“Savings Alimony” – Really?

By: David A. Riggs

According to the Florida Supreme Court in a 2000 case called Mallard v. Mallard, alimony is not intended to provide for the accumulation of capital (i.e., savings) by the alimony recipient.  It is intended to provide current necessary support to the alimony recipient.  “Savings alimony”, as some courts have phrased it, is prohibited under Florida law.

Because of this prohibition, trial courts are not supposed to include even $1.00 of alimony for post-divorce savings. The “rule” seems to be that the alimony recipient is supposed to spend the last dollar of each month’s alimony on the last day of the month.

But, can you get around this prohibition on “savings alimony”? A recent case from the Fourth District Court of Appeal (Regan v. Regan, April 12, 2017) suggests that the answer to this question is “quite possibly”.

How did Mrs. Regan achieve such a favorable result?  Here’s what happened:

The parties’ Marital Settlement Agreement provided the Former Wife with some assets, plus alimony of $9,000.00 per month. While that sounds pretty good, the Former Wife’s cost of living at the time of the divorce was in excess of $15,000.00 per month. After the divorce was finalized, the Former Wife voluntarily reduced her cost of living by more than 50%.

Her reward for this exercise in responsibility? Her Former Husband sued her to decrease his alimony because, he said, the Former Wife no longer needed so much alimony.

His reward? The trial court reduced his alimony. However, the alimony reduction was only $1,200.00 per month, to $7,800.00 per month which, coincidentally, was precisely the amount needed to cover the Former Wife’s new, reduced level of monthly expense plus her income taxes.

Both sides were unhappy with this result. Both appealed to a higher court.  As we know, in a dispute like this, only one side can win.

And, the Former Wife won, but she may not feel that way. The Former Wife, possibly seeing herself as an example of the maxim that no good deed goes unpunished, did not think that her alimony should be reduced at all.

The Former Husband, on the other hand, did not think that the alimony reduction was nearly sufficient. He thought that the trial court should have imputed income to the Former Wife as if she were employed and that the trial court should have taken into account income available to the Former Wife from her investment and retirement accounts. According to the Former Husband, when these sources of income are taken into account, the Former Wife is receiving from him alimony in excess of Former Wife’s needs. That is, according to the Former Husband, the Former Wife is receiving the prohibited “savings alimony”.

The Former Husband’s position seems pretty reasonable given the prohibition on “savings alimony” and considering that the Florida Alimony Statute requires the court, in determining the amount of alimony, to consider the income available to both parties from investments and the earning capacity and employability of the parties.

Nevertheless, the Fourth District Court of Appeal affirmed the trial court’s $1,200.00 per month reduction in alimony, thereby making both the Former Wife and the Former Husband, once again, unhappy.

The Former Wife seems to have been the real “winner” because she was able to have her living expenses fully paid through the alimony she receives. Plus, she gets to keep all of the income from her investment accounts and retirement accounts, and, if she were to choose to go to work, from her employment. That sounds a lot like “savings alimony”.

How did the Former Wife get this great result?

Interestingly, the court refused to impute income from employment to the Former Wife.  The court stated that the Former Wife had not been employed outside of the home for the entire marriage and the parties’ Marital Settlement Agreement did not require the Former Wife to become employed. The court said that if the parties intended to impute income to the Former Wife for purposes of support they should have put a provision to this effect in their Marital Settlement Agreement.

The trial court also stated that the parties’ Marital Settlement Agreement never contemplated the Former Wife using any income from her assets for her support, saying that this income was for the Former Wife to spend or, presumably, save, as she wished.

Perhaps, the concurring opinion (which, in part, objected to any reduction in alimony) gave the real motivation for this result stating: “That the former wife voluntarily decided to reduce her standard of living after the divorce, in order to make funds available either to save or to spend, was her decision.  The husband should not benefit because the wife has chosen to spend her money differently after the divorce than she did prior to divorce.  The principle of Mallard has no application in these circumstances.  To hold otherwise creates disincentives for an alimony receiving spouse to save for his or her old age or for health care expenses . . .”  Stay tuned.  This may not yet be over.

David A. Riggs is a Boca Raton family law attorney, focusing his practice in the areas of marital and family law, probate litigation and guardianships.  He can be reached at 561-241-3113.

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By |2017-09-19T12:13:25+00:00September 19th, 2017|Blog, Marital & Family Law|