Just the Facts: Spousal Support in a Virginia Divorce

April 29, 2014

alimony-spousal-support“Alimony” and “Spousal Support” are the same thing. In Virginia, alimony is called “spousal support”. Also, alimony is sometimes referred to as maintenance. To the IRS, though, it’s all the same: “Alimony”.

Spousal Support is not guaranteed in Virginia. In Virginia, Spousal Support is neither presumed to be appropriate in any particular type of divorce case nor is it presumed unnecessary in any particular type of case in divorce case. Spousal Support is awarded on a case-by-case basis (both in the courts and in mediation).

Spousal Support is often awarded to SAHM’s (stay at home mothers), spouses who have a much lower income than the other spouse, spouses who have the potential to be financially independent (but need help getting there), and spouses who remain in an expensive-to-maintain family residence (usually for the sake of the children). Spousal support that is temporary, and designed to financially assist the receiving spouse while she (or he) prepares for employment, is referred to as “Rehabilitative Support”.

Need-Based Calculations versus Formula-Based (Pendente Lite) Calculations. In Virginia, the divorce courts utilize specialized calculations, called pendent lite spousal support calculations. This formula, originally intended to be a temporary calculation used for emergency situations, but now used often by the courts, lawyers and mediators when trying to determine a “fair” amount of spousal support, holds a lot of clout in the courthouse (Fairfax, especially). If your case looks like an alimony case, it is usually recommended that you run the pendente lite calculation to see what the “risk” is to the payer, and what the possible monthly award will be to the recipient.

To determine a more “real life” amount of necessary spousal support, a basic need-based approach is also helpful. Need-based calculations require both spouses to list their expenses (and projected expenses). These expenses are then compared to the net income available to support two households (which also includes the child support to be paid).

Often times, there will be a shortfall in both parties’ ability to pay their expenses. With budgeting adjustments, creativity and planning – alimony often being a chief player in the mix – Graine Mediation is able to help couples settle most cases despite the financial hurdles involved.

What are the tax effects of spousal support? The recipient is taxed on alimony at her (or his) tax rate. In other words, alimony is considered “earned income” by the IRS. The payer of spousal support is allowed to deduct the alimony paid, dollar for dollar, from his (or her) gross income, thereby decreasing the income upon which he (or she) will be taxed. In other words, the payer’s adjusted gross income is decreased by the amount of alimony paid. The party who receives the spouse support, on the other hand, will pay taxes on that money at the same rate as her (or his) earned income is/would be taxed.

What is the effect of spousal support payments on child support? Since alimony (spousal support) increases the gross income of the receiver, and decreases the gross income of the payer, the payment of spousal support decreases the presumed child support amount when calculated using the Virginia Guideline’s formula.

Is Spousal Support modifiable? Spousal support is modifiable – both in terms of the amount and/or duration – depending on how the Mediated Property Settlement Agreement is written (i.e. what the parties agree to). If a couple agrees that the spousal support award is to be modifiable, the terms of that modifiability must be stated very clearly in the Mediated Property Settlement Agreement. Otherwise, the court may base a future decision regarding modification of a spousal support award on the “default” standard: “Whether or not there has been a material change in circumstances not reasonably contemplated by the parties”.

Can there be no spousal support awarded at divorce, but a window left open for an award at a later date? The possibility of a future award of spousal support may be left open in a Mediated Property Settlement Agreement. The term for this is “Reviewability”. Clients may leave a period of review open — whether or not there is an actual dollar amount of spousal support to be paid. The period of time in which the parties may seek an award of spousal support (the review period) may be whatever is agreed upon by the parties. If a period of review is left open, but no time period is specified, the “default” in the law is 50% of the length of the marriage.

Leaving a period of review open is useful if the potential recipient feels insecure about his or her future earning power, but there is no actual need for alimony at the time of settlement.

How long does Spousal Support last? There is no clear law on this, but the rule of thumb in Virginia, when spousal support is deemed appropriate, is 50% the length of the marriage. It depends, of course, on the purpose of the spousal support (e.g. to help get a mother back on her financial-feet, to allow time for a parent to get re-trained/degreed, to offset the costs of living expenses for a specific period of time, to provide full and ongoing support to a former spouse, etc.)

