In a divorce, there are three types of support that a spouse may be entitled to in Pennsylvania – spousal support, alimony and alimony pendent lite. In this podcast, Pittsburgh family lawyer Kathryn Rosinski discusses the difference between the three types of support and answers some of the most common questions about each type.
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Hosted by: Diana Shepherd, Editorial Director, Divorce Magazine
Guest speaker: Kathryn Rosinski, Esq., Family Lawyer at McCarthy, McDonald, Schulberg & Joy
Bio: Kathryn Rosinski is an experienced litigator who concentrates her practice on family law at the Pittsburgh family law firm McCarthy, McDonald, Schulberg & Joy. Her family law practice areas include equitable distribution, spousal support, alimony, child support, and protection from abuse, among others.
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Read the Transcript of this Podcast Below.
Can you explain the difference between spousal support, alimony pendente lite, and alimony?
Spousal support is the support that one spouse would receive once they are separated. It has to be that the spouse actually has to file for support, so you don’t automatically just get support. What it intends to do is provide for the reasonable needs of the dependent spouse. For example, if the spouse is living in the same household as the other spouse and the spouse who makes more money is still paying all bills and such, you may not get spousal support. You may not need it. It’s based on the reasonable needs, if they are not being met by the dependent spouse.
APL, alimony pendente lite, is very similar, but it’s the support one spouse would receive once the divorce complaint is actually filed. As compared to spousal support, which you can receive once the spouses are actually separated but a divorce complaint has not been filed yet, once the complaint in divorce is filed, the type of support that a spouse would receive is actually now termed APL. This is based, also, upon reasonable needs. However, a spouse may get this even if they’re still living in the same household, because the purpose of APL is not only to provide for reasonable needs, but is also supposed to allow the dependent spouse to be able to fairly and effectively litigate the action. That’s really important because there’s sort of two things that APL is intended to do, which is allow a spouse to maintain their standard of living and provide for their reasonable needs as well as litigate the action because they’re actually is an action now because a complaint in divorce has been filed.
Alimony is actually the payments received by a spouse from the other spouse after the divorce is actually finalized. There are 17 factors that the court considers in terms of whether to award alimony, how much alimony would be awarded, and for what duration.
What’s the process for receiving spousal support or APL, and are these awards always modifiable?
The process is that the dependent spouse has to file for it. You don’t just automatically receive support. You, in fact, won’t receive support or APL otherwise. The process for doing that is you go down and you fill out some paperwork, or your attorney does that for you, and then you have a hearing. The purpose of that hearing is to determine what each spouse’s net disposable income and/or earning capacity is, and the award is based on either that net disposable income and/or earning capacity.
In some cases, it’s very complicated to determine either a spouse’s earning capacity or their net disposable income. If that’s the case, and we either need to bring in an expert, or we have to present documents, have evidence in court, etc., we’ll have to designate the case complex. When a case is designated complex, it’s sort of a two-part process. First, we have a conciliation to determine an interim amount. The initial conciliation, at least here in Allegheny County, is pretty short. They are 10 to 20 minutes, sometimes less, and we determine, at least have a very initial determination of either, potentially, earning capacity or, more likely, simply just what we believe the net disposable incomes are.
This award is modifiable because you actually go to the next step of the process in a couple of weeks or a few months, and you have a final hearing to determine the final amount of support that will be awarded for the pendency of the case. In that final hearing, you will actually be able to present more evidence as to each spouse’s income as well as the earning capacity of each spouse, if that’s an issue in the case. That can be anywhere from a partial day to a one-day or two-day hearing to determine that final support amount, and that award is not modifiable. You get an order stating what that award is, and then if you have an issue with that award, you can do what’s called taking exceptions to your judge, and your judge then issues an order as to what that final support award is going to be, or APL award is going to be, and that, at that point, is really not modifiable. That’s the amount that’s going to be in place through the entire pendency of the divorce.
How is each spouse’s income determined for purposes of awarding spousal support or APL? I’m thinking that this could be particularly problematic if one spouse is self-employed in a cash-based business.
That is obviously going to be a complex case. It’s difficult to determine exactly what a spouse’s income is, particularly where they are self-employed. In that situation, we absolutely would employ a financial expert to help analyze those documents submitted by that party to determine their net disposable income and prepare an expert report. It’s exactly that type of situation that requires a complex hearing to determine what the net disposable income is for that particular party or, potentially, for both parties.
The essential way to determine net disposable income is, you take the party’s gross income and deduct out of it federal taxes, state and local taxes, Social Security taxes, and some other things, other appropriate deductions, and then you get a party’s net disposable income. There are cases in which it’s not cut and dry to determine that NDI, and we need to employ a financial expert to do that, to help us with that.
Do men ever receive spousal support or APL from women?
They do. Being the payor is not limited to men. If a woman makes more, they will absolutely be required, assuming the other party files, to pay spousal support or APL to the man. It really just depends on who the higher-earning spouse is.
If one spouse makes all the mortgage payments on the family home, and the other continues living in that home during and after divorce, could the mortgage payments be considered spousal support and/or APL?
I think that sort of touches on something we talked about at the beginning, but I think this goes to the ultimate question of, what counts as support? Things that count as support that go toward the reasonable needs of party would be payments on the house, food, utilities, tax on the house, upkeep, clothing, credit cards, etc. It wouldn’t include capital expenditures, i.e., replacing the roof, but those things would absolutely be considered spousal support or APL. In fact, there are parties that have agreements that essentially state that, in lieu of spousal support or as spousal support or APL, the party will simply pay the mortgage payment, and that will count as their spousal support and/or APL. Certainly, mortgage payments could be considered spousal support and/or APL.
If one spouse agrees to forego alimony for a larger share of marital property but then discovers that the property isn’t generating enough income to support him or her, can they go back to court after divorce and ask for more alimony or ask for alimony in the first place?
