By Adam T. Kronfeld of Duff & Kronfeld, P.C. on Tuesday, April 17, 2018.
Barring an express agreement of the parties, an award of spousal support may be modified by a Court upon proof of a material change in circumstances warranting such a modification. While the loss of income by the payor is typically a material change, where that loss is voluntary – i.e., the consequence of the payor’s own decisions and actions are that loss of income may not permit a reduction or termination in his spousal support obligation. Thus, one being fired for cause or voluntarily taking a lower-paying job may result in the payor having much less income but the exact same support obligation.
What, then, do we do about retirement?
For quite some time, a support obligor’s retirement has been the subject of a patchwork of court decisions that have been very fact-specific. Someone retiring before the conventional range of retirement ages was typically not rewarded with a modification, assuming they could still work. However, there was no bright line age at which retirement was considered to be legitimate or reasonable. Additionally, even if a Court considered one’s retirement to be legitimate and a material change in circumstances, it could then take into consideration whether the retiree’s assets nevertheless provided sufficient means to continue paying support. Curiously, the Court could not consider the support recipient’s assets as a source for the recipient to support himself or herself.
A new law expected to be signed by the Governor is about to change all of the above and bring at least some standardization to retirement scenarios. The law, known as SB540, changes the existing spousal support statute to specifically address when retirement is automatically considered a material change in circumstances and how the courts should consider it in modifying spousal support. In pertinent part, the revisions to the law state the following:
1. When a court establishes spousal support, it must state whether it has already considered retirement by one or both of the parties, whether presently or in the future;
2. When a party reaches “full retirement age,” based on how the Social Security Administration defines that term (around age 67 now), that is automatically a change in circumstances. If the party does in fact retire, then the Court must determine if spousal support should be modified or terminated; and
3. In considering a modification, the court must consider, among other factors, “the property interest of each of the parties” during the period since the last spousal support order.
The final item-considering both parties’ assets – appears to be specifically intended to overrule a case holding that the payor’s assets must be considered in determining whether the payor is still able to pay spousal support. Instead, the courts will apparently be required to consider both parties’ assets. This is a significant change in the law, because it means that another long-established principle is being overruled, specifically that the recipient of spousal support need not invade his or her assets to provide for his or her own personal expenses.
Assuming this bill is signed by the Governor, it will become law and be effective for any motion to modify support based on retirement that is filed after July 1, 2018.
If you have any questions or would like to discuss your legal matter with an attorney, please contact Duff & Kronfeld, P.C.at (703) 591-7475 for a complementary, 30-minute consultation.