In marriages of greater than 20 years, where the spouse seeking support was not an income earner, or her (or his) income is relatively low compared to the other spouse, permanent alimony (or at least up until the other spouse’s retirement) might be appropriate. This is not the law, but both parties should be aware of this legal trend in Virginia, especially where the spouse seeking the support is on the older side.

Is adultery a bar to spousal support? If the spouse against whom an award of spousal support is sought (the bigger earner) is able to prove the ground of adultery against the spouse seeking the support, there will be no alimony awarded. However, proof is often hard to come by. Also, if the court finds that a denial of spousal support to the adulterer would be “manifestly unjust”, the judge can award it to her (or him) regardless of the marital transgression.

What happens when the party receiving spousal support gets remarried or cohabits: Unless otherwise agreed by the parties, remarriage or cohabitation “in a relationship analogous to a marriage for a period of 1 year or more” (statutory definition) will result in the cessation of all spousal support payments. Of course, the term “relationship analogous to a marriage” is not clearly defined in the law and, in some mediations, clients are urged to discuss and determine what that phrase means to them (in order to avoid future litigation).

What does “Child Contingency” and “Recapture of Alimony” mean? The tax law related to alimony is fairly complex. Two areas, in particular, often come up in a divorce mediation: Child Contingency and Recapture of Alimony.

The Child Contingency rule has to do with the IRS’s sensitivity to taxpayers classifying payments as alimony (to get the tax deduction) when, in reality, those payments are really a form a support for the children (child support). The Child Contingency rule can be triggered when an award of alimony ends at the same time, or near the same time (within 6 months to a year, depending on the specific circumstances), of a child-related event (e.g. child turning 18 years old, graduation from high school). For more detail, see my Fairfax Divorce Blog article at https://fairfaxdivorceblog.com/?s=contingency

In a Recapture of Alimony situation, the IRS is looking for deductible alimony payments made, during the first three years following a divorce, which are actually more in the nature of a property distribution. Once again, the IRS is very sensitive to parties classifying payments as deductible alimony when those payments are more aptly classified as some other sort of non-deductible payment such as part of the equitable distribution and division of property (which includes the transfer of money from one spouse to another and may be in the form of a lump sum or paid out in periodic payments). For more detail, see my Fairfax Divorce Blog article at https://fairfaxdivorceblog.com/?s=recapture

Seek Professional Guidance: The law regarding spousal support in Virginia and the Federal Tax Code is fairly complex. Not only that, but the relationship between spousal support, child support and the equitable distribution of property and debt can be overwhelming and easily misunderstood. If you think that your case may involve a need/request for alimony, seek professional guidance from a lawyer-mediator. We are here to help: Robin Graine, JD – Graine Mediation – 571-220-1998.

Posted by Robin Graine, JD, Virginia Supreme Court Certified Mediator

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.

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Military Divorces 101, Part 3

May 16, 2013

Military divorces present unique challenges and far-reaching ramifications for our clients.  This area of law is a complex mixture of several Federal and State statutes which are balanced against the servicemember spouse’s particular branch procedures and the standards and practices in your jurisdiction.  At Graine Mediation, we know the jargon, understand the issues, and are skilled at making sure that both parties have all the information they need in order to make the best settlement choices they can mutually agree upon for themselves and their children.

In this special, three-part blog post, we’ll try to demystify this process for you.

military-divorce2

SPOUSAL SUPPORT (ALIMONY):

Unique Challenges: Military divorce cases present unique challenges in terms of spousal support.  Many military spouses have given up opportunities for career advancement in order to support the career of the servicemember spouse. Military spouses, too, often end up living in places where they do not have family resources (grandparents, aunts & uncles, etc), or choice in the cost of housing, etc.  This is common in Northern Virginia, an area that is targeted by many military families as a good place to send their children to school during the final years of the servicemember’s duty. For many military families, this plan was ideal when the marriage was intact, but many parents find Northern Virginia a very expensive place to raise a family post-divorce.  There is also the factor of health insurance for the non-servicemember spouse, which is a brand new expense for most military families, and perhaps vocational training/college for the former spouse in order to “catch up” in terms of career planning.

