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Wisconsin Spousal Maintenance
Wisconsin
Spousal Maintenance
By
Maury D. Beaulier, Esq.
"Alimony" is the term used in many states for financial support paid to a ex-spouse
after a divorce. In Wisconsin the term "alimony" has been replaced with the term
"Spousal Maintenance." The terms are synonymous.
Maintenance is most often used to provide temporary financial support from
one spouse to another when that spouse was financially dependent on the other
during the marriage. In most instances maintenance is designed to provide the
necessary support for a spouse until he or she either remarries or becomes
self-supporting. In some states, an award of alimony may be based on
marital fault. However, Wisconsin is a "no fault" divorce state which
means that perceived marital misconduct such as infidelity or abuse are not
considered in determining support obligations. Spousal Maintenance is an
obligation that is independent of child support and property settlement
obligations.
Unlike Wisconsin's child support statutes, there are no percentage guidelines
to determine when spousal maintenance is appropriate or at what level. In
Wisconsin, trial courts have broad discretion in deciding whether to award
maintenance and in determining its duration and amount. As a result, spousal
maintenance often becomes one of the most contested issues in divorce
proceedings.
Spousal Maintenance Factors
Currently, Spousal Maintenance awards are granted pursuant to Wisconsin
Statutes § 767.26. Under this law the courts are guided by ten factors that
should be considered in determining a spousal maintenance award. The factors
include:
- The length of the marriage.
- The age and physical and emotional health of the parties.
- The division of property made in the divorce.
- The educational level of each party at the time of marriage and at the
time the action is commenced.
- The earning capacity of the party seeking maintenance, including
educational background, training, employment skills, work experience, length
of absence from the job market, custodial responsibilities for children and
the time and expense necessary to acquire sufficient education or training
to enable the party to find appropriate employment.
- The feasibility that the party seeking maintenance can be-come
self-supporting at a standard of living reasonably comparable to that
enjoyed during the marriage, and, if so, the length of time necessary to
achieve this goal.
- The tax consequences to each party.
- Any mutual agreement made by the parties before or during the marriage,
according to the terms of which one party has made financial or service
contributions to the other with the expectation of reciprocation or other
compensation in the future, where such repayment has not been made, or any
mutual agreement made by the parties before or during the marriage
concerning any arrangement for the financial support of the parties.
- The contribution by one party to the education, training or increased
earning power of the other.
- Such other factors as the court may in each individual case determine to
be relevant.
No single factor is dispositive and the Courts must weigh all factors giving
appropriate weight to each.
One important factor in determining whether spousal maintenance is paid and
for how long is the length of the marriage. Shorter marriages often result in no
award of spousal maintenance or lesser awards. Longer marriages may result in
long term or even permanent awards. A second important factor in determining the
level of spousal maintenance is the standard of living the parties enjoyed
during the marriage. When faced with a long term marriage (fifteen years or
more), often Wisconsin trial courts begin their evaluation of spousal
maintenance with the proposition that a spouse that is dependant on the other
for financial support is entitled to 50% of the earnings of both parties. This
is considered to be a starting point for equalizing the standard of living for
each party.
Awards,
Denials and Modifications of Maintenance
If the parties are unable to resolve disputes
related to spousal maintenance, a court may:
- award spousal maintenance;
- reserve spousal maintenance (not award maintenance
currently but leave the matter open for further review);
- deny spousal maintenance.
Awards of spousal maintenance may be "temporary" or
"rehabilitative", designed to rehabilitate the spouse so that he/she may
become self-supporting, or "permanent."
No matter whether spousal maintenance is awarded, denied or reserved after a
trial, the issue may be always be readdressed and spousal maintenance modified
upon a showing that there has been a substantial change in circumstance making
the original award (or denial) unreasonable or unfair. Under most circumstances
spousal maintenance automatically terminates when one spouse dies or the spouse
receiving maintenance remarries.
From a practical standpoint, it is unlikely that a Court denying spousal
maintenance would later change that determination absent compelling
circumstances. A compelling circumstance may include a critical illness
befalling the party seeking maintenance which renders that person incapable of
working or providing for their own support. There would also have to be a
showing that the person from whom maintenance is sought has the ability to
contribute.
Temporary awards of spousal maintenance usually dictate factual presumptions
on which the award is based. For example, maintenance may be awarded for a
period of five (5) years at a certain level predicated on the recipient
enrolling in and completed educational courses and finding employment in that
period of time. Either party may bring the matter back before the Court if the
recipient becomes self supporting at an earlier date or, through no fault of
his/her own, fails to find employment within the designated period. Orders
setting forth detailed educational and employment time lines on which the
maintenance award is based tend to favor the person paying spousal maintenance
since the recipient must demonstrate good cause why the time lines were not
followed or achieved to extend the spousal maintenance beyond that period.
There are only one way to preclude the Court
from having jurisdiction to award spousal maintenance. Statutes relating to
spousal maintenance awards specifically allow the parties to enter into a
private agreements that preclude or limit spousal maintenance awards. These
agreements may take the form of properly executed prenuptial agreements or
agreements reached as part of the divorce proceedings.
Unfortunately, such agreements are disfavored by Wisconsin Courts. Any court
that is asked to enforce such an agreement must determine that the stipulation
is fair and equitable and supported by adequate consideration after full
disclosure of each party’s financial circumstance.
