ALIMONY QUESTIONNAIRE

Spousal support awards are discretionary. MCL 552.23, the statute that authorizes the Court to award spousal support, provides:      

Upon entry of a judgment of divorce or separate maintenance, if the estate and effects awarded to either party are insufficient for the suitable support and maintenance of either party and any children of the marriage as are committed to the care and custody of either party, the court may further award to either party the part of the real and personal estate of either party and spousal support out of the real and personal estate, to be paid to either party in gross or otherwise as the court considers just and reasonable, after considering the ability of either party to pay and the character and situation of the parties, and all the other circumstances . . . .

Your attorney’s job for your case is to advocate the facts for each factor to your advantage. To help you and your attorney prepare, describe your and your spouse’s circumstances for each of the following factors. Be as detailed as possible, and include documents where helpful:

 (1) The past relations and conduct of the parties

(2) The length of the marriage

(3) The ability of the parties to work

(4) The source of and amount of property awarded to the parties

(5) The age of the parties

(6) The ability of the parties to pay spousal support

(7) The present situation of the parties

(8) The needs of the parties

(9) The health of the parties

(10) The prior standard of living of the parties

(11) General principles of equity (i.e, what do you think is fair, and why?)

SPOUSAL SUPPORT BASICS

Spousal support, also called alimony, is a sum of money usually paid by one spouse to another spouse for the support and maintenance of the spouse. The factors the court considers in awarding spousal support are as follows:

1. the past relations and conduct of the parties (fault)

2. the length of the marriage

3. the ability of the parties to work and their respective incomes

4. the source and amount of property awarded to the parties

5. the ability of the parties to pay spousal support

6. the present situation of the parties

7. the needs of the parties

8. the health of the parties

9. the prior standard of living of the parties and whether either is responsible for the support of others

10. the age and educational level of the person claiming spousal support

Generally, judgments of divorce in which spousal support is not granted must either expressly reserve the question of spousal support or rule that neither party is entitled to spousal support.

Regular or periodic spousal support clauses in the judgment of divorce are modifiable at any time. When limitations are placed in the judgment regarding modification, specific language is necessary to try and ensure that the court will honor these limitations. Spousal support may be increased, decreased, or canceled. A modification is based on a showing of a change in circumstances that warrants a modification.

Regular or periodic spousal support is usually taxable to the recipient and is deductible by the payer. The phrase “payment until death” must be part of the spousal support clause for it to be considered as taxable spousal support. This type of spousal support is not dischargeable in bankruptcy. Qualifying clauses such as “payable until remarriage” may be included.

Another type of spousal support, referred to as spousal support in gross, has all the attributes of a property settlement; but it is not taxable to the recipient, not deductible by the payer, and not modifiable. However, it may be subject to being discharged in bankruptcy. This type of spousal support is for an amount certain and has no qualifying clauses such as “payable until remarriage.” The court will look to the intent of the parties to determine the nature of the spousal support.

There are many tax consequences and restrictions in regard to spousal support and spousal support in gross, which your attorney or your accountant should explain to you. Because both federal and state tax laws and their interpretation continually change, your attorney cannot guarantee any tax consequences resulting from your divorce proceedings and the judgment of divorce.

Spousal support is usually paid through the Michigan State Disbursement Unit (MiSDU) for so long as child support is also paid or for so long as the particular county allows. Please note, if only spousal support is ordered, the county need not collect through the MiSDU.

The enforcement of regular or periodic spousal support payments is usually instituted by an order to show cause. Your attorney will explain the procedure to you on request. Spousal support in gross is more difficult to enforce, and there are other procedures available for enforcement.

With respect to health care coverage, your attorney will explain to you, on request, your options, including your right, if applicable, to elect health care under COBRA (a federal law that makes health care insurance portable in some instances) or the health insurance exchange.

Post-Divorce and Penniless: Are You Entitled to Divorced Spouse Social Security Retirement Benefits?

If the prospect of a penniless retirement leaves you shaking, you might want to delay your divorce until you have been married at least ten years.

Genevieve George learned that the hard way. She divorced her husband, Vito, in the summertime of 1950 in Detroit. They married on November 9, 1940. Their judgment of divorce was effective six months after their final hearing on May 3, 1950 – that is, November 3, 1950, just six days shy of their tenth wedding anniversary.  During the marriage, Genevieve completed high school, attended college for two years, and began working for the US Department of State. She retired in 1980 and applied soon thereafter for a little-discussed form of Social Security, divorced spouse derivative retirement benefits, based on Vito’s Social Security eligibility. To her dismay, the Social Security Administration denied her application because she and Vito were not married for ten years. A ten year marriage, with limited exceptions, was required.

