A Comprehensive Guide to Spousal Maintenance in Arizona
In August, 2018 the language of a statute was made more specific regarding whether one is entitled to spousal maintenance. This article will highlight different aspects of the statute, making it easier to understand. It will also explain why spousal support outcomes in Arizona are very difficult to predict.
Spousal maintenance, also referred to as spousal support or alimony, refers to payment by one spouse to the other spouse following a divorce or legal separation. Arizona takes a needs-based approach to determine spousal maintenance, which is designed to limit the negative financial impact of divorce, by providing financial support, for a designated period of time, to a spouse who cannot meet their reasonable expenses on their own. Payments are ordered only for as long as necessary. The goals is to create a ‘bridge’ to financial independence and to encourage financial independence by the party seeking maintenance.
It is important to note that it is not a substitute or supplement for child support payments. It is a wholly separate consideration, to be paid separately. For further information, please see our articles regarding child support in Arizona.
How it Works
Not every divorce or legal separation involves spousal maintenance. It can be ordered by the court or parties may mutually agree in divorce mediation.
There is a two-step inquiry process:
1) Whether one spouse is entitled to spousal maintenance; the element of “entitlement.” In making this determination, the court considers only the circumstances of the requesting spouse. If a spouse satisfies at least one of the conditions of entitlement. The inquiry then shifts to the second step;
2) How much the spouse should receive and for what duration. If the court determines the spouse is entitled to an award, it then considers the relevant circumstances of both parties to determine whether to actually grant an award and, if so, the amount and duration. Although a spouse may be entitled to maintenance under step 1 of the inquiry, a court may nevertheless decide that an award of $0 is appropriate after consideration of the factors relevant to the second inquiry.
A spouse qualifies if they:
lack sufficient property to provide for his/her reasonable needs;
are unable to be self-sufficient through appropriate employment, or is the custodian of a child whose age or condition prevents the spouse from working outside the home;
have made significant financial or other contribution to the education, training, vocational skills, career or earning ability of the other spouse;*
had a marriage of long duration and is of an age that may prevent the spouse from gaining employment adequate to be self-sufficient; or
have significantly reduced that spouse’s income or career opportunities for the benefit of the other spouse.*
* 2018 Changes to Law: Recently, the legislature revised the entitlement factors, altering Factor #3 and adding Factor #5. The revisions took effect in August 2018 and are discussed in more detail below.
In litigation, a judge determines whether an individual qualifies, while in mediation, spouses reach a mutual agreement. Mediation provides a platform for spouses to develop their own agreements, as opposed to having a judge make the determination for them.
Understanding Entitlement Factors
ARS 25-319, states “the court may grant a maintenance order for either spouse for any of the following reasons if it finds that the spouse seeking maintenance:
“The spouse seeking maintenance lacks sufficient property to provide for his/her reasonable needs.”
The law does not explicitly define what constitutes “sufficient property,” but the courts have provided some guidance. It means property that, on its own, can provide for a spouse’s reasonable needs during their lifetime. Property allocated as part of the divorce decree is considered as to whether a spouse can provide for their needs with said property. In many cases, the property could actively produce income, either in its current form or by being converted into a suitable form.
In determining whether a person has sufficient property, the court must evaluate the property element separately and determine whether the person’s property is “capable of independently providing for a spouse’s reasonable needs during his or her lifetime.”
In an example case, the court contemplated that the wife might need to convert the non-income-producing property into the income-producing property or sell it to provide for herself. The court modified her maintenance award by limiting it to two years in order to give her adequate time to convert her property into a form that would provide for her reasonable needs going forward.
“The spouse seeking maintenance is unable to be self-sufficient through appropriate employment, OR is the custodian of a child whose age or condition prevents the spouse from working outside the homeOR lacks earning ability in the labor market adequate to be self-sufficient.”
Determining whether a spouse is able to be self-sufficient through employment requires the Judge to consider additional factors, including the current labor market and the spouse’s existing skills and experience. The courts give special consideration to older spouses who worked inside the home as homemakers, or stay-at-home-moms during long marriages, generally, because the courts find that age and years out of the job market make it very difficult to find work that supports a lifestyle comparable to that enjoyed during the marriage.
Additionally, a spouse who is the custodian of a very young child or a disabled child may not be required to seek immediate employment outside the home due to the needs of the child.
In litigation, a Judge requires each spouse to complete an Affidavit of Financial Information to show their most accurate, reasonable expenses after divorce in order to assess whether spouses are each able to self-sufficient with their own individual income. This can lead to much conflict and fighting as spouses litigate over the “reasonableness” of one another’s expenses.
