Income Based Maintenance Near Retirement?

Frequently clients of advanced years nearing retirement age, may be faced with the prospects of retiring yet still being responsible to pay maintenance and/or child support in the event of divorce. Since at first blush it may seem inequitable to require a retired spouse to provide support consistent with the family's pre-separation standard of living, nevertheless the courts seem to require a retiring spouse to do so, despite the fact that earned income will dramatically decline. This is especially true in marriages of long duration, that span twenty or more years. While it is uncommon for a retiring spouse who is 65 or older to have infant children, the issue of child support is generally not encountered. It is usually a case of determining whether maintenance should be awarded. An examination of case law has revealed that the courts in examining such question, may impute income to a retiring spouse and consider investment income from all sources which may even include separate property.

Several cases in both the First and Second Department have considered this knotty question with somewhat similar results. For example, in Correa-Alvares, 286 A.D.2d 123, 726 N.Y.S.2d 668 (1st Dept 2001), the trial court awarded the wife lifetime maintenance and child support based upon the parties' pre-separation standard of living even though the husband argued that his separate property which was in the form of substantial trust funds should not be considered in directing such an award. The facts of the case bear some exploration. The parties were married for seventeen (17) years and had two children who were aged ten (10) and twelve (12) respectively at the time the divorce action was filed. The wife was the homemaker and primary caretaker of the children. The husband was an investment banker, with his own firm, and had an income of several hundred thousand dollars per annum (the opinion did not state the exact amount), derived from his own business and a trust fund, which was separate property. The trial court awarded the wife $7,000 per month for child support and $9,000 per month for maintenance for three (3) years then reducing it to $5,500 per month for life, for an aggregate amount of $12,500 per month or $146,000 per year. The first three years required an annual payment of $192,000. Despite the husband's objection that the court could not consider the trusts established for his benefit, the court refused to do so, holding that it could consider such separate investment income in arriving at an award for both maintenance and child support. The court went out to find that his trust funds together with his earning capacity was sufficient to enable him to apparently support himself and satisfy both his child support and maintenance obligations.

The award was affirmed on appeal, the appellate court finding that the award of the trial court permitted the plaintiff to resume a lifestyle approximating the standard of living enjoyed before commencement of the divorce action. The appellate court also reflected that the award of lifetime maintenance was entirely proper under the factual predicate, since a consideration of the pre-separation standard of living is an essential component of evaluating the duration and amount of maintenance citing Hartog v. Hartog, 85 N.Y.2d 56 and then added that the wife's ability to become self-supporting in no way obviates the need for the court to consider the pre-separation standard or will it create a bar to lifetime maintenance. Another interesting aspect of the case was that the award of child support greatly exceeded the statutory percentage of 25% because of the defendant's vast trust resources, and other income. Finally the court concluded that lifetime maintenance was necessary because the wife would not be able to achieve a lifestyle comparable to the one she had during the marriage.

A similar result was reached in Loeb v. Loeb, 186 A.D.2d 174, 587 N.Y.S.2d 738 (2nd Dept 1992). In acknowledging that the duration and amount of maintenance is a matter for the sound discretion of the trial court, it found that "Where lifetime maintenance has been awarded, the recipient spouse has almost invariably been an older person, often in bad health, and the supporting spouse has been in a strong financial position." Here the evidence supports the court's finding that there was a great disparity between the husband's and wife's income and the wife's medical condition and age justified an award of lifetime maintenance, despite the husband's heated argument that lifetime maintenance was inappropriate and should not be awarded because he was nearing retirement age and would soon leave his employment. However, a fatal flaw was found in his testimony since he failed to testify that he did not have the option to continue his employment if he so desired. The court found this lapse in proof to be a controlling factor. In affirming the trial court's determination, the appellate court reflected that the court below was entitled to draw reasonable inferences including the timing of the husband's decision to retire in relation to the trial, and discredit his purported reasons for retirement. It approved the court's conclusion that the husband's retirement should not affect the wife's entitlement to lifetime maintenance. There was no medical testimony to support his further contentions that his physical condition mandated his retirement and opined that such argument should be disregarded. Then the court restated what appears to be the current trend in the Second Department that the amount and duration of maintenance can be based upon a spouse's established earning capacity rather than his actual earnings, and cited Kay v. Kay, 37 N.Y.2d 632 and Rosenberg v. Rosenberg, 155 A.D.2d 428, in support of such proposition.

Other cases have reached similar, if not identical conclusions. For example, in Constantino v. Constantino, 639 N.Y.S.2d 936 (2nd Dept. 1996), lifetime maintenance was awarded to the wife, illustrating the evolving trend to consider not only the standard of living and ability to pay, but the disparity of earning power between spouses. See also, Feldman v. Feldman, 605 N.Y.S.2d 777 (2nd Dept. 1993), where the court explained the parameters in fashioning an award as follows:

"Turning next to the issue of spousal maintenance, the husband asserts that the Supreme Court's award of lifetime maintenance to the wife in the sum of $1,000 per week exceeds both his ability to pay and his wife's reasonable needs. It is well established that the amount and duration of maintenance is a matter committed to the sound discretion of the trial court (See Wilner v. Wilner, 192 A.D.2d 524, Loeb v. Loeb, 186 A.D.2d 174). In fixing the amount of such an award, a court must take into account the financial circumstances of both parties, including their reasonable needs and means (See Raviv v. Raviv, 153 A.D.2d 932; Foy v. Foy, 121 A.D.2d 501. A court must also consider the paying spouse's present and anticipated income, the payee spouse's present and future earning capacity, and both parties' pre-separation standard of living (See, Raviv v. Raviv, supra)."

A review of both Allen v. Allen, 275 A.D.2d 225, 712 N.Y.S.2d 496 (1st Dept. 2000) and Walker v. Walker, 255 A.D.2d 375, 680 N.Y.S.2d 114 (2nd Dept. 1998), is particularly revealing. There, the pre-separation standard of living was held to be an essential component in determining the amount and duration of maintenance.

The matrimonial trial courts continue to struggle with the amount and duration of support awards. Certainly, results may vary from case to case, and from judge to judge. Since the passage of the equitable distribution statute, those attorneys representing the monied spouse seek to have the court impose a limitation in time equal to perhaps one-half of the length of the marriage, while those representing the non-monied spouse attempt to obtain lifetime maintenance. It is this writer's opinion, that the use of the phrase "lifetime maintenance" is a misnomer and should be avoided by the attorney seeking a lifetime award. Rather, the request should be made for "non-durational maintenance" which of course can be terminated by the death of either of the parties, the remarriage of the non-monied spouse, the recipient spouse living together with an unrelated male or female and holding themselves out as husband and wife, or a successful application for modification based upon extreme financial hardship. Using this euphemism might best achieve the result sought. Awarding non-durational maintenance, may be more palatable for a court since it most certainly can be modified during the lifetime of the recipient spouse for the reasons set forth above. The award of maintenance will certainly be heavily weighted upon the pre-separation standard of living. Today it is clear that all income derived from separate property will flow into the pot when deciding a fair and equitable amount, and the duration, of maintenance, the end, it will depend upon the circumstances of the case and of the respective parties.

Elliot Samuelson is the senior partner in the Garden City matrimonial law firm of Samuelson, Hause & Samuelson, a fellow of The American Academy of Matrimonial Lawyers and master of The New York Family Law American Inn of Court. Mr. Samuelson can be reached at (516) 294-6666 or [email protected].

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