Leslie Shaw is the founder and owner of the the Law Offices of Leslie J. Shaw in Reno, Nevada. With the experience and knowledge to handle all kinds of divorce and family law disputes including litigation, property division, child custody and spousal support, Leslie is certified to practice family law in both California and Nevada.
This podcast discusses questions surrounding spousal support or alimony in Nevada and California, including how it is determined, if it is modifiable, and what happens if a spouse quits their job to avoid paying support.
Hosted by: Diana Shepherd, Editorial Director, Divorce Magazine
Guest speaker: Leslie J. Shaw is a divorce attorney located in Reno, Nevada with over 40 years of experience as a lawyer. Practicing law in both Nevada and California, Leslie has extensive experience litigating complex divorce and can serve clients across all areas of family law.
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Read the Transcript of this Podcast Below.
Spousal Support in Nevada and California
Diana Shepherd: How does a judge determine the amount and duration of alimony someone will receive?
Leslie J. Shaw: Well, the determination of the amount really depends upon what type of alimony, oftentimes called, “spousal support,” use those references synonymously – is looking at. There are two different phases that most courts will look at, certainly, in California, and that is temporary spousal support and long-term spousal support.
Temporary spousal support is that which one spouse would pay to another while the dissolution action is pending. In other words, ongoing. And temporary could be for two months and it could be for 12 to 18, or 24 months in the unfortunate event of a very slow moving dissolution action. The purpose of temporary support is to preserve as best possible the marital status quo that existed before the commencement of the dissolution action.
And in California there are guidelines. Now guidelines for child support are mandatory in California, but not spousal support. The guidelines for spousal support, I should make clear, temporary spousal support in California are discretionary. But the guidelines are based upon trying to fairly share the income of the parties to give them some approximation of the marital status quo before the unhappy circumstance of divorce that came about.
On the other hand, there is long-term support. And long-term support is typically what’s ordered by a court at the end of an action, either because the parties have reached an agreement and the courts are approving an agreement. Or in the absence of an agreement after the court has heard evidence, typically at a trial.
Long-term support has a very different purpose. Unlike it’s temporary counterpart, long-term support is based, at least in California, on a variety of statutory facts. There are actual lists of factors in the California family code of what a court must consider in making an award of long-term support. The purpose of long-term support, being to provide adequate financial assistance to a spouse based upon the circumstances in which that spouse is left by the family law action.
In Nevada, we have a little different twist because in Nevada, community property continues until the date of divorce. So even though a legal action may be filed in the court and spouses may need financial assistance, one from the other, all of the money that is being earned during that period of time, except those coming from separate sources, all those monies are community in nature and the court will commonly look to provide each party half of that income. Again, in California, separation carries a legal consequence to the parties and their property acquisitions and earnings. In Nevada, the separation date doesn’t have that consequence so the court is generally looking at equal division of what is community property income right up until the time of the divorce.
The duration is often times a function of the length of the marriage, the age of the parties, and their ability to rehabilitate themselves and mitigate their dependence on the other spouse for support, given reasonable efforts in the future. Now the establishment and the quantification of spousal support, I think is one of most unpredictable and one of the most complicated things that I deal with as a family lawyer.
So trying to reduce an answer to your question, a very reasonable question, to an answer even this short, and this hasn’t been that short, is a very, very challenging task. It’s a very, very difficult area of law to quantify by duration and amount.
Do spousal support payments end if the recipient remarries or moves in with a new romantic partner?
Spousal support payments do not end based upon the cohabitation of the recipient spouse. But there is a presumption of decreased need when a recipient spouse cohabits. Oftentimes the dispute is whether there is a cohabitation or whether there’s merely some co-tenancy or co-occupancy of premises.
Now the cases and the statutes, both in California and Nevada don’t require that there be a romantic or personal component to the cohabitation of a recipient spouse with another. It really looks at the cost saving or the economic impact – two can live more cheaply than one, that there’s an economy of scale. And if people are now sharing expenses with somebody living under the same roof, they don’t need as much in support.
But nothing happens automatically. That presumption might give rise to the paying spouse seeking relief from the court. And in the absence of an agreement between the spouses, it will take an order of court based upon cohabitation to affect the change in support.
How does somebody determine how much spousal support they’re going to need and what if they either overestimate or underestimate their need for support?
When it’s difficult to look into the future, and it commonly is, and see where a recipient spouse might be given two or five, or seven years to rehabilitate themselves, it might be best to enter into a more short-term agreement or advocate to a court in the absence of an agreement, that there be a more short-term support order that can be revisited in a number of years. It’s not uncommon for a court to award support to a financial dependent spouse that includes in the support amount, a budget for that spouse to get technical training or to go back and receive broader academic training in an undergraduate degree or a graduate degree.
And oftentimes, the courts will set a review date by which reasonable efforts are expected by the recipient spouse to result in reaching that retraining or educational goal. The court will then look at where that spouse is in mitigating reducing their dependence on support from the other spouse and adjusting that amount either because the recipient spouse has successfully acquitted his her or her duties to retrain, to re-educate, and to become more financially independent.
Or, on the darker end of the spectrum, the courts can reduce support because a spouse has been given an opportunity to rehabilitate themselves and has not, in good faith, embraced that opportunity. So typically, to avoid trying to project too far out into the future, a support award or support award on agreement can be made for a limited time and then a revisit, a wait and see type of approach can revisit that support arrangement and tailor it however it needs to be tailored a few years down the road.
Under what conditions might a judge order indefinite or permanent spousal support? How common is this in California and Nevada?