Call it desperation or confusion over bureaucratic red tape and regulations, or both, Genevieve thought she could get around the Social Security Act’s ten year marriage requirement by changing the effective date of her divorce. She convinced Vito and her divorce court judge to change the effective date of the judgment of divorce to November 17, 1950. The meeting was secret in the judge’s chambers, and no records save an amended judgment existed. She completed her application once more, this time noting her marriage lasted ten years. But, once again, the Social Security Administration denied the application.

The reason? Her divorce was final on November 3, 1950, six days too soon, regardless of what an uncontested amended judgment had to say, because that was the date the State of Michigan officially dissolved the bonds of matrimony. Rather than retirement money, even if it were change on the dollar Vito received, Genevieve got a chiding in court for trying to circumvent the Social Security Act. See George v Sullivan, 909 F2d 857 (6th Cir. 1990).

What are these benefits, and could you qualify? Here is an overview of the Social Security Act’s   divorced spouse Social Security retirement benefits to consider as you contemplate divorce, negotiate your settlement, or select the date to make your decree effective.

What are divorced spouse retirement benefits?

The focus of this article is retirement benefits. These are also known, in Social Security Act lingo, as   Old-Age benefits. They are designed to be a wage replacement for workers and their families when the worker’s income decreases or terminates due to retirement, death or disability. They require proof of insured status, which the worker obtains by reaching a certain age and paying into the Social Security program through taxes on wages. (Thus the Social Security notations you see on your paystub.)

As a matter of federal preemption, state divorce courts do not have the power to divide Social Security retirement benefits when a couple divorces. Social Security is a matter of federal law, and the federal government has give the Social Security Administration the power to administer it. At most, state courts can make binding findings of fact and conclusions of law about the validity of a marriage and the date the marriage will terminate, as Genevieve discovered in George v Sullivan. See, e.g. 42 USC § 402.

Am I eligible for divorced spouse retirement benefits?

Not every ex is entitled to divorced spouse retirement benefits. The circumstances are narrow and subject to change as our national deficit skyrockets and congressmen and congresswomen get to work revising the laws. You should always consult a Social Security lawyer for specific information. In general, however, a divorced spouse may be entitled to these benefits if he:

            (1)        was validly married to the worker ex-spouse, who is insured under the Social Security  Act, for at least ten years;

            (2)        is unmarried at the time of receiving the benefits;

            (3)        is at least 62 years old; and

            (4)        is not entitled to Social Security retirement or disability benefits equal to or greater than  the ex-spouse’s full benefit.

Additionally, if the spouses have been divorced for at least two years, he is eligible to receive the benefits even if the insured worker ex-spouse has not filed for retirement benefits. See 42 USC 402(b).

For benefit months after December 1990, applicants who were not validly married may qualify under the first requirement if they were “deemed married.” To be deemed married, the applicant and his ex-significant other must have gone through a wedding ceremony that would have resulted in a valid marriage but for a legal impediment, must have believed in good faith they were married, and must have been living in the same household as husband and wife. See 42 USC § 416(h).

How are divorced spouse retirement benefits calculated?

The successful applicant will receive a monthly benefit equal to one-half of the worker ex-spouse’s primary insurance amount while the worker is living and a benefit equal to the worker’s full primary insurance amount after the worker’s death. The primary insurance amount is the amount of benefits the worker is entitled to based on his or her Social Security earnings record. With limited exceptions, the Social Security Administration calculates the amount with the average indexed monthly earnings for workers who reach age 62 after 1978 or become disabled or die before age 62 and the average monthly wage for individuals who reach age 62, become disabled or die before 1979. See 20 CFR 404.210, .220.  Each year, as tax season approaches, you will receive a booklet from the Social Security Administration that indicates your earnings history and the benefits you may receive based on that history. You should keep this booklet in a safe place: it contains information about the various Social Security benefits, for one thing, and, more importantly, it will help you and your attorney chart your earnings history if child support and spousal support become issues in your divorce.  

Do divorced spouse retirement benefits terminate if I remarry?

Yes, usually. Unless the recipient remarries someone who also receives derivative Social Security benefits (i.e., benefits based on another’s history), the Social Security Administration will terminate the benefits. For example, Tom will lose his divorced spouse retirement benefits if he marries breadwinner-CEO Susan, who did not qualify for them because her primary insurance amount was greater than her traveling artist, low-earning ex-husband, but Tom would not lose his benefits if Susan were the low-earning ex-spouse who did receive the benefits. So, while it is possible for a married couple to receive retirement benefits based on each’s ex-spouse’s primary insurance amount, usually qualification for retirement benefits terminates at remarriage. See 20 CFR 404.332.

How can I learn more?

To learn more about the Social Security Act, the Social Security Administration, or how to apply, visit the Social Security Administration’s website at http://www.ssa.gov.

