Standard of Living, Diminished Income, Spousal Maintenance and Child Support

The courts in New York have had some difficulty dealing with situations were a claim of recently diminished income has been presented to the court in response to a temporary spousal support application. In most situations, the courts would either impute income or deny downward modification. The courts have been concerned with the parties’ standard of living for the non-monied spouse and the children despite  the claims of the income-producing spouse of diminished resources and/or income. One trial decision, S.A. v. L.A., 2 Misc.3d 7441 (Sup. Ct. Westchester Co.), illustrates the situation where the present financial situation – the husband earning a lot less income than existed throughout the marriage, has led the court consider present circumstances and to caution the non-monied spouse that she would have to deal with a new economic reality.

In considering interim spousal support, the court had to determine if it would apply the husband’s 2012 income of $819,049 or his far lesser annualized 2013 income imputed at $240,000. The husband was 56 years old and employed in the financial services industry. The wife was 64 years old stay-at-home wife and mother, who has not had any significant for 23 years of the marriage. The husband claimed that he was terminated from his old job through no fault of his own and he was forced to find new employment at a much lower rate of pay. The wife argued that he had voluntarily left his former employment.

The court had to address the principles of utilizing the current income as opposed to the income on the last tax return on a presumptive temporary maintenance calculation. The court determined that according to the language of the Domestic Relations Law §240 (1-b) (b) (5), the income rules applicable in child support proceedings may be used to determine an application for temporary spousal maintenance, as is available for interim child support.

The second part of the court’s analysis, and of great significance, was the court’s view of the parties’ present diminished financial situation from their historic standard of living even as measured by the immediately preceding year. The reduction in the family’s income from the husband’s 2012 adjusted gross income of $819,049.00 to the annualized 2013 income of $240,000.00, was accepted by the court. As result, instead of presumptive temporary support of $17,000.00 per month as requested by the wife, the court awarded $5,737.00 per month. The court further found that with the requested amount of $17,000.00 exceeded the wife’s legitimate monthly expenses, rendering the presumptive award unjust and inappropriate. The court ruled that the issue of whether the husband had been discharged or voluntarily separated from his old employment was reserved for trial.

In its decisions, the court stated that:

The court recognizes that the spousal support provisions in this decision and order will greatly affect the parties’ respective post-separation standards of living. They need to consider the financial predicament they are in, and how to deal with the future. They are now suffering the consequences of their prior high standard of living. It is beyond dispute that two cannot live as cheaply as one, and that “hardship” at any economic level follows drastic losses of income. It is time for the parties to recognize the financial reality they may well face in the future, given their ages, work experience and future prospects for employment. The court urges that the parties’ focus should be on financial planning with asset and debt liquidation. The continuance of this costly litigation will not heal their wounds, both economic and emotional, already suffered, but rather will exacerbate them.

The decision in S.A. v L.A. illustrates that during the difficult economic times, the parties may have to temper their expectations. If a monied spouse can not earn past levels of income through no fault of his or her own, the non-monied spouse is likely to have to share the hardship as well.

Long Term Separation, Maintenance and Problems of Proof

I have previously discussed how the courts determine maintenance amounts in divorce cases. One of the critical factors in court’s evaluation of whether maintenance is appropriate or necessary, is the parties’ standard of living. However, there are many situations where the parties have been separated for a significant period of time. Under those circumstances, in Dowd v. Dowd, 58 A.D.3d 1057 (3rd Dept. 2009), the Appellate Division, Third Department, held that where the parties were separated for a long period of time, their pre-separation standard of living should not be considered.

In Dowd, the parties were married in 1976, were separated in 1999 and were divorced in 2007. According to the court, the standard of living during marriage was not a consideration given parties’ long separation. During the separation, the wife, who was 49, was supported, in part, by her live-in boyfriend, and had sporadic employment history involved low-wage jobs. Neither party graduated from high school. By time of trial, the husband, who was 50, was earning approximately $60,000 per year, working for manufacturer of heavy equipment. The wife also received distributive award of $100,000.

Supreme Court initially awarded defendant wife $500 maintenance per month until she is eligible for Social Security retirement benefits at age 62 in 2019 and, thereafter, reduced it to $250 per month, until she is eligible for health care benefits through Medicare at age 65 in 2022. The Appellate Division reduced the duration of the maintenance award to 5 years. It held that the standard of living during marriage was not a consideration given the parties’ long separation. Further, since the purpose of maintenance is to provide financial support for recipient spouse, while spouse gains skills and employment necessary to become self-sufficient, that particular factor was not applicable in this situation since the wife should be able to support herself. The court also noted that there was no competent medical proof with respect to the health problems claimed by the wife.

It should be noted that the Appellate Division split 3 to 2 in this case. The vigorous dissent stated that the lower court did not abuse its discretion in its award of maintenance to the wife, arguing that she was suffering from several medical conditions, impairing her ability to work and making it unlikely that she would become self -supporting.

It is worth noting that Dowd may have been decided the other way, if there was admissible proof that the wife was suffering from a medical condition, or conditions, that would prevent her from being gainfully employed. Such admissible proof inevitably involves testimony of a medical professional. Any divorce lawyer who is making an argument that his or her client is unable to work for medical reasons must be ready present testimony of a medical professional. Similarly, if a claim for rehabilitative maintenance is being presented to the court, an attorney must be prepared to present testimony of a vocational expert. While experts can charge significant fees, the case may turn on such testimony.