Both the House of Representatives and the Senate in the Massachusetts State House have unanimously passed the Alimony Reform Act of 2011, however, the Senate changed a few words. Proponents of the bill are hoping that it avoids going back to committee, and as of now it is unclear as to whether a full House vote will be required. The bill is still expected to pass, but this is a bump in what has for some been a very long road towards reform.

The Massachusetts Alimony Reform Act of 2011 has been passed by both the House and the Senate and now awaits the Governor's signature. Once it is passed, which is almost assured at this point, there will be many questions about how it is implemented. The one I am receiving most often already is:

How will alimony be calculated in cases with child support?

The section of the Alimony Reform Act that addresses this question is Section 6(c):

"For purposes of setting an alimony order, the court shall exclude from its income calculation:

(1) Capital gain income and dividend and interest income which derives from assets equitably divided between the parties under Section 34; and

(2) Gross income which the court has already considered for setting a child support order whether pursuant to the Massachusetts Child Support Guidelines or otherwise; provided that nothing in this section shall limit the court’s discretion to cast a presumptive child support order under the Child Support Guidelines in terms of unallocated or undifferentiated alimony and child support."

As indicated, the Alimony Reform Act would exclude from any General Term Alimony calculation gross income which was already used to calculate child support. Since the Massachusetts Child Support Guidelines presumptively apply up to a total gross income of $250,000, many practitioners read this section to mean that any cases where the total gross income does not exceed $250,000 will not have alimony if they have child support. This is the most obvious reading of the section, and was the intention as described by one of the drafters on the Joint Task Force at a recent conference I attended (I won't call her out by name but she is a lawyer who clearly understood the implications).

There has been some outrage over this interpretation because it is one of the most significant changes this law makes to presumptive alimony in child support cases. However, there are exceptions, which I will detail below.

Before I tell you the exceptions, though, let's examine if this is truly unfair (or at least inconsistent with the rest of the Act):

Sample Case:

The Act contains a formula for calculating the maximum alimony award as follows: "the amount of alimony should generally not exceed the recipient’s need or 30 percent to 35 percent of the difference between the parties gross incomes established at the time of the order being issued."

This means that if the higher-earning spouse (let's use the name Chris) earns $125,000 and the lower-earning spouse (Pat) earns $25,000 in gross income, then alimony should not exceed $30,000 to $35,000 per year. This assumes no child support, that Pat has a need for support, and that the marriage is of sufficient length to warrant support. If we use the average of $32,500 then Chris' after payment income is $92,500 and Pat's is $57,500, and all of Pat's $57,500 will be taxable income. Assuming an effective tax rate of 15%, Pat ends up with $48,875 in net income.

Now let's add children. Chris still earns $125,000 and Pat earns $25,000. Chris is the non-custodial parent and Pat is the custodial parent. Child Support by the guidelines (assuming no other expenses for simplicity) is $510 per week, $26,520 per year. Since all of Chris' income was taken into account for child support guidelines, the Alimony Reform Act would indicate that none is left to consider for alimony. Chris' after payment income is $98,480 and Pat's is $51,520, but only $25,000 of this is taxable income to Pat. Again assuming an effective tax rate of 15%, Pat ends up with $47,770 in net income. In addition, Chris is still paying tax on $125,000 in income.

As you can see, although Pat is receiving almost $6,000 less in support, when you take into account the taxation of alimony vs. the tax-free nature of child support, the effective support that Pat is receiving from child support is only about $1,000 less. And this difference is not necessarily going to Chris, rather it is being taxed by Uncle Sam.

Given the tax-free nature of child support to the recipient, in cases where all of the income is considered in calculating child support, the Alimony Reform Act's exclusion of that income from calculating alimony is consistent with the caps that they have proposed on total support. Of course, these numbers won't work out the same at all income levels. The differences will be greater as the gap in incomes becomes greater. And while it may seem foolish to pay that extra money to the tax-man, the drafters did provide for an alternative by allowing the Judges to have discretion on assigning some of child support as unallocated support.

Exceptions:

Furthermore, there are exceptions which can also help crafty attorneys get around this child support limitation in the Alimony Reform Act. In setting any alimony order the Judges are not completely limited by this formula and can vary depending on numerous circumstances:

"Grounds for deviation may include:

(1) Advanced age; chronic illness; or unusual health circumstances of either party;

(2) Tax considerations applicable to the parties;

(3) Whether the payor spouse is providing health insurance and the cost of heath insurance for the recipient spouse;

(4) Whether the payor spouse has been ordered to secure life insurance for the benefit of the recipient spouse and the cost of such insurance;

(5) Sources and amounts of unearned income, including capital gains, interest and dividends, annuity and investment income from assets that were not allocated in the parties divorce;

(6) Significant premarital cohabitation that included economic partnership and/or marital separation of significant duration, each of which the court may consider in determining the length of the marriage;

(7) A party’s inability to provide for his or her own support by reason of physical or mental abuse by the payor;

(8) A party’s inability to provide for his or her own support by reason of a party’s deficiency’s of property, maintenance or employment opportunity; and

(9) Upon written findings, any other factor that the court deems relevant and material."