To learn more about the laws and how they may affect you, however, talk to an attorney. If you already have an attorney, have you discussed the ten year marriage requirement? Has your attorney analyzed your potential qualification for divorced spouse retirement benefits as you negotiate a settlement? Have you included them in your post-divorce budget? Has your attorney provided you with resources, such as pamphlets or websites, to help you learn more?

If your answer to any of these questions is “No,” speak up and ask your attorney, “Why not?” Remember, your attorney works for you and should answer these questions, but in your partnership, this client-attorney relationship, you have to ask the questions you need answered. If you do not have an attorney, now is the time to locate one. Call your state bar association for no- or low-cost services. Be sure an attorney analyzes your case so that you are confident, moving forward in your divorce, of your decisions and how they will affect you during retirement.

The costs if you do not could be great – like Genevieve, even, just days shy of reaping retirement benefits.

HOW FAULT AFFECTS AN ALIMONY AWARD - AND WHAT TO DO ABOUT IT

There’s a common misconception that “no-fault” divorce means fault is totally irrelevant – as if one spouse can have an affair and the affair means nothing because the divorce is “no fault.” That is incorrect. “No-fault” means neither party needs to prove the other party is at fault for the breakdown in the marriage, e.g. with a string of e-mails that chronicle a sordid affair, to obtain a divorce. “No fault” does not mean fault is totally irrelevant to the divorce.

In many states, like Michigan, fault is relevant to spousal support, property and child custody awards. There is a great variety among states because each has its own body of common law (the prior court opinions that may apply to the case) and its own statutes (the law “on the books” from the legislature). However, with the rise of “no fault” divorce statutes in the 1970s, a general trend emerged that fault could be an issue but not “the” issue for divorce. What was once a fault-focused case now became a case focused on fault only as it affected property, the need for or ability to pay support, and child custody.

In Michigan, the trial court has the discretion to award spousal support, but the award “must be based on what is just and reasonable under the circumstances of the case.”[1] The award, if any, must balance the income and needs of the soon-to-be exes without impoverishing either.[2] In other words, the trial court should not award spousal support if, after considering the parties’ income, ability to work, health, fault, need, marriage length, age, and any other relevant fact, neither needs it, neither can afford it or the circumstances do not justify it.[3] The tcourt will not be reversed on appeal absent an abuse of discretion.[4]

Underlying spousal support awards at divorce is the partnership theory of marriage. Marriage is a         joint venture between husband and wife, and they rely upon each other to work, raise children and maintain a standard of living. That is why the statute authorizing an award of spousal support, MCL 552.23(1), emphasizes the parties’ needs and abilities to pay and their character and situation. The statute has not been revised in more than 100 years, and so we are left with a somewhat archaic caselaw featuring homemaker wives and breadwinner husbands. The more recent caselaw, however, features working spouses burdened with debt and unable to support each other at divorce.       In that caselaw, the length of the marriage is often the linchpin to determining a spouse’s entitlement to support after divorce. This factor shows the interdependence of the other factors because the length of the marriage usually affects the parties’ respective property rights, work history and employment potential. In Zecchin v Zecchin,[5]    for example, the Court of Appeals approved a trial court’s award for permanent support in favor of a wife of a 27 year marriage whose husband had convinced her to take herself out of the job market to live as a homemaker. The consensus is, support is appropriate when the parties share a long marriage and one party did not maintain a career.[6]

Fault would be important if it perpetuated that lifestyle. In other words, if one spouse made the other be a homemaker so he (or she) could maintain an affair at work, the judge might admonish the cheating spouse and award the homemaker spouse rehabilitative support to gain skills and seek employment. A few extra dollars for the affair would be a slap on the hand, and it would cost the cheating spouse more to appeal the decision that it would to pay the extra support. However, if both spouses worked and one cheated but the other’s lifestyle was unaffected, then support would be inappropriate because the fault did not affect the spouse’s lifestyle.

The problem is, in Michigan judges have so much discretion that virtually any award is acceptable on appeal. A discretionary ruling receives the greatest amount of deference on appeal. Moreover, although the judge must state findings of fact on each support factor, there are so many factors that it is easy to mask what is really punishment for being the faulty spouse by something else – say, a mix of the other’s needs and lifestyle. The trial court cannot give “an inordinate amount of weight” to fault, but so long as the trial court rationalizes its decision with the other factors (age, health, lifestyle, employability, length of the marriage, etc), the award will not be set aside on appeal.[7]

So, how do we deal with fault in Michigan?