In mediation, each spouse completes a Monthly Budget Worksheet, instead of the Affidavit. Spouses do this individually, but then the mediator guides spouses through making adjustments in a low conflict, cooperative way that avoids fighting and focuses on problem-solving so that the outcome of agreements allows both spouses to be financially stable. Both spouses will eventually reach terms that each believe are fair. More discussion on this process exists below in the section titled, “The Mediation Approach.”
“The spouse seeking maintenance has made significant financial or other contribution to the education, training, vocational skills, career or earning ability of the other spouse”
Under the updated law, the legislature has included a more inclusive statement to better define the intent of the above statement. Specifically indicating ways in which a spouse can contribute to their spouse’s abilities to pay spousal maintenance.
“The spouse seeking maintenance had a marriage of long duration and is of an age that may prevent the spouse from gaining employment adequate to be self-sufficient”
Judges view the duration of marriage in a very subjective way. A duration that one Judge may consider “long” may not be regarded as “long” enough by another Judge. In regard to the duration of the marriage, generally, a marriage of fewer than 10 years is considered short-term, a marriage of 10 to 20 years is considered medium duration, and anything over 20 years is considered a long-term marriage. Usually, spousal maintenance is not awarded for marriages of very short duration (for example, less than five years), but again, there is no set rule. Depending on the specific circumstances, even short term-marriages can qualify for an award of spousal maintenance.
This factor specifically looks at the issue where the duration is so long that the spouse seeking support is at an age that regardless of using maximum efforts possible, the spouse will never be able to gain employment to meet their reasonable expenses.
“The spouse seeking maintenance has significantly reduced that spouse’s income or career opportunities for the benefit of the other spouse.”
The new spousal maintenance law adds a fifth qualifying factor that expands upon the recipient’s contribution to the marriage. This condition defines the sacrifices a spouse may make to their own earning capacity for the benefit of the other spouse, due to a lack of individual financial stability.
Amount and Duration
If the court determines a spouse seeking maintenance is entitled to an award, it must then consider relevant factors, balance inequities, and exercise discretion. The amount is determined by what the judge considers to be reasonable for both the payor and the payee. The court looks to the following factors:
the standard of living established during the marriage;
the duration of the marriage;
the age, employment history, earning ability and physical and emotional condition of the spouse seeking maintenance;
the ability of the other spouse to pay spousal maintenance while meeting his/her own needs;
the comparative financial resources of the spouses;
the extent the spouse seeking maintenance contributed to the earning ability of the other spouse;
the extent the spouse seeking maintenance reduced their income or career opportunities for the benefit of the other spouse;
the ability of both spouses to contribute to the future educational costs of their mutual children after divorce;
the financial resources of the spouse seeking maintenance.
The time necessary for the spouse seeking maintenance to acquire the education or training needed to find suitable employment, and whether such education or training is readily available;
excessive or abnormal expenditures during the marriage;
the cost of health insurance for the spouse seeking maintenance; and
actual damages resulting from the criminal acts of either spouse on the other spouse or child.
There is no designated ‘point system’ or instruction as to how factors are to be weighed. Each Judge determines how much weight to give to each factor.
Litigation Approach: The Court Battle
The most challenging part of the factors outlined above is that they do not provide any set formula to determine the amount of duration of support. While child support determinations are based on very specific guidelines established by State law, the courts have far more discretion when it comes to spousal maintenance.
In the past, Maricopa County courts used a spousal maintenance calculator to help determine spousal maintenance. This gave spouses the opportunity to gage support obligations. However, in recognition of the complexity of spousal maintenance, the court has held the calculator to be invalid. Now, the courts must conduct a full review of all spousal support factors outlined by law.
Today, there are no calculators or formulas that dictate how a Judge will determine an award of spousal maintenance. Therefore, there is no way of accurately predicting what a Judge will order. There is virtually no consistency among Judges, or even among individual Judge’s orders.
While the length of the marriage and the comparative financial resources of the spouses are important considerations, the judge will take heed to the reasonable needs of the requesting spouse, in comparison to the ability of the payor spouse to meet that need. Perhaps the most important variable for those in litigation is who is assigned to be the judge in their case. Studies have shown that when multiple judges were asked to award spousal maintenance given the same fictitious facts, the awards ranged in responses from no award to a lifetime award and everything in between.
Divorce attorneys can be very aggressive in approaching this issue in the courts. Often times lawyers give spouses the opposite legal advice. One attorney may give advice that the chances of paying any spousal maintenance is very low. The other attorney may give advice that a high amount and long duration of support is very likely. And so, a battle ensues as a result of family law attorneys giving very different information to their clients.
