New Maintenance (alimony) Law Awaiting Governor's Signature

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.