If I am representing the spouse seeking support – that includes men, because men, although traditionally not the support recipient, can need support just as much as women – I identify the fault in the marriage and then argue at length how it affected my client’s finances and lifestyle. This takes guts, because fault is not a popular topic, and it takes an attorney not afraid to advance the arguments. I investigate each way fault is linked to money or property. For example, if my client tells me his wife has a gambling habit and that habit caused the couple financial ruin and their marriage to deteriorate,  I want: witnesses to tell me how often she gambles; photographs of her gambling; bank account records showing her withdrawals and deposits for gambling; deposition testimony from the crowd she frequents; copies of unpaid bills; a spreadsheet showing how much money the couple would have saved had she not gambled; etc. I want all of these items in court, on exhibit boards or a PowePoint presentation, so that I can show the judge how a gambling habit has caused financial problems and how much that spouse would have to pay support if she stopped gambling. Similarly, for a cheating spouse courting her new beau, I want bank account records showing trips, gifts, bills for fine dinning, etc., photographs of dates, deposition testimony from witnesses, etc., to prove that the cheating spouse led a secret, higher standard of living and, therefore, has money to elevate my client to a higher standard of living.

If I am representing the at-fault spouse, on the other hand, I divert attention from fault and restore it to where it ought to be: needs and ability to pay. Those are the two most important factors. I subpoena bank, school and employment records, interview fellow employees, take pictures of the couple’s home, and otherwise gather evidence to prove that the spouse seeking support is employed, employable and living a decent standard of living, irrespective of an alleged affair. I have my client prepare a monthly budget with basic expenses --- food, transportation, housing – to show he simply has no money to pay support. Again, I put these things on exhibit board or in a PowerPoint presentation to show that the couple’s standard of living will be about equal.

In my last spousal support trial, in fact, I got the wife to admit, happily, that she is “a great worker,” has “a great job” and “had been employed for the entire marriage” – even during the time that, she claimed, my client was having an affair. The judge interrupted her and said, “Then why do you need support?”       I sat down and said, “No further questions, Your Honor.”

The key is to use fault when it suits your case and minimize it when it does not. That means knowing the judge, too. It’s up to the judge to decide how much support the at-fault spouse pays, and a well-prepared case could make that spouse the cheater who spent away his wife’s lifestyle (and so should pay support) or the love-lost guy with no money whose marriage fell apart (and so should not pay support). That decision, unless wholly outside the realm of reason, will withstand an appeal. 

[1]               Moore v Moore, 242 Mich App 652; 619 NW2d 723 (2000).   

[2]               Id.

[3]               Magee v Magee, 218 Mich App 158; 553 NW2d 363 (1996).

[4]               Id.

[5]               149 Mich App 723; 386 NW2d 652 (1986).

[6]               See, e.g., Johnson v Johnson, 346 Mich 418; 78 NW2d 216 (1956) (20 year  marriage); Demman v Demman, 195 Mich App 109; 489 NW2d 161 (1992) (23 year marriage); Ross v Ross, 24 Mich App 19; 179 NW2d 703 (1970) (14 year marriage).

[7]               Welling v Welling, 233 Mich App 708; 592 NW2d 822 (1999).

FORMULAS, FACTORS AND OTHER FACTS ABOUT AWARDING ALIMONY IN MICHIGAN

In Michigan, defending against, or arguing for, spousal support is like putting numbers into a black box and waiting guessingly for what will come out – the award is completely discretionary, and there are no bright-line rules, formulas, mandatory marriage lengths, minimum payment years, or other requirements, to guide the judge. There are computer programs some attorneys use as bargaining tools, but they are woefully inadequate, judges cannot refer to them as evidence, and they fail to account for the spousal support factors judges must use according to caselaw. That law requires the judge to engage in a lengthy fact-finding analysis instead.

The trial court has the discretion to award spousal support, but the award “must be based on what is just and reasonable under the circumstances of the case.”[1] The award, if any, must balance the income and needs of the soon-to-be exes without impoverishing either.[2] In other words, the trial court should not award spousal support if, after considering the parties’ income, ability to work, health, fault, need, marriage length, age, and any other relevant fact, neither needs it, neither can afford it or the circumstances do not justify it.[3] The trial court will not be reversed on appeal absent an abuse of discretion, which means the judge’s decision fell outside the principled range of outcomes.[4]

Underlying spousal support awards at divorce is the partnership theory of marriage. Marriage is a         joint venture between husband and wife, and they rely upon each other to work, raise children and maintain a standard of living. That is why the statute authorizing an award of spousal support emphasizes the parties’ needs and abilities to pay and their character and situation. The statute has not been revised in more than 100 years, and so we are left with a somewhat archaic caselaw featuring homemaker wives and breadwinner husbands.