Aside from the fact that there is a broad catch-all in number 9, the most obvious and useful tool in arriving at a more fair balance of child support and alimony in any case is deviation factor number 2: Tax considerations applicable to the parties. In the example used above, even if Chris and Pat have children, restructuring the support paid by Chris to include some alimony and some child support could result in better tax treatment for the family overall, and greater net income for both.

The Alimony Reform Act simply puts the burden on parties to show these tax considerations to the Judge to assist them in deciding what cases are appropriate for variation. The Judge can then deviate from the guidelines completely, or choose to use a portion of Chris' income in calculating child support and a portion in calculating alimony, a result still consistent with the Section 6(c) limitation.

This ability to deviate, built into the Act, means that the child support limitation is not as limiting as some fear.

The Catch

Yes, there is always a catch. The problem in reaching agreements or judgments that split the total support payment between child support and alimony is that both of these types of payments have different duration. Under the Act, alimony duration is limited by a formula dependent on the length of the marriage, whereas child support duration is limited by the emancipation of the children. These dates may coincide but most likely will not, and the needs of either the children or the lower-earning spouse will need to be taken into account in creating such a deviation.

Finally, as with the rest of the Act, once it becomes effective we will have to see how the Courts of the Commonwealth implement it. Despite our opinion that the reading of this child support section is clear, we are  not on the Appeals or Supreme Court and until they rule there is certainly room for interpretation.

For more information about the Alimony Reform Act of 2011 check out MassAlimonyFormula.com

Click here for a Massachusetts Child Support Guidelines Worksheet.

Thank you to Julia Rueschemeyer for inspiring us to finally write this post.

According to the Boston Globe, the Massachusetts House has approved the Alimony Reform Act of 2011 unanimously and the bill now waits for a vote by the Senate.

To read more about the act visit MassAlimonyFormula.com

On May 18, 2011, a public hearing took place at the Massachusetts State House before the Joint Committee on the Judiciary. The bills that garnered the most attention involved human trafficking, redefining joint custody, and the Massachusetts Alimony Reform Act of 2011 (S0665). While efforts to reform alimony in Massachusetts have fallen short in the past, the atmosphere was one similar to watching an athlete jog a victory lap.

In a forum designed to encourage debate and dissenting opinions, there was no notable opposition to the bill, as the Joint Task Force established by the Judiciary Committee seems to have crafted a bill that expected to pass this session. Steve Hitner, the co-founder of the Mass Alimony Reform group, received a standing ovation and a round of applause just prior to testifying. Usually, such welcomes operate against the rules of decorum, but Committee co-chairs Eugene O'Flaherty (D-Chelsea) and Cynthia Stone Creem (D-Newton) allowed it, recognizing the efforts of Hitner and other members of the Task Force in reaching a realistic middle ground.

We at Kelsey & Trask have already voiced our support for the proposed bill, and if it indeeds becomes the law in Massachusetts, we will continue to advocate for our clients under the new law.

If you're interested in seeing a summary of the bill's changes and viewing a calculator for the proposed formulas visit MassAlimonyFormula.com.

You can view the full video of the Joint Committee hearing here.

The Alimony Reform Act of 2011 has had a lot of buzz in the past few months. Since it's filing, over 130 legislators have signed on as Petitioners and many family law practitioners have expressed their support for the bill.

Despite some reservations we at Kelsey & Trask, P.C. have about the bill, we believe that it is a significant improvement over the current alimony law in Massachusetts. In addition, we recognize that some of the provisions that we think could be improved (such as the child support integration) were the result of significant compromise from all of the interested parties (lawyers, judges, citizens and advocates).

Therefore, we at Kelsey & Trask, P.C. support the efforts of Bill Sponsor Gale Candaras and the numerous petitioners to have this bill entered into law as soon as possible.

If you agree, voice your opinion to your state legislators. The Joint Committee on the Judiciary is holding a hearing this Wednesday, May 18, 2011 at 1:00 P.M. in the Gardner Auditorium.

If you're interested in seeing a summary of the bill's changes and viewing a calculator for the proposed formulas visit MassAlimonyFormula.com.

UPDATE: There is pending legislation for major changes to the alimony statute in Massachusetts. The Alimony Reform Act of 2011 was filed on January 18, 2011 and you can learn more about the Act at MassAlimonyFormula.com or in our recent blog post highlighting the differences between the bill and the current law.

