8: Introduction to Spousal Support

What is Spousal Support/Maintenance?

Spousal support (also known as maintenance, spousal maintenance, or alimony) is defined as money paid by one spouse to another spouse as financial support during legal separation or after a divorce. In the past, orders for long-term spousal support were fairly common, especially after long-term marriages; however, such orders are not automatic and are becoming rarer.

When spousal support is ordered, it is typically either based on spousal rehabilitation or reimbursement.

• Rehabilitative spousal support is awarded to provide financial stability to the lower-earning spouse to allow the spouse to go back to school or undergo career training that will increase their earning capacity. The spouse may have stayed home to raise the family and care for the home instead of pursuing a career. This is short-term support until the spouse becomes self-sufficient and meets their financial needs.
• Reimbursement spousal support is intended to repay one spouse for their contributions to the marriage. For example, one spouse may have financially supported the other while they attended school or training to increase the other spouse's income. This spouse may have even paid for the other spouse’s training and higher education costs. This form of spousal support helps to balance the benefits the other spouse receives from that support.

Investigation Relating to Spousal Support/Maintenance.

Information relating to spousal support is obtained from many sources. Although the client should be the starting point of information gathering (see Chapter 3), legal practitioners also should plan to investigate

• Public employment, education, and business records for both spouses
• Income tax records for both spouses
• Court records (including judgments, bankruptcy, and pending claims) for both spouses
• Credit reports
• Social media

Once a divorce action has been filed, discovery tools such as interrogatories, and depositions can be used. The parties can also use Requests for Production to obtain information.

Suggested topics and document requests include

• Employment information for the past 10 years, including
  • employer contact information
  • job title and job description
  • salary and other compensation, deferred compensation, benefits (including insurance, retirement, profit sharing, etc.)
  • expectations of future promotions, raises, bonuses, etc.
  • pre- and post-tax deductions from paychecks of current employer
  • copies of employment contracts
• Business information (especially if self-employed), including
  • description of ownership (including purchase and sale of business)
  • contact information for all financial and legal advisors consulted regarding the business
• Other income information including
  • copies of federal, state, and local income tax returns and supporting schedules and documentation for the individual and any business in which the spouse has an ownership interest
  • names of all banks and other financial institutions where the spouse makes deposits has investments, or receives money; include account numbers and copies of statements
  • detailed description of government benefits such as social security, unemployment compensation, workers’ compensation
  • information regarding current or potential litigation
  • information regarding any other source of income, including trusts, contracts, and previous court orders
• Health and disability insurance policies
• Education, training, licensing, and certification information
  • describe each credential, including when and from which entity it was earned/received
  • state who paid the costs associated with obtaining each credential, including by providing indirect or direct financial or other support/assistance
• Physical and mental health status (past, present, anticipated future)
• Description of any past or present disabilities that limit the ability to perform work, including details regarding treatment, treatment providers, etc.

Initial Order for Spousal Support/Maintenance

The amount of spousal support is based on many factors, which vary by state, and courts have a lot of discretion with respect to whether to order spousal support and if so, how much and for how long. Most state statutes require the court to consider the following factors:

• Length of the marriage
• Age, physical condition, emotional state, and financial situation of both spouses
• Earning capacity of both spouses, based on education, training, skill, and experience
• Length of time the payee spouse would need to acquire education or training to become self-sufficient
• The ability of the payer spouse to support themselves while paying spousal support
• Standard of living established during the marriage

Wisconsin’s statutory factors for granting spousal support (maintenance) are located in Section 767.56. Wis. Stats.

Payment of spousal support can take many forms, which can be negotiated by the parties. The most common form of spousal support is expressed as a fixed amount of monthly payments. Payments are usually required to be made pursuant to the payer spouse’s regular pay schedule, which might be weekly (52 paychecks per year), bi-weekly (26 paychecks per year), or bi-monthly (24 paychecks per year). This means that the monthly amount must be converted to the correct periodic payment. In Wisconsin, the amount of monthly spousal support ordered is multiplied by .23 for weekly payers, by .46 for bi-weekly payers, and by .5 for bi-monthly payers. Additionally, in Wisconsin, spousal support is required to be paid by income assignment directly from the payer’s employer to the Wisconsin Support Collections Trust Fund (WI SCTF). The payer is only allowed to make direct payments to the WI SCTF if the payer is self-employed.

