Who Owes Whom What – The Formula
There is a statutory formula that applies in marriages of more than three years, and can be consulted by the Court in marriages of less than three years. This formula is a rebuttable presumption and provides a baseline to determine what a reasonable or probable award of maintenance could be. Simply put, with some exceptions, the formula provides that maintenance should be awarded when 40% of the monthly gross income of the higher earning spouse is greater than 50% of the monthly gross income of the lower earning spouse. The presumptive amount of monthly maintenance is the difference between these two calculations. The length of the award is based upon a percentage of the years that the parties have been married.
Maintenance can be temporary while the case is pending before the Court – a way to preserve the status quo before permanent orders can be entered – and can be awarded upon request at the permanent orders hearing in the case. The formula was initially only applicable to temporary orders for maintenance, but in 2014 was expanded to apply to a permanent award of maintenance.
Gross income is based upon the actual gross monthly income (before taxes and deductions) of a spouse. Gross income can also include potential income if a spouse is voluntarily unemployed or underemployed; that is to say, when a spouse is either not working by his or her own choice or when he or she is working but is earning less money because it is not in a field in which he or she has expertise and qualifications. If a spouse is self employed, gross income is often artificially manipulated to appear lower when the business pays personal expenses on the owner’s behalf. The attorneys at Peak Legal LLC have years of experience untangling commingled funds in business and will fight for both parties to show the correct amount of income.
The length of the marriage is a key factor in application of the formula, as the duration of award is part of the formula. Generally, the longer the marriage, the longer the award of maintenance. This time is meant to allow the disadvantaged spouse time complete appropriate schooling and/or gain sufficient experience to be able to make it on their own without assistance from the other spouse.
In some circumstances, such as when the parties have been married for longer than 20 years or when one party is disabled, the length of the award can be lifetime. If that is the case, the paying spouse essentially will have to pay maintenance until he or she retires, which, to avoid any concerns of voluntary unemployment, is considered to occur at a normal retirement age such as 65 or 66. At the time of retirement, usually any retirement assets such as 401k or IRA accounts, pensions, or other retirement vehicles have already been divided by the Court and that division will go into effect for each spouse.
Payments and Life Changes
Maintenance is generally modifiable if circumstances change for either of the parties. For example, one spouse could lose their job, and although diligently looking for another job, be unable to find a similarly paying position and thus be unable to afford to pay the same amount of maintenance. Or, the receiving spouse could be on track to self-sufficiency but could suffer a debilitating accident, making them unable to work and thus needing more maintenance or for a longer period of time.
Spouses can agree to make maintenance contractual and non-modifiable, thus preventing either spouse from asking the Court to change the amount or the duration in the future. However, the Court cannot make an award non-modifiable, and any award from the Court may be modified on sufficient circumstances.
In addition to the formula, Colorado law provides many factors for the Court to consider when applying the formula, including:
- Financial resources of both spouses
- Marital property awarded to each spouse
- Lifestyle during the marriage
- Age and health of both parties
- Each party’s economic and noneconomic contribution to the marriage
The formula for maintenance has taken a large part of the guess work out of an award of maintenance, making awards more predictable and less subject to a Court’s whim. However, there remain many circumstances where income can be manipulated and based on other factors, especially the total value of the marital estate, the health and work history of the parties, and the standard of living, that remain important and typical applications of the formula may not always be appropriate. The attorneys at Peak Legal LLC have years of experience representing both the paying and receiving parties. In all cases, we make sure our clients are properly treated by the laws on maintenance.
For a consultation about spousal maintenance, call Peak Legal now at (720) 445-9779.