failed to perform the analysis for the 19 factors. • An excellent analysis of these enumerated factors with specific

references to each factor is provided in H.K. v. J.K., 32 Misc3d 1226(A) by the Hon. Laura Drager.

Application of the Current Temporary Guidelines

• Deviations because award “unjust or inappropriate” under 236 Part B (5-A)(E)(1)• Judge Sunshine cautioned: • The factor delineated as (q) (any other factor which the court shall expressly

find to be just and proper) cannot be used in isolation from the rest of the statute to support a finding of an unjust or inappropriate presumptive amount merely because the formula may shift resources from one party to the other. While the category may appear on its face to invite a deviation based upon a resource shift, the legislative intent of the statute is consistency in maintenance awards. Granting a deviation just because there is a resource shift would be inconsistent with the statutory intent. H.G. v. N.K. 40 Misc3d 1242(A) (2013)

Application of the Current Temporary Guidelines

• In H.G. v. N.K. the parties still resided together with payor spouse paying the rent, utilities and parties’ health insurance and cell phones. The court deducted these payments from the presumptive amount and further reduced award based on consideration of other factors, particularly wasteful dissipation of marital assets by payee spouse.• The court declined to consider early retirement social security benefits the

payee spouse could arguably collect, stating that he was entitled to wait for when he would receive full benefits, at 66.

Application of the Current Temporary Guidelines

• Awards can be for less than presumptive amount if unjust and inappropriate.• Significant Factors:• Presumptive amount and payee’s income exceeded expenses• Payor spouse unable to maintain his pre-divorce separate household• Payment of carrying charges for marital residence

Application of the Current Temporary Guidelines

• Joseph M. v. Lauren J. 45 Misc3d 1211(A) The Court held presumptive amount of $3,506 unjust and ordered $650.• The Husband’s pre-separation household was significant reason for court

to hold the presumptive amount was unjust. Scott M. v. Ilona M. 3 Misc3d 353• Award modified on appeal. Presumptive amount plus payee’s income

exceeded expenses. Chusid v. Silvera, 110 AD3d 660 (2d Dept. 2013)• Temporary support award vacated as payor spouse unable to meet his

needs in addition to payment of carrying charges on marital residence and child support. Weinberg v. Weinberg, 123 AD3d 697 (2d Dept. 2014)

Impact of Domestic Violence on Temporary Awards

• Acts by One Party Against Another That Have Inhibited or Continue to Inhibit a Party’s Earning Capacity or Ability to Obtain Meaningful Employment. Such Acts Include but Are Not Limited to Acts of Domestic Violence as Provided in Section Four Hundred Fifty-nine-a of the Social Services Law (i.e. stalking victim at work leads to termination of victim’s employment)

• As used in this Section 459-a : 1. "Victim of domestic violence" means any person over the age of sixteen, any married person or any parent accompanied by his or her minor child or children in situations in which such person or such person's child is a victim of an act which would constitute a violation of the penal law, including, but not limited to acts constituting disorderly conduct, harassment, menacing, reckless endangerment, kidnapping, assault, attempted assault, or attempted murder; and (i) such act or acts have resulted in actual physical or emotional injury or have created a substantial risk of physical or emotional harm to such person or such person's child; and (ii) such act or acts are or are alleged to have been committed by a family or household member.

Post-Divorce Maintenance: How are Courts Making Decisions Now?

• Post-Divorce Maintenance: DRL Section 236 B (6)• Determination of amount as justice requires and the amount and

duration based on 20 factors set forth in DRL Section 236 B(6-a)• One new factor: the presence of children in the household.• One old factor with real meaning: distribution of assets• Non-durational maintenance to terminate upon death or remarriage

of payee spouse.

Post-Divorce Maintenance Awards under Current Law

Dominant Factors:• Length of Marriage• 25 year marriage, 12 years of support• 18 year marriage, 8 years of support• 15 year marriage, 7 years of support• 15 year marriage, non-durational support for 54 year old wife• 7 year marriage, 2.5 years of support

• Standard of Living

Post-Divorce Maintenance Awards under Current Law

• Payee Spouse’s ability to be self-supporting• Standard of living: Can the Payee Spouse earn enough to maintain • Amount of time out of the work force• Need for training/education

• Payee’s Age/Health• Distribution of Marital Property

Recent Post-Divorce Decisions

• Wife’s “mild cognitive impairment” and lack of any ED supports award of non-durational support to 54 year old. Cohen v. Cohen 120 AD3d 1060 (1st Dept. 2014)• 7 year duration increased on appeal until spouse became 66 years of

age. 20 year marriage and high standard of living were factors, and presence of ED did not appear to limit amount or duration of award. Hymowitz v. Hymowitz, 119 AD3d 736 (2d Dept. 2014)

Recent Post-Divorce Decisions

• 56 year old homeworker without a work history after a 25 year marriage awarded support for 12 years, but at a lesser amount than requested, given husband’s earnings of no more than $320,000. Alexander v. Alexander, 116 AD3d 472 (1st Dept. 2014)• Lifetime maintenance for spouse with medical condition that

prevented her from working. No information as to the length of marriage or age of parties. Rabinovich v. Shevenko, 93 AD3d 774 (2d Dept. 2014

Recent Post-Divorce Decisions

• 38 year old spouse out of work force for 6 years to raise family who holds MBA degree awarded 6 years of support after 13 year marriage. Both amount and duration limited by significant distribution of assets and child support based on cap of $450,000. V.M. v. N.M., 43 Misc.3d 1204(A) (NY Sup Ct. Albany Co. 2014)

• Spouse’s award for 7 years of support after 15 year marriage upheld, however, appeals court imputed additional income to payor spouse to increase annual maintenance from $48,000 to $72,000. Turco v. Turco, 117 AD3d 719 (2d Dept. 2014)

Practical Issues- Need for Uniformity

• Inconsistency between income cap for Temporary Maintenance ($543,000) and Child Support ($141,000)

• No differentiation for households with or without children

• No guideline for post-divorce maintenance

• No uniformity as to duration of award

Proposed Legislation

• Task force created by Judge Sunshine

• Would amend Section 236 of the Domestic Relations Law, Section 412 of the Family Court Act

• Effective January 31, 2016 and every two years thereafter, the cap is subject to a COLA increase.