The more recent caselaw, however, features working spouses burdened with debt and unable to support each other at divorce. In that caselaw, the length of the marriage is often the linchpin to determining a spouse’s entitlement to support after divorce. This factor shows the interdependence of the other factors because the length of the marriage usually affects the parties’ respective property rights, work history and employment potential. In Zecchin v Zecchin,[5] for example, the Court of Appeals approved a trial court’s award for permanent support in favor of a wife of a 27 year marriage whose husband had convinced her to take herself out of the job market to live as a homemaker. The consensus is, support is appropriate when the parties share a long marriage and one party did not maintain a career.[6]

Fault would be important if it perpetuated that lifestyle. In other words, if one spouse made the other be a homemaker so he (or she) could maintain an affair at work, the judge might admonish the cheating spouse and award the homemaker spouse rehabilitative support to gain skills and seek employment. A few extra dollars for the affair would be a slap on the hand, and it would cost the cheating spouse more to appeal the decision that it would to pay the extra support. However, if both spouses worked and one cheated but the other’s lifestyle was unaffected, then support would be inappropriate because the fault did not affect the spouse’s lifestyle.

The problem is, in Michigan judges have so much discretion that virtually any award is acceptable on appeal. A discretionary ruling receives the greatest amount of deference on appeal. Moreover, although the judge must state findings of fact on each support factor, there are so many factors that it is easy to mask what is really punishment for being the faulty spouse by something else – say, a mix of the other’s needs and lifestyle. The trial court cannot give “an inordinate amount of weight” to fault, but so long as the trial court rationalizes its decision with the other factors (age, health, lifestyle, employability, length of the marriage, etc), the award will not be set aside on appeal.[7]

So, how do we deal with fault in Michigan? Representing the spouse seeking support – that includes men, because men, although traditionally not the support recipient, can need support just as much as women – we identify the fault in the marriage and then argue at length how it affected the client’s finances and lifestyle. This takes guts, because fault is not a popular topic, and it takes an attorney not afraid to advance the arguments. Representing the at-fault spouse, on the other hand, we divert attention from fault and restore it to where it ought to be: needs and ability to pay.

[1]               Moore v Moore, 242 Mich App 652; 619 NW2d 723 (2000).   

[2]               Id.

[3]               Magee v Magee, 218 Mich App 158; 553 NW2d 363 (1996).

[4]               Id.

[5]               149 Mich App 723; 386 NW2d 652 (1986).

[6]               See, e.g., Johnson v Johnson, 346 Mich 418; 78 NW2d 216 (1956) (20 year  marriage); Demman v Demman, 195 Mich App 109; 489 NW2d 161 (1992) (23 year marriage); Ross v Ross, 24 Mich App 19; 179 NW2d 703 (1970) (14 year marriage).

[7]               Welling v Welling, 233 Mich App 708; 592 NW2d 822 (1999).

THE VOCATIONAL EXAM AND OTHER WAYS TO PROVE WHAT YOUR WIFE CAN EARN

If the threat of paying alimony to your ex-wife has you worried, the prospect of having to prove what she can earn to eliminate, or at least minimize, that threat is probably worse. For many guys, while a divorce is pending is the time that there are “no jobs” to be found, anywhere, and your income seem to be at its highest - in other words, the perfect set of circumstances for her, and not you. 

Add to those circumstances deadlines from the court, pretrial conferences, discovery requests from your wife’s attorney, appraisals, house searching, testing schedules for parenting time, and the overall unpleasantness of divorce, and it is small surprise that the burden of having to prove what she can earn is a heavy one.  There are certain things us lawyers do to make it easier, things you may do, too –

History – Make a timeline of your wife’s work history, which you may use for both settlement discussions and trial. Include dates, employer, location, job position, pay rate and the reason for leaving the position. If you have children, also include whether the children were around and, if so, whether this affected the work at all. For example, if your wife claims that she cannot work because she has to take care of your children, and yet she worked even part-time while they were younger, she will have a hard time selling that claim to your judge. In most states, whatever information you do not have you are entitled to obtain from your wife and/or her employers through the investigatory process called “discovery.”

Recent History – Do not forget to highlight what your wife is doing now. Again, use your rights to discovery to get the most recent, reliable information. If your wife is in school, consider whether the demands of school (commute, study time, class time, projects, tests, costs) are similar to the demands of work. If your wife volunteers, consider the same. Many of the same tasks used to work we apply to school and volunteering, babysitting for friends and family, and caring for family members, so, again, she will have a hard time selling her claim that she cannot work if she does these things.

Vocational Exam – A vocational exam is a test designed to identify what sills the test taker has, how those skills translate to different job categories (e.g., talkers are good with customer service, mechanical-oriented thinkers with manual labor) and what income the test taker could earn if he or she used those skills. The test is a combination of self-reflection and reporting, interviews with the expert and, for claims of physical impairment, physical application. Courts review these regularly for job loss claims in personal injury and automobile accident cases, but they are also common for divorce cases in which one spouse claims she or he cannot work. Experts can be expensive, so be sure to do a cost-benefit analysis with your lawyer.

Market Conditions – If nothing else, be sure to provide the judge with proof that jobs you claim your wife can work are actually available. In all states, the inquiry is not whether your wife has the skills to work but the “capacity” to work, which means the actual ability to do so because such work is actually available to her. There are a number of public databases, which would constitute business or public records and almost always be treated as non-hearsay, that you may use to find this information.

