Understanding Spousal Support in Divorce Proceedings | Episode 180

Navigating the rocky terrain of divorce is challenging, but understanding the complexities of spousal support can feel especially daunting. Ryan Kalamaya and Amy Goscha provide a roadmap through the world of alimony, or as it's known in Colorado, spousal maintenance. We tackle the emotional issues that often stir around this topic, and we shed light on the purpose of maintenance - to balance the needs of both parties after their marriage ends. 

The conversation doesn't stop at the purpose of maintenance, Ryan and Amy delve deeper into the pressing questions of how much should be paid and its duration. They discuss how Colorado's advisory guideline impacts the period of support, and the range of factors courts consider when awarding it. They also share strategies on how to argue against maintenance being awarded, by exploring options such as property division and providing income-producing assets. 

Finally, they unravel the intricate relationship between property division and alimony in divorce settlements, and illuminate the complexities involved in determining spousal maintenance in divorce cases. Highlighting the role of income and the importance of visually presenting quantified expenses, they also underscore the need to consider taxes, cash flow, and the potential effect of property values on alimony.  Through this episode, we aim to equip you with valuable insights into the intricacies of spousal maintenance in divorce cases and empower you to negotiate a fair and sustainable divorce settlement.

What is Divorce at Altitude?

Ryan Kalamaya and Amy Goscha provide tips and recommendations on issues related to divorce, separation, and co-parenting in Colorado. Ryan and Amy are the founding partners of an innovative and ambitious law firm, Kalamaya | Goscha, that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado.

To subscribe to Divorce at Altitude, click here and select your favorite podcast player. To subscribe to Kalamaya | Goscha's YouTube channel where many of the episodes will be posted as videos, click here. If you have additional questions or would like to speak to one of our attorneys, give us a call at 970-429-5784 or email us at info@kalamaya.law.

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DISCLAIMER: THE COMMENTARY AND OPINIONS ON THIS PODCAST IS FOR ENTERTAINMENT AND INFORMATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROVIDING LEGAL ADVICE. CONTACT AN ATTORNEY IN YOUR STATE OR AREA TO OBTAIN LEGAL ADVICE ON ANY OF THESE ISSUES.

Transcript

Ryan Kalamaya: 0:03

Hey everyone. I'm Ryan Kalamaya.

Amy Goshca: 0:05

And I'm Amy Goscha.

Ryan Kalamaya: 0:07

Welcome to the Divorce at Altittude, a podcast on Colorado family law.

Amy Goshca: 0:12

Divorce is not easy. It really sucks. Trust me, I know. Besides being an experienced Divorce attorney, I'm also a Divorce client.

Ryan Kalamaya: 0:20

Whether you or someone considering Divorce or a fellow family law attorney, listen in for weekly tips and insight into topics related to Divorce co-parenting. And separation in Colorado. Welcome back to another episode of Divorce at Altitude. This is Ryan Kalamaya. This week, we're going to be talking about money and specifically, we're going to be talking about spousal support, alimony, maintenance. In Colorado, we have different terms and we're going to talk about all those different terms and just kind of give it a high level overview of this topic. It tends to be an emotional issue and I am joined by my esteemed partner, Amy. How are you doing?

Amy Goscha: 1:05

Good. I'm doing well and maintenance is a very interesting topic, so I'm very excited to talk about this one.

Ryan Kalamaya: 1:13

Yeah, so just as a starting point what is spousal support and alimony? Are they the same thing and why do we have these different terms? Yeah, it's

Amy Goscha: 1:23

the same thing. In Colorado, we refer to it, and the statute refers to it as spousal maintenance. So that's quote unquote the legal term in Colorado. Spousal maintenance really, like when you're married, and if you're married for a long time, there's a certain standard of living, or someone might be the earner, someone might not be, and so when you're coming out of a divorce, in order to equalize out the, I guess, needs of the parties taking, not into consideration child support. There sometimes is a need for spousal maintenance.

