Maintenance (Alimony)

What is a Vocational Evaluation and When is it Needed?

nelsonda Child Support, Maintenance (Alimony) , , , , , , ,

In many family law cases, support is a hotly contested issue. When child support or maintenance (alimony) are at issue, many worry whether their former partner is being truthful about their income or what they can earn. For example, your former partner may have a degree that would allow them to earn $80,000 a year but instead, they are choosing to work a lower-paying job or simply stay at home. In that situation, an accurate idea as to their earning capacity is very important, especially because that is a factor the judge considers when making determinations regarding child support and maintenance. Trying to accurately determine your former partner’s income or income potential is not something you can do on your own. Thankfully, there are individuals known as vocational experts (or evaluators) who do the hard work for you.

Vocational experts conduct interviews with your former partner that assess a variety of factors including age, health, education level, prior work history, job skills, and the job market. The vocational expert may review your former partner’s resume during this interview. The information gathered is then summarized and used to formulate recommendations regarding employment opportunities and salary potential. The results are based on objective criteria, meaning your former spouse cannot escape the reality of what they could, or should, be earning. This objective analysis is incredibly helpful to attorney in negotiating child support or maintenance amounts, and for judges who make the final determination.

Whether or not to use a vocational expert, and who to select as the appropriate vocational expert, can be a decision that a family law attorney can help you make based upon the needs of your case. It is possible that your former partner may also want you to submit to a vocational evaluation as well. Depending on the situation, both you and your former partner may be responsible for any costs associated with the vocational evaluation, or just one of you. Should the party who is supposed to obtain a vocational evaluation refuse to do so, a court may order compliance.

If you are interested in or in the process of negotiating child support or maintenance payments, contact Nelson, Krueger & Millenbach, LLC at (414) 258-1644 to speak with one of our attorneys regarding your specific situation. 

When Can I Retire and Stop Paying Maintenance or Alimony?

nelsonda Maintenance (Alimony) , , , , , , , , ,

If you are currently paying maintenance or alimony to an ex-spouse, a question that is likely on your mind is “when can I retire?”. This is a very simple question that has a very complex answer. 

If your divorce decree has a set date for the termination of maintenance, whether it is at the expiration of 60 months or after the payment of 120 months of maintenance, then the court will expect, absent some extenuating circumstance, you will work through the date of the termination of maintenance payments.  An extenuating circumstance might be, for example, if you experience a medical condition that requires you to stop working or causes you to work less. In these instances, a court might consider this circumstance in modifying or terminating your maintenance.  If the demands of your job change, where working at the same pace becomes difficult, perhaps the court will consider the new requirements in determining whether to modify or terminate maintenance.  It is important to understand that if you have a set time frame for maintenance, you may have a difficult time terminating maintenance or modifying maintenance prior to the expiration set by the court.

If your maintenance obligation is “non-modifiable”, then the court is prohibited from modifying maintenance under any circumstance.  While you could retire during your maintenance obligation, the court will not modify your maintenance due to that retirement and you will have to pay your maintenance obligation with funds other than your employment income.

If your maintenance obligation has no termination date or is “indefinite”, then the question of when you can retire requires more of an analysis.  First, indefinite maintenance does not mean you will be paying maintenance forever.  Indefinite maintenance requires you to make your payments until there is a “substantial change in circumstances.”  Retirement is considered a substantial change in circumstances; however, that is not the end of the analysis.  Retirement is not an automatic trigger for a modification or termination.  In order for the court to grant you relief from maintenance, either by terminating or modifying maintenance due to your retirement, your decision to retire has to be reasonable under all the circumstances.    In determining what is reasonable, the court is going to analyze both parties’ “needs” as well as what is “equitable”.   As you can imagine, this analysis is going to vary greatly from situation to situation.  The court is going to give consideration to the length of time between the divorce and the decision to retire and consideration will be given to your age and your health.  Further, the court is going to analyze both parties’ current lifestyles as well at the time of divorce.  This analysis is extremely fact-driven and requires an attorney who has in-depth knowledge of the recent case law addressing such situations. 

If you are currently in the process of divorce and negotiating maintenance, consideration should be given to your anticipated retirement date.  Planning in advance can alleviate post-judgment litigation and set some expectations for the termination of maintenance based on retirement.

 If you are currently paying maintenance and are considering retirement or in the process of negotiating a maintenance payment contact Nelson, Krueger & Millenbach, LLC at 414-258-1644 to speak with one of our attorneys regarding your specific situation. 

I Hit the Jackpot! Does That Mean My Spouse or Ex-Spouse Did Too?

nelsonda Child Support, General Divorce, Maintenance (Alimony), Property Division , , , , , , , ,

 

When someone wins the lottery, it can make headlines. When West Allis local Manuel Franco won the $768 million Powerball in April, it was big news for weeks. State lotteries are becoming a growing phenomenon, with the winnings often accruing well past the million-dollar mark. So, if you hit the jackpot, does that mean your spouse or ex-spouse did too?

