2. DISCLAIMER
2
No legal advice is given in this website. Nothing said in this
website shall in anyway constitutes legal advice. Nothing on this or
associated pages, documents, comments, answers, emails, or other
communications should be taken as legal advice for any individual
case or situation. All information presented is for informative
purposes only and should not be considered legal advice in any
way. Additionally, no attorney-client relationship is established by
viewing any information on this website. If you believe you are
here to get legal advice in any way, you should leave now. THIS
WEBSITE IS FOR GENERAL INFORMATION PURPOSES
ONLY.
No Warranties or Guaranties are made regarding accuracy of the
information provided.
3. Maintenance
3
State law
A payment, other than equitable distribution or child support,
to a former spouse
Ends upon death of former spouse
May ends upon remarriage and/or cohabitation depending on
agreement
Federal tax law
Different requirements than under state law
Important because of tax consequences
4. PURPOSE
The purpose of the new legislation is to provide advisory
guidelines for all parties, to promote settlements by
providing such guidelines, and to, at a a minimum, provide a
starting point for everyone in the case.
5. Colorado Maintenance Law
(C.R.S. 14-110-114)
5
Spousal Support May Be Awarded ONLY IF:
Lacks sufficient property to provide for reasonable needs, AND
Is unable to support self through appropriate employment, OR
Is custodian of child whose condition or circumstances prevent
employment outside of home
6. Definitions
6
“Reasonable Needs” – depends on particular facts and
circumstances of parties marriage.
“Appropriate Employment”- depends on parties economic
circumstances and reasonable expectations established during
the marriage.
7. Maintenance Formula
(C.R.S. 14-110-114(2))
7
Calculation
(40% of higher earners gross income –
50% of lower earners gross income)
However, the recipient cannot receive more than
40% of the combined income of the parties when
considering their income + the maintenance
amount.
Courts can then adjust he amount after considering
the factors below.
8. Statutory Maintenance Factors
Page 1
8
1. Financial resources of both parties including any actual or
potential income from separate or marital property, or any other
source, and the ability of each spouse to meet needs
independently;
2. Length of the marriage;
3. Age, physical and emotional health of parties;
4. Standard of living during the marriage;
5. Earning capacities, educational levels, vocational skills and
employability;
Parental responsibilities for children;
2. Time and expense to acquire education and training to enable
party to find appropriate employment;
9. Maintenance Factors –
Page 2
9
8. Tax Effects;
9. Present Circumstances are controlling rather than historical
10. However historical may be consider to impute income
11. Duration of Maintenance Award
1. Continuing or for definite period of time
2. Incremental reductions ok if basis
3. Expectation of retirement benefits ok to reduce
4. Improper speculation about future NOT allowed
10. Any other factors which the court may deem relevant
10. The Practical Problems In
Determining Maintenance
10
No strict formula approach like child support.
“Established lifestyle during the marriage” is rarely
considered as both parties lifestyle usually change after
separation.
The law grants judges great discretion – rarely overturned
on appeal
12. “Income” defined
12
From every source (Same as Child Support)
Salaries, wages, tips (all), commissions, indep contractor
payments, bonuses, dividends, severance, pensions, royalties,
rents, interest, trust income, annuities, capital gains, moneys
from self employment for personal use, social security, workers
comp, unemployment, disability, PI case, monetary gifts,
prizes, ptsp distributions, reimbursed expenses from work if
significant and reduce personal living expenses, alimony
received, overtime if required by employer
Self Employment – Income after “ordinary business expenses”
– must be real business expense
Lots of Rules and tests here – but no clear line to follow
Subtract maintenance or support paid to prior marriage or
children if through court order.
13. Not Income
13
Child Support Received
Means tested assistance – SSI, food stamps, Colorado Work
Programs
Income from additional jobs from 40+ week employment
14. Duration of Award
14
For marriage of at least 3 years and up to 12 years there is a
table based upon of % of months of the marriage which
determines the duration. After 12 years, the award is
generally for 50% of the total months of marriage, subject to
modification due to change in circumstances including
retirement by the paying party.
15. Cohabitation
15
Depends on terms of agreement
Remarriage ends permanent and limited duration
alimony
Cohabitation not sufficient by itself to reduce
Depends on facts
How close to marriage
How much support provided
16. Tax Considerations
16
Alimony is deductible from income for the paying spouse and taxable to
receiving spouse
Requirements are
Written divorce or separation instrument
Spouses cannot live together after divorce
Cash (or cash equivalents)
Marriage relationship
Must file separate tax returns
Must terminate at death
Must not be child support
May be deemed child support if terminates or reduces as a result of a child
contingency
e.g., reduction of alimony on child’s 18th
birthday
Review by tax professional may be warranted
17. Alimony Recapture–IRC 71(f)
17
Intended to prevent front loading of maintenance OR
conversion of property settlement payments into deductible
alimony.
If Alimony decreases or terminates during first three
calendar years, some recapture (loss of deduction) – talk to
accountant.