Ryan Kalamaya: 1:55

We have a whole, we have a whole series that I've started breaking out the various topics on spousal support or maintenance. And so if people want to listen to those, there are some more detailed, but we thought it would be helpful to have a. conversation with Amy and me to talk about the various kind of issues in one episode. But really what we're talking about is if Eric and Melanie Wolf have a disparity in their income that. Eric will pay Melanie spousal support or spousal maintenance and it's to kind of get to her at a lifestyle that is similar to what she enjoyed during the marriage but how That is obtained and what, whether her lifestyle should be exactly the same is generally the kind of issue that that causes a dispute. So we talk about duration and the amount. So the first thing is let's talk about the duration or for people that don't know what are we talking about when duration?

Amy Goscha: 3:03

So when we're talking about duration. What the court is really looking at in Colorado, we have an advisory guideline. And I know that, for listeners that advisory guideline only goes up to a combined gross income of 240, 000. But it still is an advisory guideline and it sets out kind of duration calculations. So, what you're really looking at is length of marriage. So, like in Colorado, you have to be married at least three years usually to even qualify for spousal maintenance. Now, there's certain I guess cases where, there could be a circumstance where you have temporary maintenance, even if you've been married less than 3 years but it goes all the way up to if you've been married for 20 years. The guideline says that maintenance has to be awarded for at least 10 years. And it can be awarded for

Ryan Kalamaya: 3:52

more time. Right, and if we go back to there's temporary maintenance, and that's during the divorce where Eric will be paying Melanie. Particular amount, but then you also have to take into consideration that there's gonna be joint expenses. So the mortgage that Melanie is living in the marital house, if Eric is paying for that marital expense to make, preserve a marital asset during the divorce, that is going to impact temporary maintenance. And then, permanent maintenance. Although it's not, it's never or not, it is rarely. If ever to actually be called permanent. I know Amy, you had just recently a contested case where that was an issue. And we'll talk a little bit about that, but really it's maintenance. What we're kind of really focusing on is after the divorce. So, Amy, for the Eric's of the world, talk to me a little bit about some strategies or things that we typically argue if we're arguing against. Maintenance being awarded.

Amy Goscha: 4:54

So what, if I'm Eric's attorney, what I'm really focused on is the property and how it's getting divided. So we have the property statute that says you have to figure out first if you can alleviate a need for spousal maintenance by dividing property. So I'm looking at how can I divide property even if It's quote unquote an unequal split to alleviate the need for maintenance, or maybe I'm looking at what assets can I provide to the wife that are income producing in order to alleviate her need as she moves on to what her lifestyle looks like after the

Ryan Kalamaya: 5:30

divorce. Yeah, and I think it's helpful for people, and I probably should have started here, is to there are relevant factors under the statute. You mentioned the formula, the guideline for both duration, but there's also a formula or a guideline for the amount. Correct. Really, when we were, the court's also supposed to consider the following factors from 14 10 114, which is the statute on maintenance and that the first is the financial resources of the recipient's spouse. So, and we, just for simplicity's sake, we're not being sexist here, but, in referencing Melanie as the recipient, I mean, the vast majority of maintenance cases do has a male paying the female, but there are circumstances where it goes the other way. I mean, we're, and we're seeing more of that too as women executives come to kind of an age or an earning capacity where, maintenance is really an issue, but. The first factor is the financial resources of the recipient spouse, including the actual or potential income from separate or marital property and the ability of that spouse of Melanie to meet her own needs independently the second topic or factor is Melanie or Eric rather his financial resources. So what's the, where's the, where are the property properties or assets he's going to get? And are there any of them going to be income producing? And then his ability to meet his own. Needs while paying maintenance and we'll come back to that because those some of the factors are highlighted by one spouse or the other, depending on the circumstances. But then the 3rd factor is the lifestyle. The 4th factor is the distribution of marital property, including, as you said, whether additional marital property may be awarded to reduce or alleviate the need. For maintenance. In short, judges will sometimes give a disproportionate amount of property to Melanie in lieu of, or instead of giving her maintenance, or to reduce her need for maintenance. And the kind of the reality Amy, and I think you would agree with this is that. Judges, they generally, they don't like maintenance for a variety of reasons. A lot of, I've had, one judge say it's just an antiquated system and, with two working households that's just kind of the modern trend. But the other kind of practical reality is that maintenance results in disputes in the future because there can be modifications. There can be arguments about he didn't pay me. And judges don't like dealing with those modifications. Generally, they just want a clean break. But the fifth factor is, the court's supposed to consider that both parties as income, their employability and also, the ability that they can work and considering the education. And other things, whether or not they're taking care of a child. And then the 6th factor is whether 1 person has had a historically, higher earning capacity or income than what has been reflected at the time of permanent orders. And also, whether or not someone worked overtime or had a 2nd job. The seventh factor is the duration of the marriage and then we get into kind of some of the other esoteric or not esoteric, some of the other kind of factors and that's how long and how much did Eric pay Melanie in temporary maintenance during a divorce. And, Amy, we frequently see Eric will say, well, I want a dollar for dollar credit. I want a month for month credit on, the maintenance that I paid during. The temporary during the divorce and there can be arguments over that. Then we get into the age of and health of the parties and significant economic or non economic contributions and then finally, the taxability or other issues. But Amy, from my experience, that was kind of a long winded kind of setting the table, the person that is you know, arguing against maintenance. Eric, he will often say, listen, I can't afford to pay maintenance. I've got my own expenses. I've got to pay for, my own mortgage, my own rent, and especially with the cost of living. He'll really argue that it just wasn't, it's not feasible. And he'll also turn around and say, Melanie's perfectly capable of earning her own income and really focus on the the education or skills that She has and that's, sometimes persuasive, especially in today's labor market and really he'll tone down or reduce the actual lifestyle, but anything else in terms of against maintenance, Amy, I mean,