Let’s talk lottery winnings and divorce. Say you’re in the middle of a contentious divorce, and the stress of it all has you on edge. You’re at the gas station filling up your car on the way home from work, and you feel like you need a win. So, you try your luck and buy a Powerball ticket. Unbeknownst to you at the time, that lottery ticket is going to make you a millionaire. The Wisconsin Lottery does the Powerball drawing, and you find out that your ticket won you the $400 million jackpot.

So, now you’re wondering – how does this big win impact my divorce?

The short answer is, those winnings are now property of the marital estate. Since Wisconsin is a community property state, the court is going to presume that your lottery winnings should be split equally. Although this may seem unfair, it is consistent with how family courts in Wisconsin split other assets (and debts) in a divorce. When considering the marital estate, the lottery winnings will go in the “assets” column of your estate, and your soon-to-be-ex will likely get a chunk.

Although Wisconsin is a community property state, that does not necessarily mean your spouse will necessarily get exactly half of the winnings. The court can unequally divide assets based on a variety of factors.  From an equitable standpoint, the court could decide that it is unfair to equally divide the lottery winnings based on the fact that the ticket was purchased after the divorce action was filed.  However, a recent case in Michigan found that the husband was required to pay the wife nearly one-half of his winnings under the same circumstances, finding that because he had regularly played the lottery during the marriage, the losses he incurred came from the marital estate so the winnings should be equally shared as well.

Further, the court will likely consider the “final” winnings from the lottery –even if you win a $400 million jackpot, there will be taxes and other deductions from that amount. So even though you win $400 million, it doesn’t mean your ex gets $200 million and you’re stuck having to pay the taxes and other deductions out of your share. Those should be split equally.

So, what happens if you aren’t in the middle of a divorce, but you’re paying child support to her pursuant to a court order from a prior divorce, or a paternity case?  Or, you aren’t divorced yet but you still would owe child support or possibly maintenance?

In situations where you are ordered to pay child support, the court generally weighs two factors when they set child support: your placement schedule, and your income. If you’re unsure how child support gets calculated, check our other blog posts for more information on calculating child support. So now you’re asking yourself – are my lottery winnings income? Those winnings aren’t regularly recurring (if you take the lump sum payout option), and you aren’t guaranteed future lottery winnings. How can they call lottery winnings “income”?

Unfortunately for you, the court can consider your lottery winnings as income when they calculate your child support. How they consider the winnings will depend (in part) on how you are being paid your winnings – did you take the lump sum payout option, or are you getting regularly recurring monthly payments of your winnings? If you are getting the regularly recurring monthly payments, then it is more likely the court will consider that “income” because it is regularly recurring and available for child support purposes. If, however, you take the lump sum payout, then it is less clear what the court will do. Child support is intended to “equalize” the households of both parents so that the children have similar experiences (and opportunities) at both parents’ houses. The court doesn’t want one parents house to the be “fun” house with lots of expensive gadgets and fancy food, and the other parents house to be boring. Clearly if one parent wins the lottery, the standard of living at their house is very likely to increase. Whether or not the courts would award the other parent a portion of your lump-sum winnings will likely depend on the facts specific to your case. It will also depend on the amount of winnings – if you win a $10,000 lottery, the court will look at those winnings differently than a $10,000,000 win.

Even though your winnings may be included for child support purposes, they may not be included for maintenance purposes.  The stated goal of maintenance under the law is to maintain your spouse at a standard of living enjoyed during the marriage.  Clearly, a large lottery jackpot is far above any standard of living that was enjoyed during the marriage.  There is a case in Wisconsin where the appellate court found that a post-divorce lottery win should not necessarily be grounds for an increase in maintenance to the other spouse for that reason.

The worst thing you can do, however, is to try to hide your winnings. Any time someone tries to hide assets during a divorce, the court could penalize that person by awarding the entire asset, or an unequal share, to the other party.  After all, one-half of $400 million is still $200 million dollars!

Navigating the family courts, whether its through a divorce of a paternity, can be complex. Introducing something like lottery winnings into the equation is likely to make things even more complicated. If you are going through a divorce of paternity case, contact the experienced attorneys at Nelson, Krueger & Millenbach, LLC at 414-258-1644 or at www.nkmfamilylaw.com for a free consultation to see what we can do for you.

