Spotlight on “Twilight” Alimony
"Establishing, modifying or terminating alimony can be challenging, especially when one or both parties is" "approaching retirement age, the twilight of their income and earning potential. With the divorce rate for Americans" "over 50 already double what it was in 1990, the issue of “twilight” alimony is becoming increasingly common."
The twilight divorce
The duration of the couple’s marriage has always been a factor in alimony cases. But when couples separate and divorce after two or three decades of marriage, chances are one or both are close to retirement, if not already retired. How does that impact the amount and duration of alimony?
An initial question is whether the retiring spouse is doing so to avoid or minimize an alimony obligation. What is a reasonable retirement age? There is no bright-line test, of course.
Undoubtedly, the spouse seeking alimony believes that the financially superior spouse should never retire, especially if the financially dependent spouse has been scorned.
The would-be payor, on the other hand, wants to enjoy those “twilight” years without being burdened with hefty and long-term alimony payments. However, the payor won’t want to defend a voluntary impoverishment claim as a result of what might be considered early retirement.
Some might argue that a reasonable retirement age is 62, when one is first eligible to receive Social Security benefits. For others, retirement begins only upon eligibility for full Social Security benefits, currently between ages 65 and 67. For others, retirement begins whenever one wants to retire or is able to retire. In all cases, the health of the would-be payor spouse and the financial circumstances of the parties also need to be considered.
Once the retirement age issue is resolved, in establishing the amount and duration of “twilight” alimony one must consider Social Security benefits, pension benefits, retirement distributions (mandatory or optional), income earned on investments, and other assets. Should mandatory minimum distributions from retirement assets be considered by the court in computing income, even if the retirement and non-retirement assets are equally divided? Clearly, where the would-be payor has retired, is about to retire or is ready to reduce his or her work hours, there are challenges in obtaining an alimony award for a dependent spouse who did not work or who worked very little during the marriage and who is not likely ever to be self-supporting.
Retirement as a basis for termination/modification
Terminating or modifying an existing alimony award when the payor spouse retires or is close to retiring is challenging.
In an unreported opinion, the Maryland Court of Special Appeals (“CSA”) analyzed whether Mr. Diese’s retirement was a sufficient basis for terminating his $150 per month indefinite alimony obligation and whether his retirement constituted a material change warranting modification of indefinite alimony. Diese v. Diese, No. 2356, September Term, 2012, filed Jan. 16, 2014.
Section 11-108 of the Family Law Article provides that alimony terminates “if the court finds that termination is necessary to avoid a harsh and inequitable result.”
In Diese, the CSA disagreed with Mr. Diese’s assertion that the reduction in his income due to his retirement would create a harsh and inequitable result, and found no abuse of discretion in the lower court’s decision not to terminate alimony.
The lower court in Diese compared the parties’ expenses and ability to pay those expenses. Although Mr. Diese was not able to meet his needs with his Social Security and military retirement income, the lower court, in denying Mr. Diese’s request to terminate alimony, considered the value of Mr. Diese’s retirement assets, along with the income his current wife earned.
As an alternative to termination of alimony, a retiring spouse may seek modification of the obligation. FL §11-107(b) allows a court to “modify the amount of alimony awarded as circumstances and justice require.” This seems to be a far less onerous standard than the standard for alimony termination under Section 11-108.
While a substantial change in one’s financial circumstances may warrant a change in spousal support (see, Campitella v. Johnston, 134 Md. App, 689 (2000)), the CSA in Diese noted that retirement alone does not necessarily constitute a material change sufficient for alimony modification.
Moreover, according to the CSA, “reliance on monthly incomes alone paints an incomplete picture.”
This is particularly true in retirement. All of the alimony factors set forth in FL §11-107(a) must be considered. Obviously, the division of the marital assets pursuant to the divorce, as well as the non-marital assets retained by one or both parties, becomes very important in the court’s analysis.
In Ridgeway v. Ridgeway, 171 Md. App. 373 (2006), the reduction of the payor’s income due to retirement warranted a reduction in alimony; but, in Diese, Mr. Diese’s retirement did not constitute a material change in circumstances sufficient to reduce his $150 monthly alimony obligation.
In Ridgeway, the CSA rejected the payor spouse’s argument that his retirement necessitated termination of alimony, finding instead that alimony modification was appropriate.
Overall, these cases point out that establishing, terminating or modifying alimony as the parties retire and enter their “twilight” years requires thoughtful analysis of all the statutory alimony factors.
Carol Ghingher Cooper and F. Kirk Kolodner are Members of Adelberg Rudow and focus their practice on family law. Ms. Cooper can be reached at 410-986-0852 or CCooper@AdelbergRudow.com. Mr. Kolodner can be reached at 410-986-0830 or KKolodner@AdelbergRudow.com.