Over the past few years, there has been a trend among states to reform alimony (i.e., spousal support). New Jersey is the latest state to join this so-called Alimony Reform Movement, joining Massachusetts, Maine, Florida and Texas. In the past few years, many states have enacted or tried to enact legislation reforming alimony.
In my opinion, some states have gone to the extreme and some have made more moderate adjustments. Texas now has limited alimony terms, such that in Texas, payments cannot exceed 3 years unless the person seeking alimony has a disability and the amount is capped at $2,500 a month or 20% of the paying spouse’s monthly gross income. I don’t agree with Texas’ approach as I don’t think every fact pattern or divorce case fits the Texas model. If it did, most divorce lawyers would be out of business. I believe that a progressive approach is more practical. I prefer the Maryland model, which strongly favors rehabilitative alimony but has not yet ruled out the concept of permanent or indefinite alimony. Here is a brief background behind Maryland’s alimony laws:
Historically, “[u]ntil 1980, the only alimony the Courts in Maryland could award was technical alimony. Technical alimony was defined as a money allowance payable under a judicial decree by a husband, at stated intervals to his wife, or former wife, during their joint lives or until the remarriage of the wife, so long as they live separately, for her support and maintenance.” Bricker v. Bricker, 78 Md. App. 570, 572, 554 A.2d 444, 445 (1989). However, “[i]n 1976, Marvin Mandel, then Governor of Maryland, established a Commission on Domestic Relations Law ‘to undertake a complete study of the constitutional, statutory, and common law concerning domestic relations, including the laws concerning marriage, the dissolution of marriage, the rights and obligations attendant upon or accruing from each, and the procedures for resolving and adjudicating domestic disputes.’” Id. at 573. The Commission’s first report was “the impetus for sweeping legislative changes in property rights in the event of divorce in Maryland. The second report of the Commission dealt with alimony.” Id. In the Report, the Commission referred specifically to the term “alimony award” and stated: “The award of alimony in the ordinary case should be for a specific time, and that time should be stated in the Order or Decree making the award. Preferably, that time should be fixed in relation to a specified program or goal on the part of the recipient party that will lead to self-sufficiency before that time.” Id.
Regardless of where each state stands on the issue of alimony, the driving force behind the sweeping alimony reform legislation is the change to the make-up of the “prototypical” American family. The “normal” American family of today is a lot different from the family of the 1970s, when most of the alimony laws were enacted. In the 70s, the typical family model was comprised of a stay-at-home mom who raised the children while the father served as the sole income earner. Today, that has changed. Today’s family models have every conceivable combination, both spouses working, only the father working, and more-and-more, working wives with stay-at-home dads.
So what should couples do to protect their assets?
Commonly-used legal instruments include both pre-nuptial (an agreement entered by a couple before the marriage which outlines what will happen in the event of a divorce) and/or post-nuptial agreements (an agreement entered by a couple after marriage which outlines what will happen in the event of a divorce). Traditionally, pre-nuptial agreements were usually used in second marriages and/or marriages where one of the parties had significant assets, had a family business to protect, or children from a previous relationship. But recently, with a boom in IT and technology industry, there is a growing trend for pre-nuptial agreements among young professionals. Most of them are in their late 30s or early 40s and either own a business or have substantial equity in a business. A pre-nuptial agreement is an excellent tool that the soon-to-be spouses can use to predetermine the preservation of, and division of, assets in the event of a divorce. But pre-nuptial agreements can be tricky and require several important steps, such as full financial disclosure and opportunity for legal consultation. While you may be able to download a form from Google®, you should definitely consult an attorney before entering into a pre-nuptial agreement because you want to make sure that all of your rights are protected and/or preserved.
As for preservation of retirement benefits, a common misconception is the belief that the minute you get married, you have to split your retirement benefits. Generally, most jurisdictions define marital property as commencing from the day you get married until the date you get separate and/or divorced. So if you come into a marriage with a $100,000 401K Plan, that amount is considered as non-marital. So if you get divorced 10 years later and your 401K is now $400,000, the courts will likely consider $300,000 to be martial property[1] and the original $100,000 as non-marital. As the law does defer in each jurisdiction, be sure to consult a divorce lawyer to find out the specifics in your jurisdiction.
Prior to getting married, particularly if the soon-to-be-newlyweds have significant assets, it is prudent to consult a family law attorney to find out what your rights are both before and after a marriage and where your state stands on the dissolution of a marriage. Most divorce lawyers offer consultation (either free or at a reasonable hourly rate) so take advantage of that resource. In many respects, an hour consultation could be well worth it in the long-run.
Reza Golesorkhi is a partner in the family law practice group at the prominent Law Firm of Joseph, Greenwald & Laake. P.A. (www.jgllaw.com). He can be reached in his Rockville office at 240-399-7892 or by email at rgolesorkhi@jgllaw.com
[1] There are methods in which additional accrual of funds during a marriage can be considered non-marital property. However, as that goes against the general rule that all property accrued during a marriage is joint-martial property, this can be a difficult argument to prevail upon. A seasoned family law attorney and/or financial planner will be able to assist in these determinations.