 

 

Tax Reform Bill May Have Significant Impact on Divorce Issues

nelsonda General Divorce, Maintenance (Alimony) , , , , , ,

 

The Tax Reform Bill that is currently before Congress includes a provision to eliminate the ability to take a tax deduction for alimony, or maintenance, payments.  If passed, this provision could become effective as early as January 1, 2018. This means that a divorce, legal separation, or modification orders entered into after December 31, 2017, would fall under the new guidelines of the Tax Reform Bill. Currently, the spouse who pays maintenance, or alimony, pursuant to a Court Order, can deduct those payments from his or her income. It is also important to remember that the proposed Tax Reform Bill may be subject to revisions, and must be passed into law, so these changes are not guaranteed at this time.  However, many people are concerned about the effects the new tax reform bill

will have on them, particularly if they are paying or receiving maintenance (alimony) or may in the future.  Therefore, we believe it is important to begin discussions of these possible changes as soon as possible.

The current tax law may allow for more money to be available to the parties for maintenance purposes as the higher income party may not be taxed at a higher income rate because he/she is paying a portion of that income to the lower income party, who will claim that maintenance as income at a lower income bracket. Because the proposed Tax Reform Bill will  no longer allow the higher income party the ability to deduct those maintenance payments on his/her tax return, he/she may be taxed at the higher income rate, and there will be less income available to the parties when calculating support. In effect, the proposed Tax Reform Bill increases the amount of taxes paid by a divorced couple then what they would have paid previously because the tax bracket of the payor does not change.

This tax proposal has a far reaching effect to any case in the U.S., includingWisconsin, that requires one party to pay maintenance to the other party, regardless of when the final divorce order is entered.  While an order to pay maintenance may exist before January 1, 2018, it will still be subject to modification in the future. Therefore, if either party requests that maintenance be modified, it will then be subject to the new provisions of the Tax Reform Bill.  As a result, the paying spouse will then no longer be able to deduct maintenance on his/her income taxes.

There may be other aspects of the proposed Tax Reform Bill that could help off-set the effect of these changes to the tax code for divorce couples, such as the proposed increase of the child and family tax credit, and the proposed change in the tax brackets for all filers. However, it is difficult to say what else may effect parties who are divorcing, or are divorced, as it is not clear what the final bill will include, and how some of those provisions may effect divorcing parties.

These examples show why it is important to consider the proposed tax changes and resulting consequences related to support at the time of divorce, or when considering a modification of support.  If you believe that you will need to address maintenance issues in your matter, whether it is before the date of divorce or in determining a modification of maintenance after divorce, call us at (414) 258-1644 to schedule a free initial consultation to discuss your case.

 

Post Judgment Modifications and Enforcement of Court Orders in Wisconsin

nelsonda Child Support, Custody and Placement, Maintenance (Alimony) , , , , , , , , ,

 

Change ahead warning sign over blue sky

In Wisconsin, spousal support (maintenance/alimony), child support, custody and placement (visitation) arrangements may be modified at any time under certain circumstances.  Situations can change which may require the court to modify your order. A change in financial circumstances may warrant a modification of child support or maintenance; whereas a physical or emotional change in your children, a change in schedule or a move may warrant a modification of placement.   There may also be times where you need the court’s assistance in enforcing orders.  If you have concerns regarding a modification or enforcement of a court order, the experienced lawyers at Nelson, Krueger & Millenbach, LLC can assist you in evaluating your case and navigate you through the process. Give the a call for your free office consultation.

What changes can warrant a modification?

 There are many situations which may warrant a modification.  The court will look at requests to modify placement and custody differently depending on how long it has been since the original order was made.   When considering a request to modify or change placement the court will look at;

  • Physical or emotional harm to the child
  • Changes in the child(ren)’s behavior and or grades
  • A substance or physical abuse problem
  • Move to a new city or state

When looking at financial modifications (i.e. child support, maintenance or family support), changes in income, job status, graduation of child or placement change may all be reasons to modify an existing order.

What can I do if the other party is not following court orders?

If your ex-spouse is not following the court order, you have options available to you.  Our attorneys are experienced in litigating contempt issues in Milwaukee, Waukesha and the surrounding areas.  There are remedies available to you.  If you are due child support or a medical bill payment, the court can garnish wages or even order jail time for non-compliance.  If placement is being withheld, the law allows for you to be awarded your attorney fees as well as make up time with your child(ren).  Give the attorneys at Nelson, Krueger & Millenbach, LLC a call at 414-258-1644 to set up a free office consultation to see how we can help you in your post-judgment divorce or family law issue.

