Michigan: Length and Amount of Alimony Q

[gttriathlete]

What is the name of your state? Michigan

I am in the middle of divorce proceedings, and everything has been decided except alimony. There is a wide gap in expectations, and I need to know whether to work amicably or take to a mediator. I'll provide some facts, and any help you can give to help set my expectations would be greatly appreciated.

Bottom Line:

She expects 2000/mon alimony for 4-7 years, I expect to pay 2000/mon in the first year, but declining in years 2 and 3 until year 4 when she is on her own.

Facts about our situation:

Length of marriage:
- 15 years

Past relations and conduct of the parties
- No physical abuse
- No emotional abuse (she may attempt to establish verbal abuse and repression, I think the argument is very weak - no worse than a similar argument going the other way
- Cordial relationship until 2004 (May)
- Poor behavior from her (an affair) Aug - Oct 2004 (which still continues)

Ages:
- I am 38
- She is 39

Property of Each Spouse
- Divided right down the middle
- About 100K each

Earning capacity of each spouse
- Me - current - 150K
- Me - short term potential - 150K
- Her - current - 33K (working 3 days / week)
- Her - short term potential - 55K (working full time), or up to 80K (job change with current skillset - she's resisting the 'pressure' of switching jobs

Impairments in earning capacity
- None

Children at Home
- 11 year old, full time school
- 5 year old, school 3 days / week. Will go full time in 9 months.

Standard of living:
- Comfortable, but not extravagant
- Great schools, big house, not much else lavish
- Full time au-pair (40 hrs / week) to support the family

Contribution of one spouse to the other's career
- Jointly paid off HER student loan with our assets
- SHE supported me while out of town for 10 weeks on training
- I supported her by moving to New York for her career (1996)
- She supported me by managing the household while I traveled full-time (1999)
- We jointly elected to move to Michigan after I became unemployed (2001)
- She supported me with time (not money) for getting an MBA 2003-5

Fault
- I will claim that Her extramarital affair in aug - oct 2004 was the causal
- She will claim that the marriage was over long before that - and that I was the causal over the years for neglect

Tax consequences and prenups are not factors...

 

[BelizeBreeze]

The first piece of advice is to NOT sign any agreement with specific terms such as a fixed period or amount of alimony. Pinka v Pinka, 206 Mich App 101 (1994)
Although in Michigan, alimony is modifiable with a showing of a change in circumstances, with the above it is not.

Secondly, while no one can tell you if this information is relevant since we are not the judge being asked to sign off on the agreement, we can give you advice based on the statute.

The following factos affect the award of alimony:
The past relations and conduct of the parties;
The length of the marriage;
The ability of the parties to work;
The source and amount of property awarded to the parties;
The ages of the parties;
The ability of the parties to pay alimony;
The present situation of the parties;
The needs of the parties;
The health of the parties;
The prior standard of living of the parties and whether either is responsible for the support of others;
The general principles of fairness.

I have bolded parts of the above for this reason. To judge what is 'fair' and equitable in your situation we would have to know the elements of the property settlement and any child support and extra expenses for which you are responsible. (i.e., the au pair, schooling, medical, etc.)

Hatcher (1983) 129 Mich App 753 (The trial court in this case labeled a share of the pension benefits as "alimony." The appeals court said that this was all right.

Furthermore, courts in Michigan have a very wide range of decision-making, and so, as a practical matter, considerations of fault may influence their decisions about alimony.

Ianitelli (1993) 502 N.W.2d 691, 199 Mich.App. 641.
(In this case, the judge ordered the husband to pay $12,000 a year in alimony. The judge took into account the twenty-year duration of the marriage, and the husband's substantial assets. The decision was also made in light of the husband's gambling in the early years of the marriage, despite the wife's concern at that time for financial stability. At the time of the divorce the husband was forty-seven and the wife was fifty years old. Both parties were in good health. The husband was earning $130,000 a year while the wife was earning $28,000.

The husband also owned $200,000 worth of stock in his family's business. Although the husband claimed that the wife should not have been awarded alimony because she was cohabiting with a male companion, the court disagreed. The wife's cohabitation was not a change in circumstances, as the court and the husband both knew the cohabitation was taking place at the time of the divorce.

Additionally, although the wife had no rent or mortgage expenses, there was no evidence that her companion was providing any other support for her. The court also could not conclude the award of alimony to be unfair in light of the great difference in income between the two parties.)