Amy Goscha: 10:10

I think also I focus on that. It's just more expensive when you have two households. So if, Melanie is really focused on. Keeping her lifestyle as is, I mean, you're getting divorced and it's just the reality. It's not going to be exactly, living in a two, if there's two income household. So that's another reality and something that I remind the judge of. Yeah,

Ryan Kalamaya: 10:33

so Amy, for situations when, where Melanie's asking for maintenance, what are the, general arguments or things that, that lawyers highlight in arguing for maintenance

Amy Goscha: 10:45

awards? I mean, for maintenance awards, especially when there's children involved, usually one parent might have had to take a gap in employment. And so it's really looking at. I really look at what is my client's employability, what does that really look like, like she, in this case, Melanie Wolf, will need some time to, get back up to a certain level to earn and also I do believe that I also focus on the fact that the earner over time can just make a lot more and can put more into retirement. And so to bridge that gap, as Melanie, who is not earning she also needs to be able to plan for retirement and she's not going to be able to put, she's not going to be able to make that up as quickly. So I usually, highlight those things, but also really focusing on a budget. That's it. And what exactly figuring out what her need is and showing the court that like dividing property she doesn't just have to spend her marital property to sustain her. Her living expenses, every month and also focusing on that Eric can actually. Pay a certain amount each month and meet his need.

Ryan Kalamaya: 11:57

Yeah, we'll come back to that interplay between property and maintenance, but for Melanie, I think it's, it depends on the circumstances. So, if they had a fairly extravagant lifestyle, then I would, I really highlight the expenses. How much did they spend historically and they could have spent, I mean, Amy, you and I see, we see a lot of people that spend beyond their means. And so you really kind of lean into that of the expenses. Hey, what's good for the goose is good for the gander. Like they, they spent a lot of money. And now Eric is all of a sudden getting, he gets a bad case of divorce, flu, or he can't work. And the, he no longer has the income that he has. And sometimes that can be true, but really we're going to emphasize the expenses and how you present that, whether it be graphs or presentations, visuals, I think. That is is helpful going through the credit card statements, going through the bank statements and quantifying what did they spend? And is that over the last year? Is that over the last three years? I think that's really important and having the pictures the pictures from Hawaii, the European trip where the kids, are in front of the Eiffel Tower and saying, that she should be able to continue to maintain this. On the flip side, If they had a fairly, if the income outstripped or the income was exceeded the expenses, Warren Buffett is one of the kind of most famous examples. The guy's a, a billionaire, multi, multi billionaire, but he lives a. Fairly kinda Spartan lifestyle, all things kind of considered. And so in that circumstance, I'm really gonna focus on the income Eric is making, just grip loads of money and he's going to, like you said, he's gonna be able to continue that in the future. And so you would show, he makes a million dollars a year and yeah, okay, he's got a mortgage, what is his mortgage and how is that compared to Melanie. But I'm really gonna focus. On the income and but also there's going to be some concerns I'm going to know that Eric's attorney is going to focus on Melanie's employability, so she's got to do some things to kind of mitigate that and at least show that she's trying or that she's doing something and so but i'm really gonna make Try to make the case about Eric's income or Melanie's expenses. And it kind of, depends on those circumstances. If it's a long term marriage, I'm going to talk about all the things that they did, the waking up in the middle of the night to take care of the kids, which resulted in them not really having a job or, Eric saying, Hey, you stay at home with the kids. I don't want you to work. I want you to, volunteer, do whatever. And I really kind of focus on those things. Yeah,