Since the Court determines what is fair and equitable at the time of the
divorce, it is particularly unlikely that prenuptial agreements executed many
years in advance will carry much weight. What is fair and equitable at the time
the marriage begins may not be fair and equitable when it ends.
In most cases, the interests of persons asked
to pay spousal maintenance are better served by offering an immediate buy-out of
spousal maintenance in return for a waiver that would preclude the court from
modifying spousal maintenance in the future. This buy-out may occur as part of a
property settlement that favors the party seeking maintenance.
To determine what amount to offer or accept as a buy-out, it is important to
consider two factors:
- the present value of the asset
- the tax consequences
Present value refers to the value of a dollar today as compared to the value
at some point in the future. Remember, a dollar paid today is more valuable than
a dollar received next year or even next week since the money properly invested
would gain interest over that period. As a direct result, a buy-out of spousal
maintenance will always be less than the total value of the spousal maintenance
paid over time.
Imputation of income is a harsh result where the Court requires a party to
pay spousal maintenance (or child support) based on earning capacity
rather than true income. For example, if one party quits a job and
reduces his/her income voluntarily or if a party fails to seek gainful
employment though able-bodied, the Court may base that person’s income on
earning capacity. Oftentimes, the parson’s prior work history plays a pivotal
role in determining what they have the ability to earn.
Documents that may be presented to the Court regarding earning capacity
include:
- Past Income information;
- Past employment history;
- Educational history;
- Documents or awards related to education or work achievements;
- Documents demonstrating that previous employment was voluntarily
terminated.
Documents
that may be presented to the Court refuting a claim that income should be
imputed may include:
- Documents demonstrating that the termination of prior employment was
involuntary (eg. Documents indicating that the person was fired or was
required to quit for medical reasons);
- Any documentation of efforts to seek substitute employment (eg. Job
applications, rejection letters, newspaper ads);
- Documentation that job skills are outdated for a job similar to the one
that was terminated.
To determine the skill level of a spouse seeking
spousal maintenance, it may be necessary to have a vocational evaluation
performed. If requested by a party, it is likely that a Court will require the
party seeking spousal maintenance to cooperate with such an assessment.
A vocational evaluation is conducted by a Qualified Rehabilitative Consultant
(QRC). During the evaluation stage, the QRC will administer a series of
questionnaires designed to highlight the vocational strengths and weaknesses of
the party being tested. With theses test results, the QRC examines the fields of
employment in which the person examined is likely to have the most success. The
evaluation also analyzes the past work and educational history of the individual
as well as that person’s employment goals.
After the evaluation has been performed, the QRC drafts a report that
identifies the fields in which the tested person has demonstrated strengths. The
report then analyzes the field to determine what additional education is
necessary, if any; the likely period of time for completing that education; the
costs associated with the education; and the likely wage that the tested person
is likely to achieve after education and training.
The results of a vocational evaluation may be challenged at trial. However,
these independent experts hold great sway with the Court in determining the
amount and duration of spousal maintenance awards.
As previously stated, some relevant factors considered by the court in
deciding whether to award spousal maintenance include the finances of the
parties, the education levels of the parties, the work histories of the parties,
the health of the parties and the standard of living the parties established
during the marriage. In order to properly document these issues at trial you
should provide the following:
- A written history of employment for both parties including a job
description, the name of the employer, the wage paid and period of time
worked;
- A written history of each party’s educational background including
schools attended, years attended and degrees or certifications achieved;
- Tax returns for each year of marriage including W-2 and 1099 forms for
each party;
- A written chronology of vacations taken during the marriage;
- Photographs and post cards of vacations taken during the marriage may
provide a pictorial history to supplement the written history;
- A written list of assets and luxury items owned at any time during the
marriage (even if not presently owned) including the date that each item was
acquired, its value and the date of disposition. You should include items
such as jewelry, recreational vehicles, real estate, condos, interests in
businesses or corporations, and time shares;
- Financial documents verifying the value of luxury assets;
- Financial account records demonstrating the value of each item;
- Checking account registers and credit card statements demonstrating the
spending habits of the parties;
- A written list of necessary monthly expenses.
Spousal Maintenance also raises a myriad of tax issues that must be
considered.
In deciding whether to “buy-out” the
other party’s spousal maintenance, it is important to consider all of the
potential tax consequences.
Property Division
versus Spousal Maintenance.
Property or proceeds exchanged
as part of a property settlement is not taxable event. The proceeds paid are
not deductible to the payer or taxable to the recipient. By contrast, the
payment of spousal maintenance is a taxable event. Spousal maintenance is
tax deductible by the person paying. It is not included as income for the
obligor giving that party a dollar for dollar offset against his/her
earnings. By contrast, spousal maintenance that is paid is included as
taxable income by the person that receives it.
Maintenance Paid
While Living Together. Under Federal tax law, spousal maintenance
payments made while the parties reside in the same home are not deductible
to the payer or taxed to the payee unless a written divorce or separation
agreement has been executed.
Maintenance
Substitute under Section 71. Parties may also waive spousal
maintenance for a substitute payment under Section 71 of the Internal
Revenue Service code which allows for payments of a specific duration that
may taxable to the payee and deductible to the payer but do not terminate
upon death or remarriage as with spousal maintenance.
Attorney's Fees & Maintenance.
It is also important to
note that attorney’s fees incurred by a party seeking spousal maintenance
may be tax deductible as an expense incurred for the production of income.
You may wish to speak with your attorney regarding that issue.
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