Mountain Law: New law will help determine who gets the mine and who gets the shaft
July 19, 2013
In Colorado, "maintenance" is the amount of court-ordered support paid by a higher earning spouse to a lower earning spouse each month for a specified period of time following a divorce. For decades, Colorado courts determined the amount and duration of maintenance on a case-by-case basis after considering various factors. The wide discretion given to courts in this regard often resulted in similar cases being decided differently in different jurisdictions. A new Colorado law discussed below introduces guidelines designed to promote consistency in maintenance awards.
The new law will apply to divorce cases filed on or after Jan. 1, 2014. If a divorcing spouse requests maintenance, the law requires the court to initially make a series of findings that help determine, in essence, the requesting spouse's "need" to receive maintenance and the other spouse's "ability to pay." The law then allows the court to award maintenance after considering a statutory formula, as applicable, and a list of factors.
The court must also determine that the spouse requesting maintenance lacks sufficient property to pay for his or her reasonable needs and is unable to support himself or herself through appropriate employment (or is the custodian of a child who condition or circumstances make it inappropriate for the spouse to be required to seek employment).
The court is only required to consider the maintenance formula described above where the parties' marriage is at least three years and their combined annual adjusted gross income does not exceed an amount currently set as $240,000. The duration of maintenance payments under the formula increases based on the length of the marriage. Where the marriage exceeds 20 years, the court cannot award maintenance for less duration than provided in the formula without specifically justifying this result.
When the formula applies, it provides for maintenance equal to 40 percent of the higher income spouse's monthly adjusted gross income less 50 percent of the lower income spouse's monthly adjusted gross income. The maintenance is, however, capped at 40 percent of the parties' combined monthly adjusted gross income. For example, where the wife's adjusted gross income is $10,000 per month and the husband's adjusted gross income is $4,000 per month, the formula would result in a maintenance award of $2,000 per month (which is acceptable because it does not exceed the $4,000 cap).
It is important to note that the formula is only advisory. The court is still permitted under the new law to determine maintenance that is fair and equitable based upon the totality of the circumstances notwithstanding the formula.
Many commentators have concluded that the statutory formula provides higher maintenance than is typically awarded in divorce cases under current law. If courts follow the formula in cases going forward, as they appear likely to do, it is possible that this will be adverse to higher income spouses. These parties may be obliged to argue to the court based on other factors why the court should not follow the formula.
The new law does not affect divorce cases that have already been decided or that are filed before Jan. 1, 2014. Parties should consider the potential impact of the law when deciding whether to file before or after the law's effective date. For instance, it would appear advantageous for lower income spouses to file after Jan. 1 to take advantage of the apparently generous maintenance formula (and vice versa for higher income spouses).
The new maintenance law will help guide judges when they determine how much maintenance should be awarded and for what duration, while still leaving the final decision about maintenance in the discretion of the judge.
Noah Klug is owner of The Klug Law Firm, LLC, in Summit County, Colorado, emphasizing real estate, business, and litigation. He may be reached at 970-468-4953 or Noah@TheKlugLawFirm.com.
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