• Goes beyond addressing practical issues noted and also addresses:• ELIMINATES ALL FORMS OF ENHANCED EARNINGS AS MARITAL ASSET • However, initial proposal has since been revised to consider spouse’s contribution to enhanced

earnings as a factor for equitable distribution under item #7.• Grounds for modification (actual or partial retirement)

Proposed Spousal Maintenance Legislation:The Formula

• Income Cap: $175,000 for Temporary and Post-Divorce Maintenance Awards• Calculation for families with Children :• STEP 1: Subtract 25% of payee’s income from 20% of payor’s income;• STEP 2: Multiply sum of the payor and payee’s income by 40% and subtract

payee’s income from the result;• The lower amount will be guideline for maintenance

• OCA 37- Clarifies how income determined • maintenance is added to income of child support payor spouse before calculation is made;• Child support is re-calculated upon termination of child support• NYSBA comment that this should be subject to child support modification law (substantial change of

circumstance, 15% change in income or three (3) years since last order).

Proposed Maintenance Legislation:The Formula

• Calculation for families without Children (not affected by OCA 37):

• STEP 1: Subtract 20% of payee’s income from 30% of payor’s income;• STEP 2: Multiply sum of the payor and payee’s income by 40% and subtract

payee’s income from the result;• The lower amount will be guideline for maintenance

Proposed Maintenance Legislation:Discretionary Factors

•Where there is income over the cap, a court “may” award additional maintenance based on a list of discretionary factors•Court must articulate reason for deviation in decision

Proposed Maintenance Legislation:Reasons for Deviation

• Age and health of parties• Earning Capacity (present and future)• Need to Incur educational/training expense• Termination of Child Support Award• Wasteful Dissipation of Marital Property• Acts by one party that would inhibit another’s to obtain meaningful employment

(Domestic Violence)

• Availability and cost of medical insurance• Care of children, stepchildren, disabled adult children/stepchildren,

elderly parents or inlaws

Proposed Maintenance Legislation:Reasons for Deviation

• Tax Consequences to Each Party• Existence and duration of joint/separate households• Standard of Living During Marriage• Equitable Distribution of Marital Property (post-divorce award only)• Contributions of spouse as homemaker• Any other factor the Court deems just and proper

Proposed Maintenance Legislation:Duration

• Temporary Maintenance: terminates no later than judgment of divorce issued or death of party• Post-Divorce Maintenance- terminates on death or remarriage• Relevant to understand for purposes of negotiation and mediation• Length of marriage is calculated as date of marriage to date of

commencement of action• Court can consider impact of retirement (partial or total) and

retirement assets and/or eligibility in determining length of post-divorce maintenance.

Proposed Maintenance Legislation:Duration

Length of Marriage % Length Maintenance Payable

0 up to and including 15 years 15-30%15 years up to 20 years 30-40%More than 20 years 35-50%

COURT CAN DEVIATE USING SAME FACTORS AND ANTICIPATED RETIREMENT BENEFITS AND ELIGIBILITY

PROPOSED MAINTENANCE LEGISLATION:

Practical ApplicationHYPOTHETICAL FACTS: Payor earns $300,000; Payee earns $60,000; child support being paid; 15 year marriage

IF CAP APPLIED:• STEP #1: Subtract 25% of Payee’s income from 20% of Payor’s income up to cap of $175,000:

20% of Payor’s Income (capped at $175,000) = $35,00025% of Payee’s Income ($60,000)= $15,000

$20,000• STEP #2: Multiply sum of Payor and Payee income by 40%• $175,000 + $60,000= $235,000 X 40%= $94,000• STEP #3: Subtract Payee’s income ($60,000) from total in Step #2 ($94,000) = $34,000 (Compare Turco)

AWARD WOULD BE LOWER AMOUNT BETWEEN STEP #1 and STEP #3 or $20,000 PER YEAR

PROPOSED MAINTENANCE LEGISLATION:

Practical ApplicationIF CAP NOT APPLIED:

• STEP #1: Subtract 25% of Payee’s income from 20% of Payor’s income:20% of Payor’s Income ($300,000) = $60,00025% of Payee’s Income ($60,000)= $15,000

$45,000

• STEP #2: Multiply sum of Payor and Payee income by 40%$300,000 + $60,000= $360,000 X 40%= $144,000

• STEP #3: Subtract Payee’s income ($60,000) from total in Step #2 ($144,000) = $84,000

AWARD WOULD BE LOWER AMOUNT BETWEEN STEP #1 AND STEP #3 or $45,000

PROPOSED MAINTENANCE LEGISLATION:Practical Application

BOTTOM LINE:• Temporary Maintenance: $20,000/year or $1,666.66 per month• Post-Divorce Maintenance: $20,000/year or $1,666.66 per month

for 27-54 months (15 years = 180 months X 15-30%)