Tax Considerations in a Divorce

nelsonda Child Support, General Divorce, Maintenance (Alimony), Property Division , , , , , , ,

Tax on dollar currency

Filing one’s taxes during or immediately after a divorce can be especially challenging. Before your divorce is finalized, there are a few tax considerations that should be addressed.  Addressing these issues prior to finalizing your divorce will help ease the transition during tax season post-divorce, and may help you avoid any negative tax consequences or an IRS audit. The following points should be considered during the divorce proceeding, and are important to discuss with an attorney or your tax preparer to determine the tax consequences of your divorce agreements:

  • When can you file as single, married filing jointly, married filing separately, or head of household, and which options offer the best possible benefits? Once your divorce is finalized, you are considered unmarried for the entire year of your divorce, this includes if you get divorced on December 31st. If your divorce is not finalized by December 31st, you will have to file your taxes as married filing jointly or married filing separately. There are rare occasions when you can even file head of household even though you are married.  Determining your tax filing status, should be done with the assistance of an experienced tax preparer with the goal of maximizing the best financial result to you and your spouse.  This may require you to work cooperatively with your soon-to-be-ex to determine the best means to file your taxes and to take advantage of the benefits offered by doing so.
  • Which parent can claim the child or children for the dependency exemption and take the applicable tax credits offered to parents? Generally, the parent with primary placement of the child(ren) may claim the child(ren) on their tax return. However, parties can negotiate who can claim the exemption in divorce cases or the court can order the same. It is imperative to include in the Marital Settlement Agreement an award of how each party shall claim the child(ren) on their respective tax returns.
  • What do parents need to claim the child(ren) as a dependent? Parents must complete an IRS Form 8332 “Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent,” to allow the other parent to attach it to his or her tax return if they are claiming the child(ren) Form 8332 is the document that allows a parent to claim a child on his or her taxes even though he or she may not fit the requirements under IRS rules to do so.
  • Do I have to report child support as income? Child support payments are not deductible by the paying parent or taxable to the parent receiving the child support.
  • Can I deduct maintenance payments? Maintenance payments (or alimony) are generally tax deductible by the party making the payment, and must be claimed as income by the recipient. It may be helpful to include a reference to the federal tax code IRC 71 in your divorce decree can ensure that the parties are aware of their responsibilities regarding maintenance payments.
  • Do I have to pay taxes on assets awarded to me in my divorce? A property transfer between divorcing spouses does not create any additional tax liabilities, if it is ordered in the divorce decree.
  • Do I have to pay taxes on retirement assets awarded to me in my divorce? In order to avoid tax consequences when dividing a retirement account incident to a divorce, a Qualified Domestic Relations Order or QDRO, may need to be drafted after the date of divorce to instruct the retirement plan administrator to divide the benefits as ordered by the divorce decree. If the recipient spouse does not liquidate such funds and follows the IRS rules to invest such funds into a qualified plan, there are no tax consequences to such a transfer.
  • Will I be audited post-divorce? You risk being audited if you do one or both of the following: 1. both parents claim the same child on their taxes, 2. The amount of maintenance the recipient lists on line 11 of his or her 1040 does not match the number that the payor lists on line 31a. It is always good practice to speak to your ex-spouse before filing your taxes to make sure that you are claiming the correct child(ren) and that the amount of maintenance listed as received on your tax form matches the amount of maintenance paid.

There are several considerations in determining what options are best for you to maximize your tax benefits and to avoid any additional tax burdens after a divorce. Because each divorce is unique, it may be important to speak with an attorney or a tax professional to best address the tax consequences of your proposed divorce agreement before finalizing your divorce. If you are getting a divorce and have questions regarding the tax consequences of the issues outlined above, call us at (414) 258-1644 to schedule a free initial consultation to discuss your case.

What if I Married my Spouse Twice? How Does that Affect Maintenance in Wisconsin?

nelsonda Maintenance (Alimony) , , , , ,

Maintenance, or spousal support, is most often ordered by the court from one spouse to another when one spouse was financially dependent on the other during the marriage.

Typically, maintenance is intended to be “rehabilitative” and used to help the financially dependent spouse work towards a place where he/she can support his/herself.

Factors that the court considers when determining the appropriate maintenance amount are the following:

  1. The length of the marriage.
  2. The age and physical and emotional health of the parties.
  3. The division of property made in the divorce.
  4.  The educational level of each party at the time of marriage and at the time the action is commenced.
  5. The earning capacity of the party seeking maintenance, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children and the time and expense necessary to acquire sufficient education or training to enable the party to find appropriate employment.
  6. The feasibility that the party seeking maintenance can become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage, and, if so, the length of time necessary to achieve this goal.
  7. The tax consequences to each party.
  8. Any mutual agreement made by the parties before or during the marriage, according to the terms of which one party has made financial or service contributions to the other with the expectation of reciprocation or other compensation in the future, where such repayment has not been made, or any mutual agreement made by the parties before or during the marriage concerning any arrangement for the financial support of the parties.
  9. The contribution by one party to the education, training or increased earning power of the other.
  10.  Such other factors as the court may in each individual case determine to be relevant.

Length of the marriage is one of the main factors used in determining maintenance, so it prompts the question, what happens if you marry the same person more than once? This may seem like a unique circumstance, but in our line of work we see situations like this more often than you would think.

When parties have been married to each other more than once, the court can look at the total years of marriage when determining the maintenance amount granted. The court may look to current conditions in determining maintenance, as it is not legally bound by the terms of the first divorce.