Amy Goscha: 14:45

I think I'd also mention, in the budget when I'm putting it together for Melanie, I mean, a lot of times. They don't know exactly what their expenses are going to be. For instance, if they're keeping a property really. Focusing on what is the maintenance costs, really building in, like what, you need to put money away for retirement. So making sure that. All of those things are in the budget.

Ryan Kalamaya: 15:08

Right, now moving on to the interplay between property division and alimony. One of the things I think that lawyers or the clients don't really understand is when I sit down in front of my computer and I start kind of Figuring out, all right, like who's going to get what I'm thinking about both the value as well as the income Of a particular asset. So if there's a for example a rental property, erica Melanie have you know Some house up on the hill in boulder that generates income because they rent it out to every year to college students You know that is that something that? Melanie could have a property manager take care of, and is it going to result in in income and vice versa? If there's a, an investment account, a brokerage account that can generate, income from dividends. I mean, right now at the time of this recording we have, cash is generating 5 percent in interest because of the interest rates. And so if Melanie is allocated a ton of cash. That is going to be different than a house, a marital house, because that marital house, it's not generating income, but if her expenses, if the marital house is going to have, a mortgage with a low interest rate, I might counsel Eric. Hey. Let her stay in the house for a couple years and lend her your credit because if she's in there at a, a low mortgage rate, that's going to reduce her expenses, which then you know, ameliorates or mitigates your maintenance exposure. So, Amy what are the things that you do when you look at property division when you're going through a strategy with a divorce in negotiating that settlement?

Amy Goscha: 16:53

I mean, it's really looking at income producing assets, or how do we alleviate the need? That's really what I'm looking at, but I'm also, on the property side, it's not exactly related to maintenance, but you're also having to look at. Tax issues, is there a. Is there a big, basis issue that you need to be dealing with or capital gains? What's what could be looked at as income. On a tax return, but really isn't going to help with alleviating, a need on a month to month basis,

Ryan Kalamaya: 17:26

right? And you can get into cash flow, which is different than income or taxable income. Because if that rental income property in Boulder that I mentioned, there's going to be depreciation. But really, if we're looking at what the cash flow is to Melanie, that might be something that I want to focus on is the cash flow as opposed to the. Kind of taxable income. And so, but what you were saying, Amy, is that if there's a lot of taxes that are going to be incurred for Melanie to liquidate and actually obtain the income or benefit from the income, that's something that, certainly we're going to take into consideration, but, retirement accounts they, that's something I might have Eric say, take. The retirement accounts because that's, although it's, that's money, it's value. It's not going to really help Melanie if they're in their forties giving her retirement accounts. We might want to move some other assets over to her if we're trying to reduce his maintenance exposure because the retirement accounts aren't really going to do much for her, her maintenance. But if they're in their fifties or six, I mean, if they're in their late fifties and sixties, then you could say, Hey, she's going to. be able to use this money from a retirement account in three years. So we're going to, that reduces her need for retirement in terms of that duration.

Amy Goscha: 18:48

Right. Or even maybe, in certain circumstances where there's multiple properties. Giving the person who doesn't make the money a property that doesn't have a mortgage on it. Like that's another way to alleviate an expense on that side.