More Information: Otherwise, the factors for consideration in a military divorce are the same as those necessary in a fully civilian divorce.  For more information on spousal support in Virginia, generally, email Robin Graine (grainemediation@gmail.com) for an advance copy of her blog article “How is Spousal Support (Alimony) Calculated in Virginia?” (not yet published as of May 2013 on http://www.fairfaxdivorceblog.com)

HEALTHCARE & OTHER MILITARY BENEFITS: 

In some instances, former military spouses are entitled to healthcare and certain other military benefits.  In other cases, they are not.  The rules are strictly military, and state courts have no say-so in determining whether a spouse will be permitted to retain her or his military benefits upon divorce.  The military rules follow:

Full Benefits (“20/20/20” Rule):  A former spouse of a servicemember is defined as a dependent, and therefore entitled to all military benefits and installation privileges, including medical, commissary, military exchanges (PX/BX), if the following criteria is met:

  • The former spouse was married to the servicemember for at least 20 years;
  • The servicemember had at least 20 years of creditable service; and
  • There was at least a 20-year overlap between the marriage and the military service.

(10 U.S. Code §1072(2)(F))

Transitional Benefits (“20/20/15” Rule):  A former spouse of a servicemember is defined as a dependent for purposes of military medical care only, and entitled to one year of transitional medical benefits (not other military benefits, such as commissary, PX/BX, etc.), when she or he does not meet the criteria for Full Benefits (above), but she or he meets the following lesser criteria:

  • The former spouse was married to the servicemember at least 20 years;
  • The servicemember had at least 20 years of creditable service; and
  • There was at least a 15-year overlap between the marriage and the military service.

(10 U.S. Code §1072(2)(G) & (H))

No Dental; Tricare Standard: For both Full and Transitional Benefits, the health coverage is for medical only, not dental.  Also, unless the former spouse pays an annual premium of approximately $230, the coverage is the equivalent of Tricare Standard, not Tricare Prime.

Suspension Of Benefits: There are several fact patterns that will result in suspension of a former spouse’s military benefits post-divorce, including the following:

  • Medical benefits are suspended while the former spouse is covered by an employer-sponsored health care plan;
  • Medical benefits are terminated upon the former spouse’s remarriage; and
  • Commissary, military exchange (BX/PX) and other installation privileges (20/20/20 spouses) are suspended while the former spouse is remarried, but reinstated if that remarriage terminates due to death or divorce.

POST 9/11 GI BILL:

Not Considered Divisible Property, but appropriately considered in settlement: Many military servicemembers have access to the “Post 911 GI Bill.” For purposes of property division pursuant to a divorce, the GI Bill is not categorized as divisible property by the state courts. However, that does not mean that the potential benefits and value of the Post 9/11 GI Bill is not appropriately considered when mediating a divorce settlement.

What is the Post 9/11 GI Bill: The Post-9/11 GI Bill provides financial support for education and housing to individuals with at least 90 days of aggregate service after September 10, 2001, or individuals discharged with a service-connected disability after 30 days. You must have received an honorable discharge to be eligible for the Post-9/11 GI Bill.

Approved training under the Post-9/11 GI Bill includes graduate and undergraduate degrees, vocational/technical training, on-the-job training, flight training, correspondence training, licensing and national testing programs, entrepreneurship training, and tutorial assistance. All training programs must be approved for GI Bill benefits.

This benefit provides up to 36 months of education benefits, which are generally payable for 15 years following your release from active duty.

What will the Post 9/11 GI Bill Pay For? Some of expenses that the Post-9/11 GI Bill will pay include:

Servicemembers are Entitled to Transfer their Post 9/11 GI Bill to their Spouses and Children:  All members of the Armed Forces (active duty or Selected Reserve, officer or enlisted), who are eligible for the Post 9/11 GI Bill, are permitted to transfer their rights to this bill when the servicemember has:

  •  At least 6 years of service in the Armed Forces (active duty and/or Selected Reserve) on the date of approval and agrees to serve 4 additional years in the Armed Forces from the date of election.
  • At least 10 years of service in the Armed Forces (active duty and/or Selected Reserve) on the date of approval, is precluded by either standard policy (Service or DoD) or statute from committing to 4 additional years, and agrees to serve for the maximum amount of time allowed by such policy or statute.
  • Is or becomes retirement eligible and agrees to serve an additional 4 years of service on or after August 1, 2012. A servicemember is considered to be retirement eligible if he or she has completed 20 years of active Federal service or 20 qualifying years as computed pursuant to section 12732 of title 10 U.S.C.