Please note, if an ex who is receiving maintenance payments (“payee”) remarries another person who is not a former spouse, maintenance ends automatically under Wisconsin law if the person obligated to make payments: (1) has proof of remarriage, (2) requests that the court vacate the current maintenance order, and (3) sends a copy of the request to the payee.

If you have any questions regarding maintenance, please contact our office at 414-258-1644 to schedule a free initial office consultation or visit our website for more information.

Contempt of Court in Wisconsin

nelsonda Child Support, Custody and Placement, General Divorce, Maintenance (Alimony) , , , , ,

If a party intentionally and without legal justification disobeys a court order, this is called being in contempt of court and the law provides a remedy through a finding of contempt.

In family or divorce actions, the most common examples of contempt are when one party fails to pay child or spousal support or if one party refuses to honor the custody and placement (visitation).

In Wisconsin, to address or obtain relief from the court for the contempt, the party who is harmed by the violation of the court order must file a Motion with the court describing the contempt in order to have the matter heard. This Motion must be personally served on the violator at least five (5) business days before the date of the hearing.

If the violator is found in contempt, the court has the authority to order the violator to correct the contempt and also to order sanctions or penalties as a result of failing to comply with the court order. This may involve more than one hearing because the court must allow the offender an opportunity to obtain counsel. The court must also set “purge conditions” which is an opportunity to purge or correct his or her contempt by setting tasks to be completed or payments to be made in order for the violator to avoid further punishment. Some of the sanctions available to the judge are payments, wage garnishment, attaching or seizing assets or even jail time.

The court also has broad discretion to come up with other, more creative solutions to force the violator to comply with the terms of the decree. For example, if a party was court ordered to sell the marital residence by a certain date but did not do so, the court may give the violator a certain period of time to sell the home in order to avoid a finding of contempt. If the violator is successful in selling the home in the time ordered by the court, the violator completed the appropriate purge condition and would not be found in contempt.

The harmed party may also ask the court to order that the violator be responsible for paying the harmed party’s attorneys fees and other expenses associated with the Motion. The court will often do so as a way to punish the offender.

It is important to note that if a violator is found not to have an ability to pay or comply with the court order, for whatever reason, then he or she cannot be found in contempt. For example, if someone becomes ill and cannot work, then they are not in contempt for failing to pay support because they do not have the ability to pay. Or, if someone tries to sell a home pursuant to court order but cannot do so, they are not in contempt because they did try to comply with the order.

If you are in a contempt situation, whether you are the party seeking relief or the party who is out of compliance with the court order, it is best to consult with an experienced family law attorney to assist you for the best possible results. For more information or a free initial consultation if you are in our practice area, visit our website at www.nkmfamilylaw.com or contact us at 414-258-1644.

The Effect of Remarriage on Child Support and Maintenance

nelsonda Child Support, Maintenance (Alimony) , , , , ,

If a party gets remarried following a divorce with children, the court will not consider the new spouse’s income when determining child support nor can the court order the new spouse to pay towards child support or maintenance.

Child support is based upon a parents’ income, the time the children spends with each parent, and whether a parent is financially supporting other children. The court may modify child support based upon a substantial change of circumstances sufficient to justify revision of the current child support order.

The court considers the following as a “substantial change of circumstances:”

1. Change in the payer’s income
2. Change in the needs of the child
3. Change in the payer’s earning capacity
4. Any other factor the court determines is relevant.

Based on the above, remarriage is not sufficient to show a substantial change of circumstances warranting a revision of child support.

However, there are limited circumstances in which a court may consider the fact that a party has additional income available to him or her through a remarriage. As cited above, subsection 4 is a “catch-all” provision that allows the court discretion as to the factors it weighs when determining child support. Therefore, for example, if a party claims he cannot afford to pay additional child support, the court may determine his general economic circumstances have been improved due to a remarriage and additional spousal income as a reason to modify child support. Or, if a payee claims that she needs additional support because she cannot meet her budget or the needs of the children, the court may consider the fact that a new spouse contributes to that budget when reviewing same.

Maintenance is entirely different. For maintenance, remarriage is a determining factor that stops maintenance payments to the payee if the payer: (1) has proof of remarriage, (2) requests that the court vacate the current maintenance order, and (3) sends a copy of the request to the payee. Remarriage of the payor does not affect maintenance payments at all and is not grounds for the payee to seek additional monies.

The bottom line: a new spouse has no obligation, either directly or indirectly, to support a child of a former marriage/relationship or to a former spouse.  There is no direct effect of remarriage on a child support or maintenance order.

Can I Stay on My Ex-Spouse’s Insurance After a Divorce or Legal Separation?

nelsonda General Divorce, Maintenance (Alimony) , , , , , , , , ,

This is a very common question that we often hear in a divorce action.  The simple answer to this question is no.  This has nothing to do with the divorce or legal separation but, rather, the rules and procedures of the insurance provider.  Even if your ex-spouse wanted to keep you on his or her insurance after a divorce, the insurance company will not allow that.

