Divorce at Altitude: A Podcast on Colorado Family Law

Spousal Maintenance in High Income Divorces | Episode 185

January 08, 2024 Caitlin Geary Season 1 Episode 185
Divorce at Altitude: A Podcast on Colorado Family Law
Spousal Maintenance in High Income Divorces | Episode 185
Show Notes Transcript

This week, Ryan Kalamaya focuses on spousal support or maintenance in high-income divorces. He shares insights into how maintenance is determined once property division is settled, and why the standard Colorado maintenance guidelines and formulas don't apply when combined incomes exceed $240,000 per year. If you've ever wondered about the intricacies of alimony in the face of substantial earnings and assets, this episode sheds light on the subject with practical tips for those facing similar circumstances. 

Listen in as he discuss the myriad factors that influence spousal support awards, such as the duration of the marriage, the age and health of the parties involved, and most importantly, the standard of living established during the marriage. Also, discover why someone like Warren Buffett's modest living habits could impact support calculations, and why taxes are a significant consideration in high-income divorces.

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 how Colorado determines spousal support or maintenance in a divorce involving high incomes. Now, maintenance can be one of the more significant financial considerations in a divorce. And if you've listened to my previous episodes explaining what is alimony, then you will remember that we determine maintenance after we divide property. And I'll get into that a little bit more. The other episode that where I talked about The Colorado maintenance guidelines and the formula is also important and you should check that out because you'll remember if you listen to it, that the guidelines and the formula, they do not apply by law when the combined incomes are above 240, 000 a year. If Eric and Melanie Wolfe, our hypothetical divorce clients, are going through a divorce and Eric makes 500, 000 then the formula, the guidelines, are not supposed to apply in a Colorado divorce. But that's overly simplifying things because when we're dealing with high income scenarios, things get often a lot more complex. Indeed, because The high income, if it was over the period of a decade or several years, then there's also going to be probably some significant assets that there may not be, but we need to get into the other factors that apply for Colorado spousal support awards. Just as a reminder, some of those things can be the age and health of the parties, the length of the marriage, the standard of living during the marriage, and the contributions to the marital states. If we're talking about Eric and Melanie Wolfe, and they've only been married for two years, then we're probably not even going to be talking about maintenance, or if we are, then we're talking about maybe just a short duration, but we also really need to hone in and on high income cases, the standard of living takes on even more of importance than in the formulaic scenarios where people are making less than two hundred and forty thousand dollars. And the reason is because the standard of living can really vary. And Warren Buffett is a prime example. So for listeners that may not know, Warren Buffett is one of the wealthiest people in the world. And he has a famously Spartan or simplistic lifestyle. So even though he is a multi billionaire, his standard of living is fairly low compared to his income. So we're not going to really look at his income in Warren Buffett scenario, or if he was to go for, with a divorce we really look at the standard of living. And so when we have scenarios where people traveled extensively, they went shopping, they ate out and they lived a fairly rich. Lifestyle that's going to be in a different scenario where Eric and Melanie Wolf, if Eric is making a million dollars a year, but they have, a very limited or Spartan lifestyle, that's going to drive the determination of maintenance in that. But we really are going to start looking at what are the assets that Melanie is going to be awarded in a scenario of a divorce between her and Eric. And if those assets are sufficient to provide for her reasonable needs, then we're not even talking about spousal support, even though Eric's income could be significantly more. It could be 500, 000, but no spousal support is actually awarded. And that's because, Melanie could be awarded. Substantial assets that generate dividends and income or capital gains or rental income that provides for her reasonable needs. So that is, those are the various factors that we're going to get into. But indeed, it's not as simple as just plugging it into a formula and submitting it to the court. There's other factors that we can get into and taxes can play significant and going back to Warren Buffett, he's famous for saying that his secretary actually pays higher taxes than he does. And that's based on a proportional level. And that 240, 000 threshold that I mentioned earlier for the formula. The reason is taxes is primarily why. Anyone below 240, 000 the impact of taxes isn't as variable as in higher income scenarios. And that's because there's different tax rates for capital gains versus other things. You also, oftentimes when you're dealing with high income cases, you're talking about people that are. Often self employed and the determination of what actually their income is becomes a lot more complex. We'll have other episodes that explains income and in particular self employed individuals and how the, that Eric's income is determined when he's self employed, but for now, the Takeaway of this episode is that the maintenance guidelines do not apply for any scenario where there's 240, 000 above in combined income, and we're really going to start looking at the factors in much more detail and the standard of living. Is going to be a significant factor in that scenario. So we're really going to look at what Melanie's reasonable needs are compared to Eric's ability to pay spousal support. And that only occurs that analysis. After we figure out what are the assets that are Eric and Melanie's separate property after the divorce. But hopefully that is helpful for you to understand what happens to spousal support in high income divorces in Colorado. 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.