New Year, New Rules

As we say goodbye to 2015, we in the matrimonial bar say hello to new laws about maintenance.  Before we explore what the new law is all about, let’s review what the law was prior to the new statute.

First, some basics about maintenance:  “maintenance” is also known as spousal support (fka alimony).  In New York, maintenance can be awarded by the Supreme Court within the context of a divorce action, or by the Family Court where the parties are still married.  The statute that the Supreme Court applies for awarding maintenance is the “Domestic Relations Law,” whereas the statute that the Family Court applies is the “Family Court Act.”  The language concerning maintenance in each statute was different, which resulted in Supreme Court applying one standard for deciding maintenance and Family Court applying another.

In 2010, New York significantly changed its laws concerning the payment of maintenance.  Up until that time, whether a Court awarded maintenance was discretionary. In other words, the Court would decide whether maintenance was appropriate and, if so, how much should be paid and for how long; this decision was based on a consideration of a series of statutory factors (for example, the age and health of the parties, the length of the marriage, the ability of one spouse to be self-supporting, the ability of the spouse to pay maintenance, etc.)[1].  Since maintenance was discretionary, there was tremendous uncertainty as to what a Court would do for a client that was seeking maintenance.

The 2010 maintenance statute (Domestic Relations Law Section 236 Part B) introduced a formula that the Supreme Court is required to apply whenever a request is made for “temporary maintenance” (i.e. maintenance that is paid while the divorce is pending).  This formula is based on the incomes of each spouse, and “income” is defined by statute.   The statute imposes a “cap” on the amount of income that can be used for calculating maintenance awards.  Otherwise known as the “income cap,” this amount was set at $543,000.  So, for example, if the spouse being asked to pay maintenance earned $750,000 annually, the Court could only use $543,000 of that spouse’s income to calculate the temporary maintenance award. The amount of maintenance calculated pursuant to the formula is presumed to be the amount that should be paid; however, the Court retained discretion to adjust this amount, and whether to use income above the cap, through the consideration of numerous statutory factors.

While the 2010 legislation did provide clarity as to what a client could expect for temporary maintenance, it did not resolve any uncertainty about what that same client could expect in maintenance after the divorce.  There was no formula for “post-divorce” maintenance (i.e. maintenance paid after the parties are divorced).  Post-divorce maintenance was entirely discretionary.

There were also numerous other problems with the legislation, including the fact that it did not apply to a spouse seeking maintenance from the Family Court.  So if a person wanted maintenance (but not a divorce) and went to Family Court for relief, that person could not take advantage of the statutory formula because the 2010 legislation was not made part of the Family Court Act.  As you can imagine, right out of the gates, matrimonial and family law practitioners and other stakeholders began advocating for amendments to the 2010 legislation.

new-years-day-1114516Although it took five years, in 2015 the legislature finally passed comprehensive legislation to correct problems surrounding the maintenance statute.    On September 25, 2015, Governor Cuomo signed this legislation into law.  The law that pertains to temporary maintenance took effect on October 26, 2015, and applies to actions commenced on or after that date.  However, all other provisions of the new law will take effect on January 25, 2016 and applies to actions commenced on or after that date.  Pages could be written about the new statute, how it has changed from 2010 and how it applies, but here is a brief summary of some key changes:

  1. The Court must still apply a formula, but the formula now applies to temporary and post-divorce maintenance. The Family Court must now also apply the same formula.
  1. The income cap which is used to calculate maintenance was reduced from $543,000 to $175,000. The purpose of the reduction is to bring the income cap in line with what the majority of New Yorker residents earn annually.
  1. Any child support that is paid is taken into consideration when the Court is calculating what the maintenance award should be. When child support is paid, the formula applies different percentages to the payor and payee incomes.
  1. The Court shall now consider and allocate, when appropriate, the parties’ respective responsibilities for paying other family expenses. Prior to the new law, it was uncertain who had the obligation to pay the carrying costs for the household or other expenses.
  1. Maintenance is to be calculated before child support because maintenance will be subtracted from the payor’s income and added to the payee’s income when computing child support.
  1. The statute expressly provides for a modification of maintenance based upon the retirement of the payor spouse and allows the Court to consider retirement assets and eligibility age of both parties when it is considering a post-divorce maintenance award.
  1. When considering a request for post-divorce maintenance, the Court has a durational guideline that it may refer to for deciding how long maintenance should be paid. The duration of maintenance is tied to the length of the marriage. For example, if parties have been married for 10 years, then the Court may order post-divorce maintenance to be paid for up to three years after the divorce.  Again, this guideline is advisory  The Court retains a lot of discretion as to how long post-divorce maintenance should continue and still must consider the statutory factors in fashioning any award.
  1. “Enhanced earning capacity” as a marital asset is eliminated. Prior to the new law, a degree or license earned during the marriage was considered a marital asset and its value (measured as enhanced earning capacity) could be equitably distributed as part of the divorce. This concept created a quagmire for Courts and litigants.

As we make our way through 2016, it will be interesting to see how the Courts begin applying the new law and what impact that application will have on our clients.  For more information about the 2015 maintenance statute, contact our office.

[1] These are the factors that the Supreme Court would consider and are set forth in the Domestic Relations Law.