August 25, 2013

Alimony in Michigan and Spousal Support

Alimony in Michigan explained

“Alimony” which is the same as “Spousal Support” are payments made to support a spouse.  In Michigan, alimony is typically paid by a supporting spouse to a dependent spouse. The primary factors in determining an amount of alimony are the age, education, length of marriage and income of the parties. However, there is no rigid rule regarding alimony.

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The Basics – Alimony in Michigan explained

Alimony is a form of support to a dependent spouse.  The general rule is that a spouse is dependent if he/she is substantially dependent on the income of another spouse for the regular necessities of life. The amount of alimony or spousal support will vary with the disparity of the parties incomes and the length of the marriage. Alimony can be awarded for a term of years and/or upon the death or remarriage of the parties.

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The Details – Alimony in Michigan explained

Fault and Alimony

People often confuse the notion that Michigan is a no-fault state as meaning fault does not matter.  It is important to note, that while fault of a party or basis for the breakdown of the marriage, is a relevant factor in awarding alimony in Michigan or spousal support in Michigan notwithstanding the notion that Michigan is a no-fault divorce State.


 

 

Alimony in Michigan guidelines

The Michigan Court of Appeals in the case of Myland vs. Myland stated that Michigan divorce law prohibits the use of a rigid and arbitrary formula that fails to account for the parties unique circumstances. Notwithstanding the Myland case, most courts, mediators and attorneys use guidelines in evaluating a spousal support claim.  There are two leading guideline computer programs.  One by Springfield publications prognosticater, and another by MarginSoft, written by former Washtenaw County referee, Craig Ross.   Some Judges have thier own guidelines in determining alimony.  These formulas vary.  Recent Court of Appeals cases say alimony guidelines are appropriate.


 

 

Modifiable vs. Non-Modifiable Alimony

A Michigan divorce court can only order modifiable alimony in Michigan.  However, parties can agree on a non-modifiable award pursuant to the Michigan Court of Appeals case of Staple v. Staple.  Caution should always be considered when evaluating a non-modifiable award.  For example, if you lose you job, you are still obligated to pay.  On the other hand, if your health fails or your income falls, you may be stuck with inadequate support.
If you want to modify an existing alimony award, we can help, provided circumstances have changed since the entry of the last order. A typical change in circumstances is a change in income. A change in need is also a common basis for seeking modification of alimony.


 

 

Tax Considerations

Most alimony or spousal support payments are tax deductible to the person paying and tax deductible to the person receiving support. This is governed by Internal Revenue Codes section 71 and section 215.

Addressing potential tax issues in your negotiations can avoid problems in the future. For example, many lawyers believe that alimony payments are always tax-deductible to the person paying and taxable as income to the recipient. This is not the case.

In order to qualify for the taxable or tax-deductible status certain requirements must be met. These requirements are often overlooked. Under I.R.C. sec 215, payments made for alimony are allowed as a deduction. However, in order for payments to be tax deductible, the eight requirements of I.R.C. sec, 71 must be met.  The mere use of the word “alimony” or “spousal support” does not make the payment taxable or tax deductible.  The proper application of I.R.C. sec. 71 is required.  The requirements are as follows:

      1. The payments must be made in cash; (e.g. providing a car is not deductible);
      2. The payments must be to a spouse or on behalf of a spouse;
      3. The payments must be made pursuant to a divorce or separate maintenance instrument;
      4. The payments must not be designated as non-qualifying by the payor or non-taxable to the recipient;
      5. Spouses may not be members of the same household;
      6. The payment must terminate at the recipient spouse’s death;
      7. Spouses may not file a joint return; and
      8. The payment cannot constitute child support.

Source:  Internal Revenue Service – http://www.irs.gov/taxtopics/tc452.html

Negotiation Strategies

There are many creative ways to both, maximize or minimize a parties’ alimony or support award or obligation in a Michigan divorce, including tax affecting assets, discounting, buy-outs of an obligation, trading assets or debts in exchange for more or less alimony/spousal support and proper application of the alimony/spousal support factors. Your attorney should be competent in creative solutions to maximize his or her client’s entitlement or exposure. Many attorneys run “Guidelines” to estimate a client’s exposure or obligation for support. While “Guidelines” are appropriate in analyzing child support, Alimony/Spousal support is much more complex.

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The Law – Alimony Law in Michigan

Michigan Compiled Laws 552.23; MSA 25.103

The legal authority for a court to award alimony is found in Michigan Compiled Laws 552.23; MCL 552.23; MSA 25.103 which provides:  “. . .if the estate and effects awarded to either party shall be insufficient for the suitable support and maintenance of either party, the court may further award to either party . . . alimony out of the estate real and personal, to be paid to either party in gross or otherwise as it shall deem just and reasonable, having regard to the ability of either party and the character and situation of the parties, and all the other circumstances of the case.”

The amount of alimony or spousal support will vary with the disparity of the parties incomes and the length of the marriage.

Alimony can be awarded for a term of years and/or upon the death or remarriage of the parties.

Alimony is always modifiable unless the parties agree to make it non-modifiable.

Factors used to determine if alimony is appropriate

There are eleven factors taken into consideration when determining if Alimony in Michigan should be awarded.  The eleven factors are as follows:

  • The past relations and conduct of the parties.
  • The length of the marriage.
  • The ability of the parties to work.
  • The source of and amount of property awarded to the parties.
  • The age of the parties.
  • The ability of the parties to pay alimony.
  • The present situation of the parties.
  • The needs of the parties.
  • The health of the parties.
  • The prior standard of living of the parties and whether either is responsible for the support of others.

