The New York legislature recently enacted a new permanent and temporary
maintenance law that will go into effect 30 days after the Governor signs the bill. It
makes marked changes to the existing law that fixed a formula approach
to the fixation of maintenance which applied only to temporary but not
permanent awards. The new bill addresses this shortcoming and provides
a formula to apply where the paying spouse has child support obligations,
as well as a different one where no
child support has been awarded.
This sweeping change also provides guidance for the length of time these
awards stay in place, and is believed to provide the impetus for more
settlements between the parties since it will be able to predict the amount
of support that will be awarded with a reasonably degree of certainty.
The other noteworthy provisions of the new bill, reduces the income cap
to apply the formula to $175,000 of combined income (the existing law
for temporary maintenance is now $543,000, based upon COLA increases since
the law was passed in 2010 at a cap of $500,000). And finally the new
law repeals existing case law that considered professional licenses, celebrity
status, and other non-tangible circumstances, as marital property, subject
to equitable distribution at the conclusion of the
divorce litigation. Put another way, a doctor, lawyer, architect and the like will no longer face a
valuation of his or her license and a percentage being award to his spouse.
It would be helpful to the reader to see how the formula will be applied
when child support is or is not awarded. The first example: Husband earns
$120,000 and the wife $50,000, the combined income no larger than the
cap of $175,000. The first step to take in determining the calculated
amount is to subtract 25% of the wife's income, from 20% of the husband's
income ($12,500 from $24,000 resulting in the sum of $11,500); then multiplying
the combined income of the parties ($170.000) by 40% resulting in the
sum of $68,000 and subtract the wife's income of $50,000 resulting
in the sum of $18,000. The lower of the two calculations will be the guideline
amount of maintenance, in this example $11,500.
Where child support is not awarded, the following calculation must be made:
subtract 20% of the wife's income, from 30% of the husbands income
($20,000), then multiply the combined incomes ($170,000 by 40%, resulting
in $68,000, and then subtract the wife's income of $50,000 resulting
in $18,000, since $18,000 is the lower amount this sum will be the presumptive
maintenance award. In calculating income under the act, all sources are
included (dividends, interest, salaries, capital gains etc., but deductions
are permitted for Medicare, FICA and city taxes actually paid.
It must be remembered that if combined income exceeds the base amount,
the court will be free to award support free of the statute formula, based
upon the needs of the party, the parties' pre-separation standard
of living and other
equitable factors found in both the old and new law.
Whether the statute will in fact reduce litigation and encourage settlements
remains to be seen, as well as the governor's signature.