The Mediation Approach: Healthy Problem Solving
Divorcing spouses want to know what they can expect to pay or receive, and for what duration, so they can plan their finances accordingly. In mediation, we take a comprehensive view when approaching this sensitive subject.
Generally, the receiving spouse has a shortfall in the amount they need each month to be able to pay their expenses. The payor typically has an excess amount remaining after having paid their own monthly expenses. In mediation, we assist our clients in preparing a Monthly Budget Worksheet for each spouse to reasonably, accurately, and realistically determine their anticipated expenses after divorce. Then, together with the help of their divorce mediator, spouses work on clarifying and balancing these expenses ensuring the ongoing ability of both parties to remain financially stable.
For example, parents may have a daughter who participates in gymnastics. The costs of the extracurricular activity are $300 per month. Dad may assume he is paying the expense after divorce and include this in his budget. Mom may also assume she is paying 100% of this expense. When we review together, however, we discuss how this expense will be paid. If agreed upon that Dad will pay 100%, his overall expenses stay the same. Mom’s expenses are then reduced by $300 per month. If Mom previously had a shortfall of $1000 per month, now, she only has a shortfall of $700.
Creative expense and asset division agreements maximize the benefit to both spouses and accomplish the best possible agreements regarding spousal support so that both spouse’s needs are met.
Mediation, unlike litigation, encourages creativity in establishing how spousal maintenance may be paid to create financial stability for both spouses. Spouses can even agree for payments to be made directly to certain vendors. Lump-sum spousal maintenance is also a consideration that can benefit both spouses.
Traditionally, people think of spousal maintenance as a payment from the former husband to the former wife, and historically this was most often the case. But the make-up of traditional marriage has evolved in the United States. Many marriages now including two wage earners. A husband who works primarily within the home while the wife is the wage earner has become more common as well. Therefore we also see payments from former wives to the former husbands. Gender has no effect on maintenance eligibility, amount, or duration, nor does sexual orientation.
Types of payment can range from a set duration to a staggered payment plan that lowers the amount over time. During the divorce process itself, a judge may award temporary “pendente lite,” meaning spousal maintenance pending the final divorce, to keep both party’s financial stability during the process. When the divorce is finalized, the judge may also order either temporary or permanent maintenance for a period of time. Even if a temporary award is ordered during a divorce proceeding, it does not necessarily mean spousal maintenance will be ordered after the proceedings, although it commonly is.
In mediation, we discuss temporary agreements if the financial resources of the party seeking maintenance are not stable. Instead of a temporary order being unilaterally mandated by a judge (which both spouses may be very unhappy about), in mediation, spouses reach agreements together under the guidance of a skilled mediator.
An ex-spouse can pay a lump sum award, or as is more commonly done, a monthly amount, for a specific length of time. Permanent spousal maintenance awards are becoming increasingly rare, even after long marriages. Family courts tend to look at maintenance as rehabilitative—in other words, in place so far as to allow a spouse to find a job or obtain training and education to improve employment prospects. In longer-term marriages, this can mean a longer duration of spousal maintenance.
In some situations, a court may award limited maintenance as reimbursement to a spouse who contributed to the advanced education and earning capacity of the other spouse. Courts will generally only award long term maintenance to spouses who are unable to become self-supporting — due for example to age or disability — and even then, only after long marriages. Couples may always mutually agree to provide one spouse with long-term or permanent maintenance if both agree to this form of payment structure.
Generally, spousal maintenance terminates upon:
the remarriage of the receiving spouse;
the death of either ex-spouse; and/or
the termination of the duration term.
Although this is the default under Arizona law, spouses may mutually agree to more or even fewer termination factors in mediation. Sometimes, the creative terms developed in mediation regarding the termination of support can make the difference between stalemate and full agreement. For example, a payor may agree to a longer duration than the payor believes is most fair, in exchange for an added termination agreement that upon the recipient earning an income of $60,000 per year or more, spousal maintenance is terminated.
Paying Spousal Maintenance
Spousal maintenance payments are traditionally ordered to be made through an Income Withholding Order from the paying spouse’s paycheck to the Arizona Support Clearinghouse. This means that the court’s order directs the employer of the spouse to deduct the amount of spousal maintenance directly from their paycheck, and then the employer sends this money to the Clerk of the Superior Court. The Clerk records the payment and sends the money to the spouse who is entitled to receive the spousal maintenance payment. Self-employed or unemployed spouses must make spousal maintenance payments directly to the Clerk of the Court.
In mediation, you can also mutually agree to have payments made via automatic direct deposit between the spouses. Some spouses prefer this method to avoid any State involvement in the action payment of support or for the sake of convenience.