Moreover, any such transfer must be requested and approved while the member is still in the Armed Forces.

Servicemembers may transfer their Post 9/11 GI Bill to one or more of their children and spouse, or any combination of those people.

Further, the subsequent divorce of a military servicemember who had previously transferred his or her Post 9/11 GI Bill to his or her now ex-spouse, does not negate the transfer.  Further, the marriage of a child to whom a servicemember transferred his or her Post 9/11 GI Bill does not revoke the transfer, either.

Very importantly, too, the military rules state that the servicemember who transfers the Post 9/11 GI Bill to a family member retains the right to revoke or modify the transfer at any time.

Posted by Robin Graine, JD, Virginia Supreme Court Certified Mediator

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.

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GOOD NEWS – I am Divorced and Can Still Claim My Ex-Spouses Social Security

December 2, 2011

There can be good news a about divorce!  Did you know that if your marriage lasted at least ten years, you can claim social security benefits on the entire earnings history of your ex-spouse?

Here are a few important qualifiers you need know:

  • You must be unmarried. If you remarry, you cannot collect benefits on your former spouse’s record until your later marriage ends (whether by death, divorce or annulment).
  • You must be 62 years old or older.
  • Your ex-spouse must, him or herself, be entitled to Social Security retirement or disability benefits.
  • Your own personal social security benefit, based on your own work, must be less than the benefit you would receive based on your ex-spouse’s work.

It’s an either-or situation – you’ll get your own Social Security benefits, or one-half of your ex-spouses benefits (“derivative benefits”), whichever is greater.  Of course, the amount of benefits you get has no effect on the amount of benefits your ex-spouse or their current spouse may receive. (Their benefits are not reduced because you get ½ of your ex-spouse’s benefits!)

How you ask?  Below are a few answers to questions you may have:

1. How many ex-spouse’s can claim derivative benefits?
As many ex’s as there are, as long as each marriage lasted 10 years.  Mickey Rooney’s seven ex-wives got left out since none of the marriages lasted more than 10 years, but three of Johnny Carson’s marriages lasted over 10 years and all his ex’s were eligible for benefits.

2. If my ex-spouse dies, do my derivative benefits end?
This has good news and bad news. The bad news: If he/she dies, the derivative benefit ends. The good news is that now you can collect survivor benefits, which are 100% of his benefits, not just 50%.

3. Can I receive both public employee benefits and social security?
Under the Windfall Elimination Provision (WEP), benefits received from a non-Social Security covered job (teacher or other civil service job) may cause Social Security benefits to be reduced by several hundred dollars. The Government Pension Offset (GPO) applies to derivative benefits, which will be reduced by 2/3 of the pension benefits received by an employee from a job not covered by social security.  (This is where you really need to talk with a knowledgeable representative at the Social Security Administration.)

4. Can I receive benefits on my ex-spouse if he/she has not yet filed for benefits?

If your ex-spouse has not applied for retirement benefits, but can qualify for them, you can receive benefits on his or her record if you have been divorced for at least two years.

As in any case where government benefits are involved, these rules are subject to change. So, when you are ready to claim social security benefits, be sure to let the Social Security Administration know that you were married for more than ten years, and be prepared to furnish your ex-spouse’s full name and social security number.

The Social Security Administration will be able to calculate what benefits will give you the highest monthly payment, and will recalculate those benefits if your ex-spouse dies while you are collecting benefits.

For more information visit the page “If You Are Divorced” at the Social Security Administration’s website.

All data and information provided on this site is for informational purposes only. Graine Mediation and its owner, Robin Graine, make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

 

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