As previously reported on this Blog, there is an ongoing (and at times heated) debate in Massachusetts right now over how to amend the alimony statute. Despite how long this debate has been going on, it appears that we may finally be closer to some changes.

The Legislative Task Force appointed by Newton Senator, Cynthia Creem, is reportedly close to a recommendation which could have the backing of Judges, attorneys and at least some of the reformists. Although the final Bill is not complete yet, it will likely be filed prior to the deadline for this session, January 21, 2011, and include provisions relating to guidelines and duration as recomended by the Joint Task Force Report. It is also likely that the new Bill will address issues raised by the recent Pierce decision as to how alimony should be affected by retirement.

We'll have to wait until the Bill is filed to report on the actual specifics, but stay tuned!

UPDATE: There is pending legislation for major changes to the alimony statute in Massachusetts. The Alimony Reform Act of 2011 was filed on January 18, 2011 and you can learn more about the Act at MassAlimonyFormula.com or in our recent blog post highlighting the differences between the bill and the current law.

The Boston Bar Association has unanimously voted to endorse the Report of the Joint MBA/BBA Alimony Task Force: Alimony or Spousal Support Guidelines where there are no Dependent Children.

The Report recommends an alimony cap based on a formula. It also recommends durational limits on alimony and lists specific instances where the recommendations would not apply, such as cases where the recipient is so disabled as to become a ward of the state.

The Report also allows for deviation based on certain factors, which include cohabitation.

As indicated in a previous Alimony debate post, this is the type of reform that we believe would be an improvement over the current state of alimony in Massachusetts (especially as compared to the currently proposed reforms in the Senate and House bills).

If you have an opinion on which solution is best, vote here.

UPDATE: There is pending legislation for major changes to the alimony statute in Massachusetts. The Alimony Reform Act of 2011 was filed on January 18, 2011 and you can learn more about the Act at MassAlimonyFormula.com or in our recent blog post highlighting the differences between the bill and the current law.

Because of my involvement in the creation of the Divorce Spousal Support Calculator I am often asked if I think alimony in Massachusetts is fair.

Of course, this is a loaded question, and so my typical answer is that nothing in the law is "fair", it is simply our best efforts to be "fair and equitable." In creating the Calculator, however, I have already expressed a desire for greater consistency. This in itself is an admission that I would like to see improvement in the current statute.

Many others have expressed there displeasure with the current statute as well. As a result there is an ongoing (and at times heated) debate in Massachusetts right now over how to amend the statute. But how this debate is now framed is a trap. There is no right answer because the choices are both inadequate.

The Boston Business Journal (Dueling Alimony Bills Raise Hackles in Legal Circles), NECN, WBZ, the MetroWest Daily News, and even The Wall Street Journal have all covered the debate with varying degrees of impartiality. Many of these stories concentrate on two bills that have been presented in the Massachusetts Legislature. The House Bill No. 1785 would add numerous changes to the current statute, including limitations on duration, sunset provisions reducing alimony after five years, limitations on increases in alimony to specific circumstances, termination of alimony upon retirement of the payor or cohabitation of the recipient, and limitations on the courts' ability to consider cohabitation of the payor. The Senate Bill No. 1616 would add only the words "and duration" to the language specifying the powers of the courts to determine alimony.

The current statute, MGL Chapter 208 Section 34, gives Judges broad discretion in awarding alimony. Although it is my experience that most Judges are fair in their rulings, the lack of firm direction in the statute forces many cases to trial that might otherwise have been settled. Much of the criticism of the Senate Bill centers around this issue of protracted and expensive litigation. Indeed, the proponent of the Senate Bill, Newton Senator, Cynthia Creem, has been attacked as having a conflict of interest because she practices family law, and could potentially benefit from increased litigation costs.

Unfortunately, this is the type of debate you receive when only two solutions are presented to a very complicated and diverse set of problems. There are multiple criticisms of the current statute. They include the fact that the statute doesn't limit the duration of alimony, encourages litigation of the issue of alimony by its vagueness, and that it fails to address numerous scenarios in which unfair results may occur (such as forcing a payor to continue support after retirement age or when the recipient is cohabitating).

The Senate Bill admittedly only addresses one of these issues, the issue of duration. But to say that it further encourages litigation is a mistake. The current state of the law in Massachusetts is that Judges to do not have the authority to limit the duration of alimony in a Judgment. This forces further litigation because a Modification action is necessary to end alimony in cases where temporary alimony was appropriate or retirement has changed the circumstances. Adding the duration language suggested in the Senate bill could avoid future litigation, by allowing Judge's to address this issue in the original order.

In contrast, the House Bill attempts to address many of these issues at once, but takes a very specific position with respect to each issue. Since many of the proponents of this bill are alimony payors themselves (such as those quoted in another BBJ article) their conflict of interest is obvious (as opposed to the supposed conflict of interest of Senator Creem).