For example, whereby agreement, the amount of spousal maintenance changes several times during a short period, the time and effort to record and institute those changes of amounts may be reason enough for some spouses with a relatively high degree of trust to agree that payments happen from payors bank account directly to recipients bank account automatically on the same day each month. Each situation is different and each spouse may have different thoughts the payment method that feels most safe and reasonable.
Are Spousal Maintenance Payments Taxable?
The new Federal Tax Law passed in 2017 has changed the tax liability of spousal maintenance payments.
As such, to the public’s general knowledge, if a divorce or legal separation is finalized (stamped by the court) before December 31, 2018, spousal maintenance payments will be tax-deductible for the payor and taxed as income for the recipient, unless otherwise agreed. Tax deductibility to the payor of spousal maintenance is grandfathered in regardless of the length of spousal maintenance, so long as the divorce or legal separation is final prior to December 31, 2018. This means that payments will be deductible to the person paying support and taxed as income for the person receiving support.
However, if a divorce or legal separation is finalized after December 31, 2018, spousal maintenance payments are not tax-deductible to the payor and not taxed as income to the recipient.
Modification of Spousal Maintenance
Traditionally, the courts will only order the award as modifiable, however, parties may mutually agree in mediation that it will be non-modifiable, meaning that the amount or duration can never be changed under any circumstances.
In most cases, if a spouse chooses to waive spousal maintenance, they are forever forfeiting this right. Upon forfeiture, only a mutual agreement by the parties in mediation at a later date can result in a new award being enforced.
There must be a ‘substantial and continuing change in circumstances’ in order to make a modification. Whether a change has occurred, is determined by comparing the current circumstances of the spouses to their circumstances at the time of the modification request. Alleged changed circumstances must be proven by the party seeking modification.
Mediation also provides services for former spouses wishing to make changes to their original divorce decree, also known as a post-decree modification. In these mediation meetings, spouses may mutually agree to modify spousal maintenance payments, even without a substantial and continuing circumstance.
Spousal Maintenance Modified Due to Loss of Income
Perkins v. Perkins (AZ Court of Appeals Division One) addressed the family law question of a substantial change of circumstances for the purpose of modifying a spousal maintenance order and what constituted ‘continuing‘ (as opposed to temporary) changed circumstances.
The Perkins case tells us:
failure to negotiate and/or recognize the reality of the circumstances will be considered unreasonable;
failure to make appropriate disclosure will be considered unreasonable; and
a single factor is sufficient to justify the modification of a spousal maintenance order.
Are Prenuptial Agreements regarding Alimony Enforceable in Arizona?
A couple may choose to limit or eliminate spousal maintenance through a prenuptial agreement, which is an optional contract signed by the parties before marriage. Upon divorce, the court may uphold the couple’s agreement where the court finds the premarital agreement is valid. Arizona law does provide an exception where a spouse would become eligible for public assistance or welfare benefits absent support. If this is the case, the court may decline to uphold an otherwise valid prenuptial agreement.
In divorce mediation, spouses often follow the prenuptial agreement. However, spouses may also agree to do something different.
For example, a premarital agreement signed 20-years prior to a divorce may read, “in the event of a divorce, neither party shall pay the other spousal support.” When the premarital agreement was created, they had no children, and the wife had a higher income than the husband. Years later, they had children, and the wife worked within the home caring for the children. The wife remained unemployed for nearly 18-years. Today, they agree to share equal time with their children. As the wife is only capable of earning minimum wage and husband is earning $80,000 per year, they can agree to reasonable payments to allow financial stability for both parents through discussion in mediation.
Judgments are strictly enforced by the court and are non-dischargeable in bankruptcy. If a spouse fails to pay court-ordered maintenance, there are options for enforcement actions through the court.
For example, the court can place a lien on the property of the spouse defaulting on payments, seize the tax returns of a said spouse, collect through an income withholding order, or levy against a bank account of said spouse. The deadline to request a judgment for unpaid support is three years after the order has terminated. After securing a judgment, it need not be renewed. The judgment will remain in full force and effect. Further, failure to pay the judgment is a class 1 misdemeanor.
We hope this article has been illuminating. These guidelines apply to both litigation or mediation. Mediation may allow for more productive conversations, that result in deviations that better reflect what both spouses believe is most fair.
The Arizona Support Guidelines, while at times complicated, create a general guide. Regretfully, the guidelines leave a great deal of interpretation by the Judge presiding over the case. A skilled professional family mediator can help you have collaborative conversations to help you reach the best possible agreements for your situation.