Review – If they are not, or if you think that your wife could get a better job after your divorce, consider a review of any alimony award after a period of time so that you can reassess her skills and the job market.

Whatever you do, do not simply focus on what you can or cannot pay your wife. It is natural to fall into the defensive mode and point out what you cannot do – but, the alimony question looks not just to what you cannot do but, more importantly, what your wife can do.

THE 60 DAY RULE

60 days.

That may be all the time you have after your divorce to request healthcare insurance coverage through your newly ex-spouse’s plan.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees and their family members the right to continue group healthcare insurance coverage with the employer under certain circumstances, divorce being one of them. The coverage is variously referred to as “COBRA benefits,” “continuation coverage,” “COBRA continuation coverage,” or, simply, “COBRA” for short. If you’ve heard about “COBRA” from your ex’s employer, then there’s        a good chance this 60 day rule applies to you.

COBRA requires that group plans sponsored by employers with at least 20 employees in the year immediately preceding the qualifying event, such as divorce, offer the employee and the employee’s family the opportunity to extend their coverage, which would otherwise terminate. The extension varies depending on the qualifying event (for example, 18 months for loss of employment), but, for divorce, the minimum period is 36 months. The period begins from the date of the qualifying event, and it may terminate early if you do not pay the premium, the employer ceases to sponsor a group plan, the employer goes out of business, you obtain coverage with another group plan that does not contain any exclusions or limitations for pre-existing conditions, or you become eligible for Medicare benefits.

However, COBRA coverage comes at a high cost. The plan can charge you up to 100% of the premium cost plus an additional 2% of the cost as a fee to administer the plan to you. If you are divorced and under- or unemployed, the cost could exceed your monthly income. For example, a study from Families USA concluded that the national average monthly COBA cost consumed 84% of the average monthly unemployment benefit and, in nine states, exceeded that benefit. This is not to say you should avoid COBRA coverage altogether – you may qualify for federal assistance of up to 65% of the monthly premium. Be sure to contact your ex’ benefits office to determine whether you qualify.

You should contact the benefits office immediately. Ideally, before your divorce.  You will have only 60 days after your divorce to elect COBRA coverage. (There is a narrow exception that extends this coverage to 60 days after the employer gave you notice of the right to elect coverage, but this exception rarely applies. Most employers send form letters annually to notify employees of COBRA. You may have tossed this aside or filed it away without looking at it.) Within 14 days, the employer must provide you with materials to continue coverage, after which you will have 45 days to elect coverage. This is called the “election period.”

During this period, you can sit and do nothing, in which case, your right terminates; elect coverage, which will be retroactive to the date of the qualifying event, or affirmatively waive coverage, then change you mind with a written revocation, which will entitle you to coverage from the date of your revocation. If you elect coverage, be prepared for a hefty bill: you must pay the premium within the first 45 days, and it could be for coverage retroactive to your qualifying event, over 60 days, or more than 2 months, prior.

There are steps you should take during your divorce to take advantage of COBRA:

Contact the benefits office. Request current healthcare insurance information for your spouse’s plan. You may use a discovery device, such as an interrogatory, to your spouse or a records production device, such as a subpoena, to your spouse’s benefits office. At a minimum, you should request the plan summary, the cost per person covered, any optional coverages, the latest COBRA notice letter, and the name, address and telephone number of the individual who receives notices of qualifying events, such as your divorce. You might also request all information regarding federal programs, state programs or employer programs that assist individuals with paying the costs to continue coverage.

Investigate plans. Use the period before your divorce to investigate other healthcare insurance plans. Given the high cost of COBRA coverage, you may find an individual private plan is more affordable.

Request alimony to pay premiums. If you cannot locate a private plan or do not qualify for one, then you might use the anticipated high cost for COBA coverage as a basis to request alimony to help defray the costs. Be careful, however, because alimony will be taxable income to you.

Request an offset or deviation because you pay premiums. Similarly, you might use the high cost to obtain COBRA coverage as a bargaining tool to avoid paying alimony or to deviate from your state’s child support requirements.

Obtain a copy of your divorce decree.  Be sure to obtain an official copy of your decree, preferably the same day your divorce is final to avoid multiple trips to the courthouse or your attorney’s office, to send with your notice to the benefits office.

And, as always, review your options thoroughly with an attorney and the benefits office. Miss your 60 day notice period, and you could be foreclosed from continued coverage altogether; but, if researched and noticed properly, you could have an extra three years of insurance, and at a reduced rate.

CAN GUYS GET ALIMONY?

