Divorce at Altitude: A Podcast on Colorado Family Law

Understanding Contractual and Modifiable Spousal Support in Colorado Divorces | Episode 183

December 26, 2023 Caitlin Geary Season 1 Episode 183
Divorce at Altitude: A Podcast on Colorado Family Law
Understanding Contractual and Modifiable Spousal Support in Colorado Divorces | Episode 183
Show Notes Transcript

This episode is a deep dive into the complex world of contractual and modifiable maintenance in Colorado divorces, using the hypothetical case of Eric and Melanie Wolf to make this concept relatable. Ryan Kalamaya discusses the predictability and certainty that contractual maintenance can provide, as well as its inflexibility in the face of changing circumstances. 

Not forgetting the other side of the coin, he also delves into the flexibility of modifiable spousal support, showing how it can adjust to significant and ongoing changes. But remember, with this flexibility comes uncertainty. We'll help you weigh up the pros and cons of each option, underscoring the importance of considering your unique circumstances and future plans before making any decisions. 

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.



Ryan Kalamaya:

Welcome to Divorce At Altittude, a podcast on Colorado family law. I'm Ryan Kalamaya. Each week, along with my business partner and co-host, Amy Goscha, or an expert, we discuss a particular topic related to Divorce or co-parenting in Colorado. In addition, we have created a short series of lessons that will take you through the legal process of Divorce and answer your questions from simple to complex. Divorce isn't easy. The end of a marriage, especially when children are involved, brings a great deal of loss and change. We hope these practical tips and insights will help you on your journey to a new. And better life. This is a how to episode on the difference between contractual and modifiable spousal support or maintenance in a Colorado divorce. Now, let's take our hypothetical divorce clients, Eric and Melanie Wolfe. Let's say that they are negotiating their divorce agreement, and they've already divided their property because, as listeners no, you first need to divide property before you can even start discussing maintenance, but then they finally get to the issue of maintenance and they start discussing whether it should be contractual or modifiable. Let's dive into those. Terms and what they mean in a little bit more detail. First, let's talk about contractual maintenance. Contractual maintenance is an agreement. It's a contractual agreement thereby the name and where it comes from. But contractual maintenance is something that the Eric and Melanie agree to, and it can be both for the amount, it can also be for the duration. It can also be both. So contractual maintenance is it's explicitly written into their divorce agreement and can only be obtained contractual maintenance through an agreement. The judge or going to trial, a court can't order contractual maintenance. Now, what it means is that neither party can request an increase. or a degree decrease or some sort of modification in the future. So let's get into the advantages, one of which you can probably predict and that is that it's predictable and there's certainty and finality to it. There's not going to be any sort of dispute or at least over the amount or the duration in. The future and this type of maintenance, contractual maintenance, it allows the parties to plan for the future without any sort of surprises regarding the financial support that they're receiving. Contractual spousal maintenance, it can play a significant role. with people qualifying for refinance or mortgages. So if Melanie Wolfe is going to be keeping the house and in the property division and she needs to refinance then, the bank is going to be more likely to allow her to refinance if she doesn't have any sort of job history or income. If there is a, an agreement that says that Eric has to pay her let's say 10, 000 a month for the next 5 or 10 years, the bank's going to be more willing to give Melanie a loan. And then the other issue is that Melanie's going to be able to plan and go to a financial advisor or on her own and know that she's going to get this particular amount. Now the other benefit is for Eric. Is that if Eric is expecting some sort of increase, he's a, an optimistic person, and he's expecting an increase in his salary or his income in the future, he might not want to have any sort of risk of modification in. I believe that Eric was asking if the US Government would follow suit on what actually happened with those payments, because there were obviously significantly higher prices than what our peers had originally fortune unite estimates were. Modification. The other issue is that Eric might want to build in certain milestones or certain things into contractual maintenance, such as if uh, Melanie cohabitates with another, you can have that in agreement. Same thing for if Melanie's going to leave the area. Let's say that Eric is going to pay a premium to allow her to stay in a high cost area such as Aspen or Telluride, then you can