Maintenance (also known as “alimony” or spousal support”), is a periodic payment from one spouse to the other to compensate for a spouse’s inability to provide for his/her reasonable financial needs during a dissolution proceeding and/or following the parties’ divorce or legal separation. Under Colorado law, the court may order the payment of maintenance in an action for dissolution of marriage or civil union, an action for legal separation, and an action for declaration of invalidity of marriage (i.e. annulment). Maintenance is not an entitlement as the court will not automatically award it to every spouse who requests it. Nor is it a handout as each party is expected to contribute to his/her reasonable support whenever possible. Permanent or “life-long” maintenance is rarely awarded – although the maintenance statute suggests that the court may award maintenance for an indefinite term where a marriage exceeds twenty years.
Do the Colorado courts utilize a maintenance formula?
For cases filed after January 1, 2014, the Colorado courts utilize statutory guidelines to both calculate the amount of the maintenance award and determine its duration. The maintenance statute notes that these guidelines are advisory, and were implemented to “assist the court and the parties in crafting maintenance awards that are fair, equitable, and more consistent across judicial districts.” C.R.S. §14-10-114(1)(c). In addition to performing a guideline calculation, the court must consider “the totality of the circumstances” when calculating a maintenance award including such factors as the respective financial resources of the parties; the marital lifestyle; the age and health of the parties; and, their relative contributions to the marriage. Utilizing these and other factors, the court has considerable discretion to deviate from both the guideline amount and/or duration. The court is also permitted to award one spouse additional marital property or to adjust the distribution of marital property and debt to alleviate the need for maintenance or to reduce the amount or term of the award.
Is maintenance awarded in every case where one spouse earns more than the other?
Maintenance is always discretionary with the court. Before awarding maintenance, the court will develop a clearer picture of each party’s financial circumstances. This includes their respective gross incomes as well as an assessment of the marital property they have each received, their respective financial resources and the reasonable financial need established during the marriage. The court then looks at a variety of factors, including the guidelines, to calculate the amount and duration of a proposed maintenance award. Lastly, the court will determine if the party seeking maintenance lacks sufficient property to provide for his/her reasonable needs and is unable to support himself or herself through appropriate employment, including the care of a child whose circumstances or condition make it inappropriate for that party to work outside the home.
What are the tax effects of a maintenance award?
Typically, a party paying maintenance pursuant to a court order may deduct these payments on his/her taxes. The party receiving maintenance must declare these payments as income. To further complicate things, if maintenance payments decrease or end during the first three calendar years in which maintenance is paid, the IRS applies a maintenance “recapture” rule and the maintenance deduction may be disallowed or “recaptured.” In addition, payments which are reduced within six months of the parties’ child attaining the age of 18, 19 (the age of majority in Colorado) or 21, may be treated as child support (which is non-deductible). Readers are cautioned that the tax laws often change and parties to a divorce are best advised to consult their own accountant(s) and/or other tax professionals to determine the tax impact of a potential maintenance award.
Can maintenance be modified?
Maintenance may be modified upon a “showing of changed circumstances so substantial and continuing as to make the terms unfair.” C.R.S. §14-10-122(1)(a). Modifications will only affect installments that accrue after the request to modify has been filed with the court. Maintenance terminates upon the death of the payor and the remarriage of the recipient (unless the parties have agreed otherwise). Cohabitation with a romantic partner is not a grounds to terminate maintenance unless the parties have otherwise agreed in writing.
If a marriage is legally terminated, how does the Colorado maintenance statute justify the continuing obligation to support a former spouse?
The legislative declaration which introduces Colorado’s maintenance statute notes that the “economic lives of spouses are frequently closely intertwined in marriage and that it is often impossible to later segregate the respective decisions and contributions of the spouses.” C.R.S. §14-10-114(1)(a)(I). Consequently, it is unreasonable to penalize a spouse who is unable to achieve financial independence at the time of the divorce, as the actions and decisions of both spouses during the marriage likely contributed to the present-day disparity in their incomes. Where one “spouse needs support and the other spouse has the ability to pay support,” the maintenance statute seeks to make the financial impact of the divorce more “equitable,” by apportioning the financial consequences of the parties’ economic decisions and contributions during their marriage between them. This may be accomplished by awarding a greater share of the marital property to the lower earning spouse and/or an award of maintenance to assist the recipient spouse in making the life-style adjustments (including job training or additional education) necessary to accommodate his/her reduced economic circumstances.