Talking to a guy about asking for alimony from his wife is one of the toughest parts of my, and I dare say all family attorneys’, job. Tough not because the concept is difficult to explain, but tough because most guys just refuse to do it. Isn’t that a woman’s thing, after all? In theory, no. In practice, sometimes it is. But should that stop you from making sure you get your fair share?

In no State is gender one of the written factors to consider when awarding alimony. In some States, the legislature or the courts have fashioned a framework based on years of marriage, household income and separate incomes to determine who receives alimony, if anyone, and for how long. In most States, though, there is no framework, and, instead, the judge is left to a much more fact-intensive analysis– and one more susceptible to disguising a gender preference.

In Michigan, where I practice, arguing for alimony is like putting numbers into a black box and waiting guessingly for what will come out. The judge has the discretion to award alimony, but the award “must be based on what is just and reasonable under the circumstances of the case.” What that usually comes down to is anyone’s guess, because “fair” means a lot of different things to a lot of different people. True, the award, if any, must balance the income and needs of the soon-to-be exes without impoverishing either and considering the parties’ respective income, ability to work, health, fault, need, and age. But the “right” balance is purely discretionary

The problem is, judges have so much discretion that virtually any award is acceptable on appeal. A discretionary ruling receives the greatest amount of deference on appeal. Moreover, although the judge must state findings of fact on each support factor, there are so many factors that it is easy to mask what is really punishment for being “lazy” or suspicion for “milking it” in the name of age, employability and potential to earn money. So long as the judges rationalizes the decision with the other factors (age, health, lifestyle, employability, marriage length, etc.), the award will survive appeal even if gender was one of the (unstated) considerations, or even the guiding one.

So, how many guys actually receive alimony? According to the US Census Bureau, in 2000 men made up only 4% of the divorcees receiving alimony. By 2009, the figure had quadrupled to 8%, but the study did not include men who could have obtained alimony and just refused to request it. The “quadrupled” figure might sound impressive, but, over the same timespan, men bore almost 75% of the job loss in the nation, women’s earning capacities increased to 80% of their working male counterparts, and women still received 92% of all alimony awards. See “The Controversial Rise in Manimony” by Hillary Stout.

Why the disparity? There are many reasons. I can tell you, from my practice, that a lot of guys just refuse to ask for it. Asking for alimony is perceived as a sign of weakness, further emasculating them in a relationship that was already lopsided and broken. To them I say, money is only part of a couples’ marital wealth – that you did not bring home the bigger paycheck during the marriage does not make you less worthy of money coming out of it; your unpaid work for the yard, home repairs, vehicles, grocery shopping, running errands, fixing everything on your wife’s “To Do List” for years, etc., is valuable and deserves compensation.

Even when they do ask for it, it’s a tougher job persuading the judge that they need it, as opposed to just want it for revenge. Judges are humans, and humans come with a host of preconceptions and assumptions about what men and women should and should not do – who should stay at home with the kids, who should work, who is capable of reviving economically from a divorce faster, etc. I am not saying judges do not apply the law, because most do, but that it takes more persuading when the man is the one asking for what is traditionally for women.

And if the guy is unsatisfied with the ruling, then what? There is usually an option to appeal, but the time and expense of an appeal for a guy who does not have enough money in the first place is a huge deterrent. Add to this the growing, gnawing feeling of just wanting to “get it over with” as the divorce drags on, and the guy is likely to toss in the towel and say forget it. He’d rather live in an apartment and eat noodles and Cheerios to survive than keep fighting with his new ex-wife.

Which brings me back to my original point: in theory, guys should get alimony; in practice, they usually do not. They do not, that is, unless they have someone bold enough and principled enough to advocate for them the right way. That means telling your opponent—your wife and her attorney – at the outset that this is an alimony case, we want alimony and we will pursue it. We will investigate her income. We want to know her budget. We are not afraid to try the case, and appeal it if we have to, and, if she doesn’t like that, she needs to come to the table and settle. It also means doing at least the following:

Prepare Your Budget – Where will you be living after your divorce? What will rent run? A mortgage? What will you spend for utilities, phone service, internet, transportation, insurance, medical care, legal expenses, your children? Can you meet these expenses on your own? Keep the budget realistic, because no one believes you will spend $500 monthly on clothing (if you do, you probably do not need alimony).

Value Your Services – What does it cost to hire someone for lawn care? Snow removal? Home improvements? The oil changes you’ve been doing throughout your marriage? Value these services to show how your unpaid contributions to your marital standard of living have contributed something of real value that deserves compensation.

Get Comparisons – Talk to divorced co-workers, family and friends, someone you know receiving alimony, and find out what worked in their cases. How are the cases similar to yours? Different? Who was the judge? And what arguments did they make to advance their cause?

Most of all, talk to your attorney. You want to know what the strategy is. What hearing dates you have and what you need to do to prepare for them, what the “hi” and “low” for negotiating will be, and whether (and how) you will participate. You want to know what law is on your side. Because if the law is on your side, and if you are not afraid to advocate for it, you’ve won more than half the battle.