Ryan Kalamaya: 19:01

Yeah. And it's not in the statute, Amy, but I think it would be helpful for listeners to understand what would like what are the various. Theories or motivations behind, maintenance? Because I do think that this matters for the judge because in, in different examples we mentioned about, waking up in the middle of the night and taking care of kids, but what are the kind of philosophies or theories behind, maintenance, just so people have an idea of sometimes what's going on in the judge's head? I mean, I

Amy Goscha: 19:31

think that not just because it's a long term marriage, but, there's rehabilitative maintenance, so if you're the lawyer who's arguing for that, you're really looking at saying, my client really needs a runway for a short period of time to get on their feet. So that's, one, I guess, type of spousal maintenance. And I

Ryan Kalamaya: 19:52

think it's like, if Melanie is going to go back to school and hone her skills, or she's going to enter the workforce again, and she's going to start at entry level, but we know that she's got a clear path to generate, become self sufficient and generate her own income, then the purpose, it's what we typically. will call rehabilitative maintenance. I mean, the judges rarely use that, but it is, it's just something that it, it makes sense and kind of falls into a particular kind of bucket. But if we have a permanent maintenance situation, what are the theories behind that, Amy? I referenced there was kind of a teaser there at the beginning. You, you had dealt with that. And what are the kind of arguments for quote unquote permanent maintenance? I

Amy Goscha: 20:41

mean, permanent maintenance, I mean, you're really looking at someone over the years who, maybe they have a disability, they're not able to work, over the years, they're really going to be flatlined. They can't qualify for rehabilitative maintenance because Most You know, five years from now, they're going to be in the same circumstance that they are now. An example I had in a case was a professional lost her ability to do her profession, because of health reasons. And so, she's on long term disability, and she's going to be until age 70. There's no, she's going to have the same health circumstances. So those are the types of cases that we're looking at when qualifying for permanent maintenance.

Ryan Kalamaya: 21:24

Yeah, and the other example and there it's becoming increasingly, rare it's it's not unicorn. But I mean as people get married later in life I mean the statistics are you know, people are getting married far later in life, the Millennials and in that generation, they're just waiting and and we referenced earlier There's more to income households, but they kind of leave it to beaver traditional Long term 30, 40, 50 year marriage where the wife just never worked and they're going through a divorce And they're in either they're late 50s or 60s we have a whole episode on a gray divorce where we talk about the kind of tension of maintenance in a gray divorce and also we have a episode on retirement in a divorce, but those are the circumstances where, you know, if you have someone that is just continuing to work, I mentioned Warren Buffett, he's still working. And like it, and that might be a situation where there's permanent maintenance because the wife, yeah, she could go and work at Walmart or some entry level, but it will never, ever be the same. as what the lifestyle that she enjoyed and there's, there's, there was a understanding during their marriage that was just how it was going to be. So that is another example of permanent maintenance. And then the final one is reimbursement. And so it could be that Melanie helped support Eric in med school or In as a lawyer and now, she really kind of helped him out and then now he's just, killing it. So anything more on reimbursement or that kind of concept Amy?

Amy Goscha: 23:04

I Mean, also reimbursement. I mean, I know that we have attorney's fees is separate, but it's really expensive to go through a divorce. So part of reimbursement could also be. What did it cost to go through the divorce so that's something I think about.

Ryan Kalamaya: 23:21

Yeah. Now switching gears in terms of modification or termination of support, I referenced earlier judges generally look to ways where they don't have to deal with these modifications or requests for termination, but how does one, what, how does modification and termination, how does that fit into our topic here Amy? Yeah. Absolutely.

Amy Goscha: 23:40

So, if you, a lot of times as lawyers, we try to reach agreements on contractual non modifiable maintenance, where that means the court is divested of the jurisdiction to change the maintenance. However, if you go to court, the court can only award modifiable maintenance. So, if you go to court and the court says, Okay, Eric, you're going to be paying Melanie 5, 000 per month. The court might say for five years, the court might not even put a timeframe on it. So the parties are going to be in a circumstance where down the road Melanie or, well, Eric is going to have to come back to the court to ask for the maintenance to be, term terminated. And so that plays into, full retirement age, and there's some, like points on that and the statute,

Ryan Kalamaya: 24:27

right? And, I think it really depends on when we talk about substantial and continuing changes, which is, what the statute requires when people, what is continuing? I had a client reach out and say. Hey, I just lost my job and I'd like to terminate maintenance or modify maintenance. And I remember, having a town hall with the judges in the 5th judicial district in Eagle County and Summit County, and it was during the pandemic and there were all people were losing their jobs all across and the judges said, hey, hold on before you guys start filing all your motions to modify. We want to remind you it needs to be a continuing change and we don't know is this just a temporary short kind of blip, but, those modifications and the reality is that we're getting into a cost benefit analysis when, you're involving lawyers, how much are you going to pay a lawyer to modify or to fight versus what is likely going to happen? And, termination of support can be Because, someone got married that from a legal perspective is a termination or there might've been some milestone where, you know, Melanie Wolf her father, unfortunately passed away and she inherited a bunch of money or, Eric had, has good information, Melanie's, she is now earning, she got a significant raise and there might be a reason that, she no longer needs maintenance.