Other, less common ways of calculating the amount of spousal support include

• Payment of a lump sum of the entire obligation, or larger sums based on an agreed-upon schedule. For example, suppose the total support obligation would be $120,000. The parties could agree that the payer would make a single payment of $120,000. The parties could also agree that the payer would pay $60,000 when the divorce is granted, with the remaining payments being made in equal payments ($10,000 per month for the next six months).
• Payment of a lower lump sum or “stepped-up” payments. For example, if the payee is concerned that the payer may fall behind or stop making periodic payments, this would require the payee to take expensive and time-consuming court action to collect delinquent payments. A lower, yet guaranteed and quicker payment might be a more acceptable alternative to a higher total payment that may end up requiring the payee to expend time, money, and mental/emotional strain to collect.
• Payment of a fixed percentage of the payer spouse’s earnings. This method might be used when the payer spouse’s income fluctuates seasonally or due to earnings being based primarily on commission.
• Payment amounts that gradually decrease over a specified period of time (“Step-Down” support). This method might be used to “front load” support payments if the payer is nearing retirement, or as an extra incentive to the payee to become self-sufficient more quickly.
• Spousal support can also include payment toward the payee spouse’s medical and dental insurance premiums or other payments as negotiated by the parties.

Additionally, spousal support orders in Wisconsin must include the requirements that, within 10 business days

• Payer and payee must notify the county child support agency of any change of address
• Payer must notify both the payee and the county child support agency of any change in employer and any substantial change in the amount of income (including bonuses)
• Payee must notify the court and the payer of the payee’s remarriage.

Modifications of Orders for Spousal Support/Maintenance

Many times, a separation agreement will include a waiver by both parties of a right to seek modification of the agreed-upon spousal support. Such a provision, if incorporated into the original judgment of divorce, often results in courts refusing to modify a spousal support order unless to do so would be unconscionable pursuant to the “second look” rule. As with entering an initial spousal support order, a court must have personal jurisdiction over both parties before it can modify an existing order.

Once the court has determined it has personal jurisdiction to modify a spousal support order, the court will not do so unless there is a substantial change in circumstances justifying the modification. The change must be significant and unforeseeable at the time of the original order. Additionally, the change cannot be the result of intentional unreasonable actions by the person seeking the change, or actions taken by the payer with the intent to avoid paying spousal support. Examples of substantial change in circumstances may include

• Decreased earning capacity due to long-term serious illness or disability
• Bankruptcy of the payer
• Payer’s reasonable decision to change jobs, retire, or go back to school
• Payer dies
• Payee cohabits, remarries, or dies
• Substantial change in the cost of living as measured by the Federal Bureau of Labor Statistics

Generally, the following are not considered substantial changes in circumstances that would justify a modification

• Payer’s income has increased
• Payer cohabits or remarries
• Payer’s decision to change jobs, retire, or go back to school is unreasonable or designed to avoid paying spousal support
• Payer is incarcerated
• Bankruptcy of payee
• Payee decides to quit work, change jobs, retire, or go back to school
• Either party violates orders regarding child custody, child placement/visitation, or child support

Enforcement of Orders for Spousal Support/Maintenance

Unfortunately, as previously alluded to in this chapter, spouses sometimes attempt to avoid paying ordered spousal support. If a person has not paid spousal support when it is due, the obligation is in arrears.

When this occurs, there are several options available to the payee to attempt to force payment:

• Garnishment: a court proceeding that forces a third party, such as an employer or a financial institution, to pay money owed to or owned by the debtor (the non-paying spouse) to the creditor (the payee spouse).
• Execution: a writ issued to an officer (usually the sheriff) to seize the debtor’s property/asset (such as a boat or a car), sell it, and turn over the sale proceeds to the creditor
• Contempt action: a complaint to the court that the debtor has violated the court’s order to pay and should be punished by imposing interest on the outstanding amount, imposing a fine, or incarceration

Some states also provide assistance to spouses seeking to enforce spousal support orders through agencies established under the Uniform Interstate Family Support Act (called IV-D agencies).

Tax Impact of Spousal Support/Maintenance

Previously, amounts paid as spousal support were considered taxable income for the payee and were deductible from the payer’s gross income. As of January 1, 2019, this taxation/deduction was eliminated for new orders or agreements regarding spousal support. If the order modifies an agreement or order entered into before January 1, 2019, the pre-existing taxation/deduction continues unless the new order or agreement expressly states that the new law applies. This change in the law eliminated the incentive for some couples to disguise spousal support as property division (or property division as spousal support) as a way to gain tax advantages (property division is a non-taxable event that does not result in tax deductions or increases to taxable income).

Paralegal Roles

With respect to spousal support, the paralegal’s primary roles are investigation, coordination, documentation, and management of information relating to income. The paralegal will assist the client in gathering information about the client’s income and earning potential. Investigation of the other party’s income and earning potential may also be necessary. Paralegals may work with investigators, accountants, and other vocational or financial experts. Once the information and supporting documentation are obtained, the paralegal will index and organize the information in preparation for negotiating the terms of the separation agreement and/or for presenting evidence during a contested divorce hearing.