It’s not common any more except in a limited class of cases. I think that the courts have become more gender blind. I think the courts have backed away from marriage being viewed as a possible basis for one spouse’s retirement from the workforce and that spouse support will now take the place of individual industry and effort and earnings. So permanent indefinite awards of support are uncommon. There are common instances where people divorce at a much later stage of their life, where a judge might look into the future and say, “I don’t really see any reason to expect that the financial circumstances of the parties will change and therefore I don’t anticipate a need to automatically revisit these circumstances in the future.”
Most courts will make an order that will, upon a change of circumstance, a material change in either one spouse’s ability to pay or one spouse’s need for support, modifies support at any time. Not directly an answer to your question, is a difference between California and Nevada that is relevant, nonetheless.
In California, the parties can agree to make a support award non-modifiable; cannot be revisited, cannot be changed as to amount or duration. The court can’t order that unless the parties have agreed to it, in which instance the court can approve the agreement and make an order on that.
It is an open question in Nevada whether parties can even agree to a non-modifiable spousal support arrangement that cannot be revisited in the future. So I think in terms of permanent awards, they’re limited to very specific circumstances. I think most spouses will have to expect that their obligation to pay and their right to receive support are going to be subject to either further discussion and agreement between the parties, or further litigation in the future unless you’re divorcing at a very late stage in your life.
Have you seen cases where the payor’s income suddenly plummets just before divorce? Perhaps because they’ve quit their high-level job to take on one in which they earn much less? If so, would alimony and child support be based on what the payer used to earn or what they earn now?
The courts won’t accept an artificial reduction in income as a basis upon which to decide future support obligations of one spouse to another. Most courts are pretty sophisticated in being able to spot that. And if that is one spouse’s divorce planning, if that be the goal of a high-income spouse, that goal being to reduce their income to reduce their exposure to a higher level spousal support, that’s not likely going to succeed.
The courts will either hold the spouse to their historic ability to earn and the courts are empowered to do that. Or the courts will income average to minimize the impact of recent lower income years. Now that being said, sometimes there is a reduction in the earnings of one spouse or the other, or both leading into a period of marital disharmony, into a period of dissolution of marriage, into litigation of the dissolution, and there are legitimate reasons for that.
No matter how many years I practice family law, I hope I never lose sight of the fact that this is as profound and is impacting an experience as most people will go through in their life. I think many years ago Anna Freud did research on the degrees of grieving in life. And grieving over a lost marriage actually was greater than grieving over the death of a spouse because with the death, there was a finality to it.
And in a dissolution or divorce, that finality doesn’t exist. People are distracted. People are not functioning at their best when they’re going through divorces, in most instances. And that would be reflected in their inability to maximize their earnings and maximize their productivity and effectively – productivity at wage earning. So while I would certainly be skeptical of a reduction in income leading up to the time of the divorce, I wouldn’t rule out that there could be instances where that is legitimate and easily explained.
If one party is dragging out the divorce, possibly because of the emotions that they’re experiencing, which you mentioned earlier, can the other refuse to pay spousal support until the divorce is final to give their ex an incentive to settle more quickly?
Assuming that spousal support is being paid during dependency of a family law action by court order – and again, that’s either an order that’s initiated by the court after listening to evidence, or it’s an order that’s based upon a signed agreement of the parties. No spouse can engage in self-help and say, “I don’t like the pace of this proceeding and I don’t like what you’re doing to impede that pace so I’m not going to pay to you, my spouse, spousal support as I’ve been paying.”
If it’s by agreement of the parties, there’s no court order, then sometimes agreements fall by the wayside when emotions and tempers control. You can’t otherwise just decide I’m not going to pay what the court has ordered me to pay. You’d have to return to the court and get the court to issue a new and different order.
Now, that being said, over the last five to ten years, my experience in family law cases in both California and Nevada lead me to conclude that the courts are far more involved now in controlling the pace of cases. The courts will set on their own various dates to review the status of these proceedings, to review when and what circumstances a trial will be set. So I think there’s a lot of accountability of the parties to the courts.
And I think delaying or dragging out these proceedings, whether it be in a mean-spirited fashion or for some tactical purpose isn’t really as much an opportunity today as it may have been at one time in the past.
Can you explain the differences in tax treatment of spousal support versus child support?
Child support is non-taxable. It’s nondeductible by the child support payer and it’s non-tax includable to the child support recipient. This is rooted as best I can explain it in the concept that child support, while paid by a parent to another parent is nonetheless money that belongs to the child. The recipient parent gets child support and holds it at the nature of a trustee for the benefit of the child.
So there is no gain or income to the recipient parent. Child support carries no tax consequence. But that being said, that’s not entirely an accurate statement in that having children gives rise to dependency exemption claims, child care credits. There are tax aspects of supporting a child, but a child support payment from one spouse to another has no tax effect.
In contrast to that, spousal support is tax deductible to the parent who pays it and tax includable to the parent who receives it provided that the support that is paid meets certain requirements of the Internal Revenue Code. And the Internal Revenue Code sets out very clearly that in order for support to be deductible to the payer includible to the recipient, and quite frankly, the Internal Revenue Code doesn’t use the word, “alimony or support,” in its defining language.
As long as those requirements are met, then what we’re looking at is a transfer of income from the paying spouse to the recipient spouse, and it’s the recipient spouse who pays the tax on that. Very different treatment. You haven’t asked me this question, but there is a hybrid of sort called, “family support.”
And family support involves a payment that is for a dependent spouse and minor children without that payment being broken down between how much goes to the child and how much goes to the supported spouse. There are a list of requirements for something to be called family support, but even though there is a portion of that payment that supports minor children, that family support payment would be entirely tax deductible to the payer and entirely taxable and income inclusive to the recipient.
Now all of this being said I want to make clear I am expressing my understandings as a family lawyer of the tax aspects of this and I would want any one of my clients to consult independently with a tax expert on these issues.
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