In ancient Babylon’s Code of Hammurabi (circa. 1780 BC), divorce meant the husband would repay his wife’s dowry, relinquish child custody, and provide alimony sufficient to sustain her. We can track alimony through the Code of Justinian (529 AD) and into Corpus Juris Civilis – the basis for both Roman law and British common law. Eventually, under King James I of England, alimony sailed across the pond to Jamestown, Colony of Virginia (1607).
Arizona Adopts The UMDA
By the mid-1950s, times had really changed for American families. Women were working outside the home and societal attitudes toward divorce were evolving quickly. An upheaval in domestic relations law came about in the early 1970s with the Uniform Marriage and Divorce Act (UMDA).
Arizona adopted the UMDA and its “no fault” grounds for divorce in 1973. The UMDA provided for the division of property, child custody and support, and spousal maintenance. The UMDA also eliminated traditional defenses to divorce. With traditional defenses and guilty acts gone from divorce, fault-based alimony was no longer relevant.
To avoid confusion, the term “alimony” was replaced with “spousal maintenance” – a term of art disconnected from marital fault and equally available to either spouse. We now look at maintenance as paid by one party to the other in an Arizona divorce or legal separation.
Achieving Independence Through Maintenance
As a “no fault” divorce state, Arizona’s courts disregard marital misconduct when deciding whether or not to award spousal support. Maintenance is intended to assist in achieving independence for both spouses.
Maintenance is determined after considering a number of financial and work-related factors pertaining to both parties. ARS § 25-319 requires a two-step support analysis, starting with eligibility.
On Support Eligibility.
The court may order maintenance when the spouse requesting support:
- Lacks sufficient property… to provide for that spouse’s reasonable needs. [or]
- Is unable to be self-sufficient through appropriate employment or is the custodian of a child whose age or condition is such that the custodian should not be required to seek employment outside the home… [or]
- Contributed to the educational opportunities of the other spouse. [or]
- Had a marriage of long duration and is of an age that may preclude the possibility of gaining employment adequate to be self-sufficient.
On Support Amount.
Once the court has determined eligibility, it examines all relevant factors to decide how much support will be paid. ARS § 25-319(B) provides a laundry list of computation factors, with no particular weight or priority given to any. To name only a few, considerations include the standard of living established during the marriage, the duration of the marriage, and the comparative financial resources of both parties.
Vocational And Financial Evaluators
To be successful, one must present sufficient and accurate financial documentation of earnings and work history. The court can also look to expert testimony on earning potential and future financial resources.
On Vocational Evaluations.
The court may order a vocational evaluation when either party’s employment potential and earning capacity is at issue. The vocational evaluator’s knowledge of the relevant area’s job market is essential. During the employment assessment (or spousal rehabilitation assessment), the evaluator reviews the party’s resume, interviews others in the same employment field, and conducts studies of labor market trends. The final report projects the spouse’s earnings, and includes conclusions and recommendations. The report is also useful in cases of under-employment, particularly when contrived to receive more or pay less.
On Financial Evaluations.
A spouse may take the position that maintenance should be minimized because the other party already has sufficient means to provide for his or her own reasonable needs. When expert testimony is needed, CPAs and financial evaluators offer projections on each spouse’s resources. They predict the value and return on investments, report on tax-related issues, viability of income property, potential conversion of assets into income-generating properties, and so on. Their conclusions may be critical in accurately determining the amount needed to sustain the standard of living enjoyed during the marriage.
Tender, Trusts, Taxes And Termination
Spousal support can be paid as a lump sum or by installments. Payments may start with a larger amount and decrease over time, giving the recipient opportunity to adjust to a more financially independent lifestyle. Payments may provide for educational expenses, transportation, and retraining for more sustainable employment. Depending upon the couple’s assets, support may involve title transfers, possession or secured interests in property, and a spousal maintenance trust agreement.
On Spousal Maintenance Trusts.
Once it has been decided that maintenance will be a part of their divorce settlement, some couples with income-producing assets may create a spousal maintenance trust. The trust can be a useful device for those couples who own a family business, but don’t want to liquidate business assets to cover spousal support. The parties transfer income-producing assets into the trust for the purpose of paying trust income to the beneficiary in compliance with the maintenance order.
The court maintains continuing jurisdiction over spousal maintenance for the entire time it is awarded. In general, a maintenance award may be modified with substantial change in circumstances, as when the obligor experiences reduced income because of injury or job loss. The parties may agree, however, that the maintenance order will not be modifiable. In that instance, non-modification of maintenance would be stated in the decree.
On Income Taxes.
With spousal maintenance, the income tax obligation shifts from the payor to the recipient. Unlike child support which is tax neutral, the payor of spousal support deducts the amount paid from gross income while the recipient adds it to income and is responsible for any associated tax.
Maintenance ordinarily terminates when the recipient remarries or dies, or on a specific date when payments are scheduled for a defined period. Support may terminate with the recipient’s cohabitation with a domestic partner, too. Lastly, the court may require that a life insurance policy guarantee payments for the entire ordered period, even after the obligor is deceased.
The Hobgoblin Of Inconsistency
The unpredictability of spousal maintenance awards continues to frustrate parties and the efforts of their attorneys to resolve disputes through divorce negotiations. In 2007, the American Academy of Matrimonial Lawyers reported in Considerations When Determining Alimony, Spousal Support or Maintenance:
[T]here are two significant and related problems associated with the setting of spousal support. The first is a lack of consistency resulting in a perception of unfairness. From this flows the second problem, which is an inability to accurately predict an outcome in any given case. This lack of consistency and predictability undermines confidence in the judicial system and further acts as an impediment to the settlement of cases because without a reliable method of prediction clients are in a quandary.
Determining spousal maintenance is perhaps the single most frustrating financial issue in divorce. A big part of that frustration stems from the persistency of inconsistent and unpredictable awards. The Maricopa County Spousal Maintenance Guidelines were devised to provide judges, attorneys, and parties with a formula for establishing the amount and duration of awards, allowing a monthly amount to be calculated. But the maintenance guidelines are neither mandatory nor authoritative. Some judges will look to the guidelines to bolster the reasonableness of an award determination, but there is no requirement to apply any guidelines to the analysis. Therefore, so clients retain greater control over their financial futures, I strongly encourage attorneys to negotiate a reasonable agreement on spousal maintenance whenever possible.