Amy Goscha: 26:02

Right. And I mean, I think the biggest thing to understand is the standard is pretty high, to try to modify maintenance. And so that kind of goes into the uncertainty and special maintenance awards, like a few years ago when they passed the advisory guideline, it was to try to help so clients could have a better understanding across the judicial districts as to what they could expect regarding maintenance. But there's just so many factors that go into it. Right. That it really is not, clear cut a lot of times.

Ryan Kalamaya: 26:35

Yeah, I had a conversation with a well known attorney just the other day and he said he went to trial on maintenance and ended up losing. And I think even though there's this. Supposed predictive factor or of, the guidelines, it still can really matter. I mean, especially when you deal with these high asset and complex divorces, whether if Melanie, if Eric earns. A substantial, he earns a million dollars a year and over the time they've, their marriage, it's a long term marriage and they've accumulated millions of dollars, 30 million of assets and Melanie gets, let's say 15 million. But the reality is Eric's still earning a million dollars and Melanie says, listen, even though I'm getting 15 million. That is not sufficient to meet my lifestyle. I mean, we spent a million dollars a year and it was, we were able to make up the difference because of the income that we received from our assets, but those assets are not now being split in half and Eric's got all his income. I should get a share of that. And you can put up. on that and whether Eric agrees, I mean, he's going to say, no, you don't need maintenance. You have plenty of money, Melanie to generate income. If you get yourself a decent financial advisor and you can earn five, 6%. You know comfortably you have enough and you can also you know work you can see how those the differences of opinions on what eric owes melanie can Result in some, pretty big numbers on either side. It could be a zero It could also be ten thousand dollars a month for ten years and you know those The uncertainty of going to trial on that is, I think, it's still a reality that we have to deal with as family law attorneys, Amy. Exactly. I agree. So, and I think a lot of people just overlook the guidelines, not overlook the guidelines, overlook they just kind of embrace the guidelines and they say that's what it is. And yes, there are judges. Where if it's a, something where Eric is a W 2 employee, he makes 200, 000 and, there's at most 40, 000 per year of imputed income for Melanie, well, then the guidelines are going to apply, but. I mean, I think people just they overlook how complex maintenance is, and there's just a lot of uncertainty going into the negotiations on that. And the other final point is it's, it tends to be emotional. Eric does not want to cut a check or to send a monthly amount to Melanie. And even though, it could just be a dollars and cents thing. It's often more than that. Amy, wouldn't you agree? Yes,

Amy Goscha: 29:31

absolutely. Very emotional. People want to move on with their lives and even the Melanie who's receiving the check, like she might want just a lump sum payout because she wants to be done and she doesn't want to see that check in the mail from her ex husband every month.

Ryan Kalamaya: 29:45

Right. Or she doesn't feel comfortable managing her expenses or and, or managing her money. So I've seen a lot of women like Melanie who would say, I just want the monthly check. I just want the 10, 000 and they'll leave, money on the table where they just want to guarantee thing. And because they had a lot of uncertainty, a lot of ups and downs, and they just want, and that oftentimes we'll say, Eric will say, I'll guarantee you 10, 000 a month or whatever it is and Melanie will be fine with that because she leaves money on the table, but the that is a situation where people you know that they're locking in certainty and there can be some real value there in their negotiations, but I think we've covered a good. Amount of ground here on alimony. Amy Until next time, thanks for joining us on Divorce at Altitude. hey everyone. This is Ryan again. Thank you for joining us on Divorce at Altittude. If you found our tips, insight, or discussion helpful, please tell a friend about this podcast. For show notes, additional resources or links mentioned on today's episode, visit Divorce at Altittude dot com. Follow us on Apple Podcasts, Spotify, or wherever you listen in. Many of our episodes are also posted on YouTube. You can also find Amy and. Law or 9 7 0 3 1 5 2 3 6 5. That's aaa.