In some cases, the insurance company will allow a legally separated spouse to stay on an insurance plan.  In fact, this is one of the most common reason that spouses would typically legally separate, as opposed to divorce.  However, each plan is different and you have to check with the insurance company.

Pursuant to federal law (COBRA), ex-spouses must be given the choice to stay on the plan for up to 36 months.  COBRA law only applies to employers with more than 20 employees.  If an employer has less than 20 employees, they still sometimes offer continuation coverage at their discretion or some states require same.  If a spouse chooses continuation coverage, it would be at their own cost.  COBRA coverage is often very expensive and you should find out the cost prior to finalizing your action.

Sometimes, your ex-spouse can be ordered to pay the cost of your future health insurance as a form of alimony or maintenance.   However, this would be up to the parties to agree to and/or the court to order.

Health insurance is a very important consideration in a divorce or legal separation.  Make sure you check into all of your options prior to finalizing your action.

To find out all of the consequences of an action for divorce or legal separation in Wisconsin, please contact us at 414-258-1644 or visit our website for more information.

How to Calculate Maintenance in Wisconsin?

nelsonda Maintenance (Alimony) , , , , , , , ,

In reviewing our site stats for our blog, one of the most common searches or topic is regarding maintenance and how to calculate maintenance in Wisconsin.  We have other blog posts which deal with the maintenance in general and the standards or law regarding maintenance in Wisconsin.  However, many people are looking for a specific answer about how much maintenance will be awarded in their case.

Unfortunately, that is not an easy question to answer.  There is no formula in Wisconsin for maintenance like there is for child support. Maintenance is a discretionary decision on the part of the court which means that the amount could greatly vary depending on the facts of your case, the judge, the amount of income of the parties, etc.  In fact, what income to use for the parties is probably the most common area of dispute in a maintenance case.

With that said, since so many people are looking for answers on this topic, I thought I would at least try to address it.  Besides income, the two other main considerations when calculating maintenance are the tax consequences and the percentage of net income allocated to the parties.  Maintenance is taxable to the payee and deductible to the payor.  When determining maintenance, we often try to equalize the parties’ net disposable incomes so they both have the same amount to live on, especially in a long term marriage.  In fact, in a long marriage, the presumption in the law is to equalization incomes.  Therefore, there are some spreadsheets and tax calculators that lawyers and judges have developed and most commonly use when trying to determine the appropriate amount of maintenance.

Some time ago, Judge J. Mac Davis from Waukesha County developed the first maintenance calculator in Wisconsin.  When conducting a google search on how to calculate maintenance in Wisconsin, one of the top search results leads you to a website hosted by Attorney Ernesto Romero.  On this website, he has links to various family law forms and to a maintenance calculator which we all refer to simply as “Mac Davis” (click for link).  This calculator is fairly simplistic and automatically calculates taxes on income and maintenance. He updates it each year using new tax rates, credits which might be in effect or other changes in tax laws although he has not updated it for 2013 and may not do so again. To run the calculations, you need to input tax status (individual, joint, head of household), the number of exemptions, each parties’ annual income and other requested relevant information.  Based upon these numbers, the program calculates the net monthly disposable income of each party.  By then inputting various maintenance amounts (annual), you can attempt to arrive at a maintenance amount which most closely reaches the percentage of monthly income allocation that is appropriate, whether it is 50/50 or not.

Since the first calculator was developed, others have followed.  The two most common other calculators are called Fin Plan and a newly revised and much more complicated Mac Davis format created by Garrick G. Zielinski CFP, CDFA, Divorce Financial Solutions, LLC (click here for download).  Each attorney and judge has their own preference.  Each calculator has their own strengths and weaknesses.  The original Mac Davis version is free of charge. Mr. Zielinski’s version is available for purchase.  Fin Plan ,which does also have other divorce planning functions, must also be purchased.

Mr. Zielinski’s calculator (called 2013 DFS TaxCalc) has just come out recently but more and more attorneys and judges are using this now.  It provides much more information, allows you to also calculate child support, takes into account more complicated income situations than the original Mac Davis (such as non-taxable income) and allows you to plug in a target percentage of income (i.e. 50/50) which then automatically calculates maintenance for you.  The original Mac Davis requires some hand calculations to convert monthly to annual amounts and a certain amount of guessing to get you to your target percentage of net income allocation.

WARNING: these calculators are not for amateurs!  You might use Mac Davis to give you a general idea of what you might expect for a maintenance order.  However, there are many aspects which must be taken into consideration when running maintenance calculations.  You will need the assistance of an experienced divorce attorney and, possibly, a financial planner to arrive at a maintenance amount that is in your best interests and considers all possible consequences, tax or otherwise.