Citing: Parish v. Parish 138 Mich App 546 (1984)

The Law – Cases and statutes on alimony in Michigan

Michigan Compiled Laws (MCL), Michigan Court Rule (MCR), and the Michigan Courts provide the statutory and legal authority for spousal support in Michigan.

Sources:

MCL 552.23(1):  The court may award spousal support as is just and reasonable if the property award is insufficient for the suitable support of either party.

MCR 3.211(B)(4):  If spousal support is not granted, the judgment must either reserve the question or state that neither party is entitled to spousal support.  If the Judgment is silent, the is is reserved for possible later consideration.

Parish v. Parish 138 Mich App 546 (1984),  Factors to be considered in awarding alimony or spousal support.

Uniform Spousal Support Order:  FOC 10b (with Friend of the Court Services) and FOC 10c (without Friend of the Court Services).  Any provisions regarding spousal support (alimony) must be prepared on a Uniform Support Order.  The Uniform Support Order governs if the terms of the judgment or order are in conflict.

Uniform Interstate Family Support Act.  This act permits enforcement of an income withholding order by filing it with the State.

Interstate Income Withholding Act.  MCL 552.671 et. seq. Only the FOC can request income withholding from another jurisdiction.

Past relations and conduct of the parties:

         The Court must make findings on each spousal support factor. The conduct of a party during the marriage may be relevant in an award of spousal support or alimony.

Sparks v Sparks, 440 Mich 141 (1992)

    Fault

        is only one factor and should not be assigned disproportionate weight.

    Hanaway v. Hanawy, 

      208 Mich App 278 (1995).

    Fault:  

        The trial court is in the best position to determine the extent to which each party’s conduct contributed to the breakdown in the marriage in evaluating alimony and spousal support claims in Michigan.

    Johnson v Johnson, 346 Mich App 418 (1956)

      .

    The length of the marriage

      is a relevant factor in evaluating alimony and spousal support claims in Michigan.

    Ability to work:

      Sullivan v Sullivan,  175 Mich App 508 (1989)

        , A temporary award of alimony or spousal support in Michigan is not fair when there is serious doubt about a party’s ability to support herself after an award of temporary support.

      Goal is to balance incomes:Magee v Magee, 218 Mich App 158 (1996)

        , The objective of an award of spousal support or alimony in Michigan is to balance the incomes and needs of the parties in a way that will not impoverish either party.

      Pension benefits

        maybe distributed through a Michigan divorce property division or spousal support:

      Age of the parties.  

           Age is a factor in determining spousal support or alimony awards in a Michigan divorce.

      Demman v. Demman 195 Mich App 109 (1992)

        .
          An

      un-exercised ability to earn income:

            The ability to pay spousal support includes the un-exercised ability to earn income if income.

      Knowles v Knowles, 185 Mich app 497 (1990). Health of the parties:

         

            Health is relevant to the ability to work and to the person needs of a spouse seeking spousal support or alimony in Michigan.

        Lesko v Lesko, 184 Mich App 395 (1990)

          .

        Modification of Michigan alimony or spousal support:  

            Spousal support is modifiable upon showing of a change in circumstances.  Moving party must show by a preponderance of the evidence.

        Crouse v Crouse, 140 Mich App 234 (1985)

          .

        Non-modifiable alimony:  

            Parties can waive the statutory right to modify spousal support.

        MCL 552.28

            creates the statutory right to modify spousal support.

        Staple v Staple, 241 Mich App 562 (2000)

          .

        Remarriage:

             Remarriage in and of itself is insufficient to terminate spousal support, however it is pertinent.

        Ackerman v Ackerman 163 Mich Ap 796 (1987)

          .

        Cohabitation:

             Cohabitation with an unrelated person does not constitute a de facto marriage and justify the termination of Michigan alimony or spousal support.

        Crouse v Crouse 140 Mich App 234 (1985)

          .

        Change in need:

             Changes in need including the loss of a home, legal expenses, and unforeseen costs are sufficient factors to extend the period of Michigan alimony or spousal support.

        Aussie v Aussie, 182 Mich App 454 (1990)

          .

        Change in ability to pay:

             Ability to pay is relevant to a determination if Michigan alimony or Michigan spousal support should be increased or decreased.

         Boyer v Boyer, 30 Mich App 623 (1971)

          .

        Education is key.  I encourage you to read the articles on this website and ask questions.

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        Articles on Alimony in Michigan

        Michigan divorce law update: Alimony and tax considerations.

        Michigan divorce law update: Alimony and tax considerations.

        Alimony guidelines in Michigan

        Fault and Alimony in Michigan

        Non-modifiable alimony

        Support security – Securing the future payment of child support and alimony

        Michigan Alimony and Spousal Support video

        Support security – Securing the future payment of child support and alimony

        Support security

         

         

         

         

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        We are here to help you navigate this journey by focusing on you goals.  If you have any questions concerning any aspect of the law, let my know.  Our Michigan divorce attorneys are here to help and so am I.  My direct line is 248-399-3300 or toll free 877 YOUR FIRM. By:  Daniel Findling  (c) 2016 Findling Law The Divorce Guy, Michigan Divorce Attorneys and Specialists www.thedivorceguy.com www.divorceforum.com 877-YOUR FIRM

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