There are multiple ways other than the changes described by House Bill No. 1785 that we could improve the law in Massachusetts without moving it too far in favor of the potential payors. For instance, Maine has a statute that defines different types of alimony, allowing a Judge to order transitional or reimbursement support in cases where long-term support may not be appropriate.

Similarly, the House Bill's failure to address the creation of a formula (or at least a maximum), as recommended by the AAML, will leave us with the same problems of ongoing litigation. The House Bill might solve the problems of some of its proponents, but it is not going to reduce the litigation of most alimony cases which will still require the input of a Judge to decide the ultimate amount of spousal support payments.

This is why it's a trap to ask any experienced practitioner to choose between Option A (the House Bill) and Option B (the Senate Bill).

Whether or not changes to the statute favor the recipient or the payor, true reform of the alimony statute should provide consistency. Therefore, the most fair way to amend the statute would be to include both a durational component and a formula for calculating the appropriate amount of alimony, while still allowing Judges to vary from the presumption if they make findings that a specific factor (as suggested by the AAML) warrants such a deviation. This is the only way to reduce litigation and provide consistency.

While everyone may not consider a formula "fair", it will at least have the advantage of treating everyone the same, and the first step towards fairness is consistency.

For more information about the various formulas in use in other states (and by some Massachusetts Judges) view the Divorce Spousal Support Calculator or our accompanying Article.

The Alimony Reform Act of 2011 has started to generate some buzz in the news:

WGBH Panel Discussing both sides of the Alimony Bill:



WCVB News: State May Eliminate Alimony for Life (Video)

Fox25 News: Alimony reform bill: Are changes on the way?

Click here to read our summary of the bill.

The Alimony Reform Act of 2011 is legislation currently pending in Massachusetts which would significantly change how the Courts here handle alimony cases. The proposed bill would limit the duration and amount of alimony, exclude payor's second spouse income, and end (or reduce) alimony upon cohabitation and retirement.

Of course, these changes are controversial and in many cases favor payors. On the other hand, payors will argue that the current law unreasonably favors recipients.

Whether you are in favor or against the Alimony Reform Act of 2011, if you are a resident of Massachusetts you should make your opinion known. Contact your State Senator and Representative and tell them whether you want them to become additional sponsors or oppose the bill. If you want to know who your representatives are click here. Massachusetts Alimony Reform, an organization in favor of the bill (obviously given their choice of name), has provided a sample letter to send if you also favor the legislation.

To see Denise Squillante, President of the Massachusetts Bar Association summarize the Act on Fox25 News check out this video:

Alimony reform bill: Are changes on the way?: MyFoxBOSTON.com

If you want to read more about the proposed changes visit our last article: The Alimony Reform Act of 2011 or go to MassAlimonyFormula.com.

You can also Comment on this (or our previous posts) by completing the "Post a Comment" box at the end of each article.

On January 18, 2011, Senator Gale D. Candaras (D - Wilbraham) and Representative John V. Fernandes (D - Milford) filed An Act to Reform and Improve Alimony. The Act proposes sweeping changes to the Massachusetts alimony laws, and has already been endorsed by the Massachusetts Bar Association.

As we discussed in an article on December 3, 2011, a Legislative Task Force was created to recommend changes that would reach a consensus between Judges, attorneys and the alimony reform advocates. The Act proposed by Senator Candaras and Representative Fernandes is the result of that Task Force's hard work and according to the Press Release, the Act has the unanimous support of all members of the Task Force.

Kelsey & Trask, P.C., the authors of this Blog, have created a website that summarizes the provisions of the Act and provides a calculator based on the General Term Alimony recommendations: MassAlimonyFormula.com.

Here are some of the highlights:


For more information about the Act, visit MassAlimonyFormula.com.

For more information about the recent history of the alimony debate, view our previous post: It's a Trap! The Massachusetts Alimony Debate - February 13, 2010

For more information about the current state of alimony in Massachusetts visit our website's Alimony page.

UPDATE: There is pending legislation for major changes to the alimony statute in Massachusetts. The Alimony Reform Act of 2011 was filed on January 18, 2011 and you can learn more about the Act at MassAlimonyFormula.com or in our recent blog post highlighting the differences between the bill and the current law.

Fox25 News and Steve Hitner of Mass Alimony Reform are reporting that the Legislative Task Force on Alimony has reached agreement on a final draft for an Alimony Reform Bill of 2010. The Bill will likely be filed in the next few weeks and may then be subject to further changes in legislative committee. Once the bill is available, we will be posting our thoughts and comments.


MA Alimony Laws: Close to Reform?: MyFoxBOSTON.com

For more information see our previous posts on this subject:

Alimony Reform: Stay Tuned! - December 3, 2010
It's a Trap! The Massachusetts Alimony Debate - February 13, 2010