To discuss your maintenance case in detail with one of our experienced divorce lawyers, please call us for a free initial office consultation at 414-258-1644.  You can also visit our website or look at our other blog posts regarding maintenance (see category link below) for more information.

–Teri M Nelson

Do I Have to Pay My Husband Maintenance (Alimony) in Wisconsin?

nelsonda Maintenance (Alimony) , , , , , , ,

Many women now out earn their husbands or they are the “breadwinners” and their spouse stays home to take care of the children.  This situation can cause problems in a divorce and women often feel that they should not have to pay their husbands maintenance or alimony simply based on gender.

Maintenance, or what used to be called alimony, is ordered by the Court based on certain factors in the Wisconsin Statutes.   There is no definitive test or guidelines in Wisconsin for when and how much maintenance should be ordered. The decision to award maintenance to one party is a discretionary decision of the Court. In other words, the Court has a lot of leeway when deciding the issue of maintenance. The Court must consider a list of factors stated in the Wisconsin Statutes and any other factors that the Court deems relevant.

The Wisconsin statutes are “blind” as to gender.  It does not matter whether you are the husband or the wife.  If maintenance is deemed appropriate by the court, it will be awarded regardless of who has the higher income.  Generally, if it is a long term marriage and you (the Wife) have a significantly higher income than your husband, the court will most likely order you to pay maintenance.

The court will look at factors such as earnings history and earning capacity.  If your husband simply refuses to work or refuses to work at his full capacity, the court can order that a higher income be imputed to him for purposes of calculating maintenance.  However, if the role reversal in your marriage was based upon a mutual decision or has a long-standing history in your marriage, then maintenance would most likely be ordered.  In other words, the court will look at the reasons why there is an inequity in the income.

At the time of the divorce, both parties are expected to work and work to their full earning capacity.  The only exception is if someone is unable to work due to health or other legitimate reasons.  In those cases, the court will look to see what the party can do or what alternative sources of income may be available to them such as social security or disability payments.   Ultimately, however, if maintenance is requested by your husband, the court will follow the statutes in awarding maintenance, regardless of gender.

To discuss maintenance in your divorce, contact our office to schedule a free initial consultation at 414-258-1644 or visit our website for more information.

Maintenance Disputes in Wisconsin Divorce

nelsonda Maintenance (Alimony) , , , , , , , , , , , ,

Maintenance (or alimony) is one of the issues we most often disagree about in a divorce.  One of the main reasons for this is that there are no definitive guidelines in Wisconsin about how maintenance is determined.  If there are maintenance disputes in a Wisconsin divorce, how are they resolved?

Maintenance is spousal support which is set as a certain amount per month for a period of time which can range from months to years to indefinite.  Maintenance is taxable to the person who receives it and deductible to the party who pays.  Either the Husband or the Wife can be ordered to pay maintenance in Wisconsin.  And, fault is not a factor the court can consider when awarding maintenance.

In some cases, maintenance can be easy.  When there is a long term marriage and a disparity between the parties’ incomes, maintenance is presumed to be appropriate.  Generally, the longer the marriage, the longer the term of maintenance that is awarded.  The goal of maintenance is often to equalize the parties’ net incomes.  There are several financial calculators and spreadsheets that attorneys and judges use which calculates the net disposable income of a party (after taxes).  Since maintenance is taxable/deductible, we can determine through these programs exactly what is the appropriate amount of maintenance needed to accomplish the goal of equalizing incomes.

So, why do so many people fight over this issue then?  There are many reasons but one of the primary reasons is income.  What income is appropriate to use when calculating net disposable incomes and the amount of maintenance?  We often have situations where a party (generally the Wife) has not been employed for many years.  She may have been a stay-at-home mother or only worked part-time.  Or, sometimes we have a situation where someone lost his or her job and either cannot or will not obtain comparable employment.  Depending on the reason for the job loss and/or the reason for the continued unemployment, this also can create an issue.

The courts generally find that (a) someone must be employed full-time and (b) they must be employed at their highest capacity.  There are always exceptions to this, of course, but the circumstances would be unusual.  Since the term “highest capacity” is very subjective, this creates maintenance disputes.  If an individual is not currently employed at their highest capacity, the court can “impute” them income which it will then use to calculate support and maintenance.

In order to resolve those maintenance disputes, we have a variety of tools available to us as attorneys.  For example, we can research an individual’s earnings history through tax returns or social security earnings statements.  Looking back can provide the court with information as to the highest earnings that individual has had in the past.  If an individual’s income varies, sometimes the court will average his or her income over a period of time.

We can also obtain a vocational evaluation for an individual.  There are vocational experts who will interview a party, look at their earnings history, examine their background, education and experience and then arrive at an opinion as to what that person can or should be earning.  The court will then consider this information when making its determination as to what income a person should be imputed.

