Jeff Landers, Contributor
A few months ago, legislators in Massachusetts passed the Alimony Reform act of 2011, updating the Commonwealth’s alimony laws.
Now, citizens’ groups in Florida and New Jersey are pushing for the same kinds of changes in those states.
On some levels, I support these reforms. As a Divorce Financial Strategist™, I too have seen examples where the alimony payors are treated unfairly.
However, I believe that some of these proposed new laws go too far, putting the recipient of alimony, especially the older recipient, (which, in most cases, is still the woman) at a significantly increased risk of an unstable financial future.
Before we discuss the unintended consequences of some of these alimony reforms, let’s review the answers to a few basic questions. Please keep in mind that since my firm exclusively works with divorcing women, I am an advocate for laws that treat women fairly.
Why not abolish alimony completely?
Alimony serves an important function, and for me, the arguments in favor of it are straightforward.
If a woman has been in a long-term marriage, and she has either been out of the work force for decades or has an income that is substantially less than her husband’s, I believe she needs –and deserves –alimony in order to maintain a post-divorce lifestyle that’s at least somewhat comparable to the lifestyle she enjoyed while married.
Of course, the same applies for a man who is divorcing under similar circumstances –he stayed out of the work force, has less income, etc.
Even now, though, in the vast majority of cases, it’s still typically the woman who needs alimony.
Under what circumstances do I believe a woman deserves alimony?
The purpose of alimony is to somewhat equalize the economic disparity between a husband and wife.
I feel a woman deserves alimony if she has income that is substantially less than her husband’s, and she:
- sacrificed her educational opportunities, potential career and earning power so she could invest her time and labor for the betterment of her family.
- directly or indirectly aided her husband’s career by taking care of the home front and enabling him to invest in his job opportunities and increase his earning power.
- helped her husband (financially or otherwise) complete law school, med school or to get other professional training.
In many instances, a marriage ends when the husband is at or near the peak of his earning potential (thanks in part to his wife). At the same time, since she sacrificed education and job opportunities, she may now be relatively unemployable, especially in this job market.
Also, keep in mind that alimony payments are almost always determined by both the payor’s ability to pay and the payee’s need, and that, in general terms, I agree that the term of alimony should be directly related to the term of the marriage.
Even though a divorcing couple may divide assets 50-50, the husband, because of his earning power, will often replace some or all of those assets over time, while the wife, because of her lack of earning power, potentially could be liquidating assets from Day One.
Alimony helps to somewhat equalize this economic disparity.
Why doesn’t a woman just go back to school and then find a job?
Even when the economy is healthy, it’s not easy for older women who have been out of the workforce for decades to just get “re-educated” and find a job.
The current economic climate makes the task even more difficult.
Research shows that unmarried women now experience high and extended unemployment, as well as underemployment. Older women face even more challenges.
Where do alimony reforms go too far?
Two potential issues have me very concerned. First, as Scott Maxwell points out at the Orlando Sentinel, Florida’s proposed legislation will automatically terminate alimony payments when the payor reaches retirement age. (The payor doesn’t have to stop working, he just needs to reach that age.)
A law like this sets up this potential nightmare scenario:
A woman gets divorced at age 61, after 30 or 35 years of marriage. If her husband is 62, that means she would only be entitled to about four years of alimony after a 35-year marriage. This makes no sense to me . . . and I have to believe the language in any finalized legislation would be corrected to allow for terms to be “adjusted” at retirement age, at the discretion of the courts. My understanding is that this is how Massachusetts ultimately decided on this reform. The legislation in Massachusetts is very open to interpretation, so case law and individual circumstances are expected to prevail, at the discretion of the courts.
Secondly, I have trouble understanding how these alimony reforms do not allow already divorced people to be grandfathered. In other words, according to the Orland Sentinel, the proposed legislation in Florida would allow reductions in alimony that was agreed to years ago –even though the woman may have negotiated in good faith then and perhaps even gave up significant assets in return for those alimony payments. Essentially, the law would allow a one-sided do-over because she can’t go back to get more assets.
Massachusetts has offered something of a compromise solution to remedy the issue of grandfathering. I don’t believe the Massachusetts law goes far enough, but it does provide for applications for alimony modifications to be staggered over several years. For instance, payors from longer-term marriages are not permitted to apply for modifications until three-and-a half years after the law goes into effect.
Even before Massachusetts adopted alimony reform, most states already had revised their laws, setting limits on the duration and amounts of alimony payments –now it looks as though Florida and New Jersey will do so, as well. As I watch the alimony landscape continue to evolve, I become increasingly convinced that an upfront, lump sum payment in lieu of alimony is, in the vast majority of cases, the preferred option if there are sufficient assets available to do so.
Article found: http://www.forbes.com/sites/jefflanders/2012/01/18/alimony-reforms-continue-to-create-more-uncertainty-for-divorcing-women/
Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC (http://www.BedrockDivorce.com), a divorce financial strategy firm that exclusively works with women, who are going through, or might be going through, a financially complicated divorce.