Now that you have a fuller understanding of what is relevant and what is not, and for your information, your already knowing about the affair renders it moot in alimony proceedings, you can make an offer based on the facts.

 

[gttriathlete]

Additional detail: We have 200K in assets, and have agreed to split them right down the middle. I will pay the mandated 36K in child support annually, and keep the children on my medical benefits. The au-pair costs 17K a year, and currently will be paid for by her.

 

[BelizeBreeze]

Additional detail: We have 200K in assets, and have agreed to split them right down the middle. I will pay the mandated 36K in child support annually, and keep the children on my medical benefits. The au-pair costs 17K a year, and currently will be paid for by her.

so what will your offer be?

 

[LdiJ]

Taking it to a mediator still falls within "handling it amicably". Its when you have to go beyond that, that you pass the level of "amicable", and get into the level of "hostile".

What you don't want to do is spend so much money on legal fees that you defeat the purpose of coming to agreements. With the income disparity between the two of you there is a reasonable possibility that you could be ordered to pay for her attorney as well as for your own. Therefore you want to make sure that you don't take this to the point where even if you win, you end up spending just as much in total as you would have if you had agreed to what she wanted......and heaven forbid you lose and pay what she wanted PLUS tons of legal fees.

Also, you need to remember that child support is non-deductable to you. However alimony is above the line tax deductable to you, and taxable income to her. So you have some opportunity for negotiation that could mitigate the "net" costs to you.

You may want to consult a tax consultant as well as an attorney during your negotiations.

 

[gttriathlete]

so what will your offer be?

Keeping in mind the best interest of the children, I'd look to maintain as much continuity as possible for them in the short run, as well as providing some stipend for her to become "self sufficient". This dictates that I would most likely be inclined to support substantial alimony in year 1.

I believe a fair and desirable outcome would be to offer a significant amount of aliminony in year 1, but decreasing in yr 2, and smaller yet (and ending after) year 3. This provides incentive for her to aggressively pursue her career to raise her income to sustainable levels. Something like (don't choke) 1700/mo year 1, 1100 mo year 2, and 500 mo year 3. I would make this non-modifiable alimony, as I am not concerned about my ability to pay (I have assets that could be cashed in to provide the benefit in lump-sum).

Now...your question was...what's my offer? I would offer less than this, knowing that the negotiation would probably move my original offer. I would probably offer 1000/mo for 2 years and 500/mo for 1 year, initially. I would ensure that by 'giving' more support in year 1 that I received consideration by shortening the length of the alimony commitment (no longer than 3 years).

An alternative would be to offer a lump sum in year 1 of 25K (need to make sure this could be treated as alimony with the tax guys).

Thoughts?

 

[gttriathlete]

Taking it to a mediator still falls within "handling it amicably". Its when you have to go beyond that, that you pass the level of "amicable", and get into the level of "hostile".

What you don't want to do is spend so much money on legal fees that you defeat the purpose of coming to agreements. With the income disparity between the two of you there is a reasonable possibility that you could be ordered to pay for her attorney as well as for your own. Therefore you want to make sure that you don't take this to the point where even if you win, you end up spending just as much in total as you would have if you had agreed to what she wanted......and heaven forbid you lose and pay what she wanted PLUS tons of legal fees.

Also, you need to remember that child support is non-deductable to you. However alimony is above the line tax deductable to you, and taxable income to her. So you have some opportunity for negotiation that could mitigate the "net" costs to you.

You may want to consult a tax consultant as well as an attorney during your negotiations.

As far as attorney payment the assets / debt is being split down the middle, with the attorney debt being just one of many family liabilities, so the more WE spend, the less WE have. It's coming dollar-for-dollar out of her pocket as well. So that's a non-issue.

The tax treatment of alimony is known and comprehended in our discussions. Got that covered. And we will put a clause in the agreement, at least for year 1, that says any tax liability / refund will be split between the two of us - the total tax picture is too complicated to put each individual tax ramification in the written agreement, so we'll do it at a summary level.

The mediator will cost between 3 and 10K. That's a lot of dough, when we may not even reach agreement there. The mediation is non-binding (obviously), and our disagreements are fundamental - her entitlement vs. her responsibility. Mediation would only reflect this fundamental disagreement, so we're going to try to work things out in a slightly different way for starters...by educating ourselves via divorce counselor. I don't know whose expectations are out of whack, but someone's are...