build in that you have to live within a particular geographical, area. There's some, real creativity that you can have with contractual maintenance. But there are some disadvantages and let's talk about those disadvantages with contractual maintenance. The most notable drawback is that there's some inflexibility or lack of modification. So if Eric loses his job, for example, it does not matter that the, his, the economy has tanked or that the rationale behind him, his income going down. It does not matter because it is a contractual agreement and there's not going to be any sort of modification. Eric owes that 10, 10, 000 for 5 years regardless of what happens. The other issue is on Melanie and you can just look into this or just assume that if Eric starts making a lot more money, she's going to be regretful or feeling regretful because she left money on the table. So that she also might be agreeing to less than what she would normally get in under modifiable spousal support. So those are the advantages and disadvantages of contractual maintenance. So let's now turn the page and talk about spousal support when it's modifiable. This is the alimony that you would get if you went to court. It's the default unless there is contractual maintenance. Then we're talking about. In essence, modifiable spousal support. This could be changed in the future. It's based on a change in circumstances that are substantial and continuing. And if Eric loses his job, then, he can ask for a reduction. Now, if it's just a temporary blip and he's switching jobs, that's not going to be a continuing change. But if there's some sort of market disruption that, results in Eric's, income being jeopardized or reduced over a substantial, period of time, then he can ask for a reduction. Another example would be if Melanie were to get remarried or she were to, have a new job, or Something happens in her life where she, her financial circumstances are drastically different and continuing compared to when the parties either agreed to modifiable spousal support or the judge entered it. So those agreements can be changed if there is no sport sort of contractual language that said that the court does not have jurisdiction. thE advantages are that it's flexible. Eric can either agree or have a particular amount. Ordered by the judge or agree in an agreement, and he might know that, life is unpredictable and he won't be able to he won't be locked in rather to the particular terms that he agreed to if there is some sort of change. Melanie, she would be protected if there's inflation or the cost of living increases significantly. We've recently seen that at the time of this recording. So she might be asking for more spousal support because she's just not able to keep up. And she can ask for the court to change that over. Time or various things that could be expected or assumed at the time of the agreement when the original amount is ordered, that could be changed. So the flexibility is the key component of modifiability or modifiable spousal support, but there are some disadvantages. One of the disadvantages. is the ongoing legal involvement or lawyers that can be asked and a spouse could be asking for spousal support to go down and it's just because they are angry or upset that they just get are tired of paying. Eric could just be Wanting to retaliate or use the legal process and so there is ongoing transactional costs in the form of lawyers. If there's a modification and, the Eric and Melanie can, it can be a proxy for them. Just continuing to. Duke it out and battle over the amount. And so there's unpredictability and transaction costs with disadvantage or the disadvantages of spousal support. The final term or the final disadvantage is that some banks and lenders will be a little bit spooked and they won't be able to give Melanie some sort of loan because the amount is just not certain. And so there could be. Some disadvantages with that, so finally, the, which option is right for you? It really depends on your life your circumstances, your priorities and that's the sort of thing that we would go through in considering it with our clients about which option is right for you. And we've seen, certainly seen some. Pros and cons on both different ends of spousal support, but hopefully that gives you an idea of the difference between contractual and modifiable alimony and you can apply the lessons learned here to your own circumstance and be able to make a better decision going forward. Thanks for joining us on Divorce at Altitude. Thanks for listening or watching this short lesson on the Divorce Ude podcast. If you found this helpful, please leave a review or share with a friend. It does help for others that are going through or thinking about a Divorce in Colorado. If you want to find out more information, Please visit Kalamaya Law or Divorce at Altittude dot com and that's K A L A M A Y A law. Remember, this is educational information, it's not intended to be legal advice. Please consult with an attorney about the particulars of your case. We're happy to answer questions. Feel free to give us a call at(970) 315-2365.