No. A lot of parties wish they could, but, unfortunately, we can’t do that, so that’s really important to consider when you are making your bargain, when you’re drawing up a marriage settlement agreement, to really take a hard look and/or have your financial expert or your financial advisor take a long, hard look at what property are you receiving, what you are getting instead of that alimony, and how you are going to support yourself after the divorce. It’s virtually impossible to go back and change an agreement after it’s entered.
If that agreement says you’re going to receive a larger share of marital property in lieu of alimony or take a lower alimony or an alimony payment of less duration, it’d be very difficult to go back and change that agreement. In fact, you can only do it if you prove fraud or some other sort of contractual contract-based defense, and that is extremely, extremely difficult to do. As a rule, we generally tell people, “We need to be sure this is what you want and that this will support you down the road, because this is your only chance of getting this done, and we got to do it right the first time.”
Does an alimony award guarantee that the recipient’s lifestyle will remain the same after divorce as it was during marriage, particularly in a high-net-worth marriage?
No, and frankly, that’s not the standard. The purpose of alimony isn’t to replicate the lifestyle prior to divorce. The purpose of alimony is to provide for need, and it’s to provide for reasonable needs when compared to each party’s sources of income. The court determines that by looking at 17 factors that it considers in determining alimony, both the amount of alimony and the duration. One of those factors is not replicating the party’s lifestyle. It’s simply to provide for those reasonable needs.
One thing that we always advise clients to do, however, because one of the factors is looking at reasonable need and determining alimony, is we want them to maintain, as much as possible, their lifestyle during the marriage. We don’t want them to go out and drastically decrease their standard of living, because when we go to trial, the court is going to look at, what does the party reasonably need? If you haven’t taken a vacation in four years or bought clothes in a year and a half, the court is going to say, “You know what? They don’t need that much, so maybe we don’t award them as much alimony or for as long a duration.” Talking to counsel about that and considering that when you’re going through the divorce process is particularly important.
Is it better for a wealthy spouse to pay alimony in one large lump sum at the time of divorce or to make monthly alimony payments?
It’s a good timing for that question because the interesting thing is, for the balance of 2018, there could be very adverse tax consequences to making a lump-sum alimony payment. There’s a very complicated tax analysis that’s done by a qualified tax and divorce counsel, but that’s actually only an issue through the balance of 2018 until the new tax laws go into effect.
After 2018, this really isn’t an issue anymore because alimony is no longer deductible, so there’s no longer an issue at that point as to paying alimony in one large lump sum at the time of divorce or to make monthly alimony payments. That’s a determination that, at least if you’re considering it for the balance of 2018, would have to be done. An analysis would have to be done by a qualified tax professional and divorce counsel.
Is alimony always modifiable, and if so, under what circumstances can it be modified?
The parties can actually agree either way. It can be modifiable either up or down, or it can be non-modifiable. If you have it modifiable, most modifiability clauses are downward only and, typically, the parties would use a threshold, i.e., it has to go down, the party’s income has to decrease by approximately 10% or some actual threshold in order to invoke that modifiability clause.
What are the pros and cons of modifiable versus non-modifiable alimony for the payor?
Modifiable alimony definitely has some advantages for the payor. The advantage there is fairly obvious, which is that you can adjust, hopefully downward, if the income changes by more than a certain threshold. If it also allows for an upward modifiability, then that’s obviously a little problem for the payor because you might end up having to pay more. The pro of non-modifiable would be you know for certain what your payment is going to be, and you can plan for that.
The obvious con of having alimony be non-modifiable is that you’re stuck with it, so even if your income dramatically drops or drops at all, you’re stuck with that payment, which may or may not be possible to make. I think there are definitely pros and cons just depending on the situation of the payor.
Does someone have to continue paying alimony if their ex moves in with or marries a new romantic partner?
Absolutely not. Alimony automatically terminates with cohabitation or remarriage. If the agreement is silent, then it terminates. However, I will say the parties can agree otherwise, so they can say that it wouldn’t terminate even if their ex moves in or marries a new person. If you are the payee, if you’re the recipient of alimony, and you’re in a relationship, you need to think about this when you’re negotiating your deal. By that, I mean you may want to consider taking more property instead of as much or as long of a duration as alimony. That’s really important to consider, depending on your personal situation.
How can you help a client make a case for receiving a higher amount or a longer duration for alimony? If your client is the payor, on the other hand, is there anything you can do to help them reduce the duration and amount of alimony?
To receive a higher amount or a longer duration of alimony, I would refer to those 17 factors that I referred to earlier. Those that receive the most weight are sort of the disparity between earnings and earning capacity. If one party earns and well out-earns the other person and even the other person’s earning capacity, that’s one factor.
Another would be a strong showing that, even with child support and alimony, the payor has way more than enough money to meet their reasonable needs and is able to save quite a bit each month. Another would be to emphasize the fact that the payee, the recipient of alimony, will never have the ability to generate income or assets moving forward as the payor will, simply because they don’t have the same earnings or earning capacity. Then, I think the final factor would be to show that the payee or the recipient is really making a bona fide effort to maximize their earning capacity.
Now, with regard to the payor, to help them reduce the duration and amount of alimony, I’d want to give the other party more assets to, hopefully, sever ties between the parties and reduce the amount of time during which they would be paying alimony. I’d want to emphasize the payee or the recipient’s earning capacity and maybe the fact that they’re choosing not to work. As a result, they don’t need and shouldn’t need as much alimony or as long of a duration of alimony. I’d want to emphasize the efforts of the recipient in not maximizing their earning capacity, instead either taking a lower-earning job or choosing not to work at all, and, therefore, showing that they don’t need as much alimony or alimony for as long of a duration.