In short, it takes stepping up to the plate like a man to get alimony.

THE THREE YEAR ALIMONY TAX TRAP: WHAT IS IT, HOW TO AVOID IT

As if paying alimony weren’t bothersome already, imagine receiving an unfriendly letter from the IRS forcing you into an audit and, worse yet, assessing taxes for three years’ of income you previously deducted. This may sound like a tax nightmare – you pay alimony, you deduct it like your CPA and/or your attorney said, and now you have to pay taxes for it – but, for many guys, it is reality. This often misunderstood and little discussed trap, the recapture rule, has them, and possibly you, coming up with money to pay taxes in addition to money for their exes.

The recapture rule forces the alimony payor to report as income the alimony payments he previously deducted, which means the payee is entitled to reduce from income the alimony payments she previously received. The rule applies when the payments decrease or terminate during the first three calendars years post-divorce and (1) the total payments made in the third year decrease by $15,000 or more from the payments made in the second year or                       (2) the payments made in the second year and the third year are substantially less than the payments made in the first year. Reasons other than the language of your divorce decree can cause the reduction, even reasons beyond your control, like a modification of the decree, failure to make timely payments, inability to make payments and a modification in the amount you pay because your ex no longer needs as much from you.

For example, if in the first year you pay $30,000 in alimony, then in the second year you pay $20,000 in alimony, but in the third year you successfully motion to modify your obligation because your ex has a new job and, as a result, you only pay $4,000 in alimony ($16,000 less than the second year), you’ve triggered the recapture rule. Be prepared to report the first year’s worth and the second year’s worth of formerly deducted alimony payments as income. And you thought you were doing yourself a huge benefit by petitioning to modify the alimony obligation in the third year.  . .

However, the recapture rule does not apply (1) for payments made pursuant to a temporary order, (2) if the payments terminate due to you or your ex’s death, (3) your ex’s remarriage prior to the end of the third year, (4) when the total payments made each year vary, for reasons not in your control, and are tied to a business, property, variable employment or self-employment. In these circumstances, the termination and variable amounts of alimony are foreseeable and assumed.

For example, if you agree in your divorce decree to pay 10% of your income received for your alternative energy business – a business that is in a state of flux – then you would not necessarily have to recapture those payments you deducted in the first year and the second year even if, in the third year, your payment is substantially less than the first year.

As another example, if for a five year obligation in the first year you pay that $30,000, then in the second year you pay that $20,000, but, in the third year, your obligation is terminated because your ex remarriages, you do not have to recapture the payments you previously deducted even though you are paying $0 in the third year.

Then how do you avoid the recapture rule? Discuss these tips with your attorney and your CPA:

No Front Loading: Front loading refers to paying a large amount of alimony in the first few years of your support obligation, maybe while you feel like you have the money and/or when your children are minors and you want to pay family support. The problem, with front loading is, if you reduce the payment substantially in the second year, you trigger recapture. If you do not, but then in the third year the payment is as little as $15,000 less than the second, you also trigger recapture.  Instead, consider extending the front loaded payments over more than three years or transferring an asset or assuming a debt in lieu of front loading the payments altogether.

Section 71 Payments: You could skip the deductibility problem altogether by making payments under IRC 71, referred to as “section 71 payments.” Under this rule, you are entitled to make a series of payments to your ex without tax consequence. The down-side is, the payments are not tax deductible to you.

Tied to Variable Uncontrolled Income: If your income is variable, and those variables are not within your control, then clearly state so in your divorce decree, and be prepared to provide proof to the IRS if an audit comes your way. In your decree, consider stating why your income varies, what factors cause your income to vary, that both you and your ex understand that your income varies and why and that your ex will confirm the same to the IRS. This will keep your ex from disagreeing with you – in an effort to deduct the alimony she previously reported as income – in the future if you are faxed with an audit.

Longer Schedule:  Extend your payments over more than three years, and be sure the amounts you are ordered to pay, and ideally do pay, do not decrease substantially from the first year to the second year and the third year or by more than $15,000 in the third year from the second year.

Increasing Schedule:  Rather than decease your payments over time, consider increasing them. This may make sense, for example, as your ex approaches retirement age, provided you are financially able to make the payments. Be cautious, however, of linking the increase to a loss of child support for your children – the IRS can decide that your “alimony” payments were actually child support because the amount you pay changed when your child support obligation changed. If so, then you will have to report that “child support” as recaptured income, too.

And, of course, always talk to your attorney and your CPA about the best alimony, child support and tax planning strategy for your case. If you do not have this conversation early and often, you may find yourself, three years after your divorce, recapturing all of those payments you deducted and hating the fact of paying alimony even more than you already had.