Once we calculate or determine income, disputes also arise in maintenance as to how much maintenance should be awarded.  For example, one issue is whether incomes should be equalized or how much disposable income should be allocated to either party.  This depends on a wide variety of factors and, therefore, creates many areas for disagreement.  Primarily, the court will look at available income, budgets/bills, standard of living, property/debt division and child placement/child support in determining how much maintenance to award in a divorce.

The other main area for maintenance disputes is how long maintenance should be awarded or the “term” of maintenance.  The general rule of thumb is half of the length of the marriage.  However, this is not always true and again depends on a wide variety of factors such as the length of the marriage, age, earning capacities of the parties, education and work history of the parties, health problems, standard of living, etc.

Since maintenance is a discretionary decision of the court and based on a wide variety of factors, there are many potential areas of dispute.  The attorneys at Nelson, Krueger & Millenbach, LLC will attempt to resolve your maintenance issue in a way which is most favorable to you.  However, in the event that is not possible, you will benefit from our knowledge of the law and of how the judges typically rule in these types of case and from our experience in litigating these issues.

Modification or Enforcement of a Court Order in a Wisconsin Divorce

nelsonda Child Support, Custody and Placement, General Divorce, Maintenance (Alimony) , , , , , , , , , , , ,

Can you change a court order in a divorce in Wisconsin?  If so, how is this done?  What if someone isn’t following court orders?  How can you enforce an order?

Orders regarding property division are permanent and generally cannot be changed unless you file a Motion to Reopen.  A waiver of maintenance at the time of the divorce judgment is also a final order and cannot be changed except upon extreme or unusual circumstances.

However, spousal support, child support, custody and placement (visitation) arrangements do not have to be permanent. They can be outdated, changed or violated. When this happens, individuals must ask the court to grant a modification or to enforce the decree.  You must do those by filing a Motion with the court.

The court will entertain a request for a modification of an order if, after a required period of time, there has been a substantial change in your life or the life of the other party that justifies altering the decree. Any of the following may qualify as a significant change:

-A substantial change in either spouse’s income or employment status

-A new health problem which impacts the ability to work

-Moving to a new location

-Substance abuse problems or criminal activity

The exception to this rule is for a period of two (2) years after an original custody or placement order, you must show that the current custody or placement arrangement is harmful to the child(ren).

If one party asks for a modification and the other party doesn’t agree, this dispute can be resolved through negotiation or through the courts.  At Nelson, Krueger & Millenbach, LLC, we always try to minimize conflict and are local leaders in using collaborative and cooperative techniques to resolve disputes.  However, we will also vigorously represent you in court whenever necessary.

If one party fails to pay child or spousal support or refuses to honor the custody and placement (visitation) order, the law provides a remedy through a finding of contempt.  Again, a Motion must be filed with the court. If the violation involves child or spousal support, the court can garnish wages or force the violator to pay in other ways.  Sometimes, the violator is sentenced to a jail term as well. The court also has broad discretion to come up with other, more creative solutions to force the violator to comply with the terms of the decree.

If a placement order is not being followed, you can file a Petition to Enforce Placement to force the other party to comply with the court order.  The court again has broad discretion to enforce a placement schedule, including awarding make-up time, changing the schedule or awarding attorneys fees and costs.

Returning to court is not an ideal option for anyone. However, there are remedies available to you in the event you need to modify or enforce a court order.  The attorneys at Nelson, Krueger & Millenbach, LLC can assist you with any of these options and advise you as to the likely or possible results so you can make an informed decision as to whether you want to return to court through a post-judgment action.  At Nelson, Krueger & Millenbach, LLC, we handle modifications, disputes and enforcement cases with compassion and diligence. Our lawyers are prompt, detail-oriented and persistent. For a free initial office consultation, contact us at (414) 258-1644.

Maintenance (Alimony) in Wisconsin

nelsonda Maintenance (Alimony) , , , , , , , , , , , ,

Wisconsin Maintenance (Alimony) FAQ’s

WHO IS ENTITLED TO MAINTENANCE AND HOW DOES THE COURT DECIDE THIS ISSUE?

Maintenance, or what used to be called alimony, is ordered by the Court based on certain factors in the Wisconsin Statutes. There is no definitive test or guidelines in Wisconsin for when and how much maintenance should be ordered. The decision to award maintenance to one party is a discretionary decision of the Court. In other words, the Court has a lot of leeway when deciding the issue of maintenance. The Court must consider a list of factors stated in the Wisconsin Statutes and any other factors that the Court deems relevant. Some of those factors are:

(A) The length of the marriage;

(B) The age and the physical and emotional health of the parties;

(C) The division of property;

(D) The educational level of each party at the time of marriage and time of divorce;

(E) The earning capacity of each party;

(F) The feasibility that the party seeking maintenance can become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage and the length of time necessary to achieve that goal;

(G) The tax consequences to each party;

(H) The contribution by one party to the education, training or increased earning power of the other;

(I) An agreements between the parties where one party has made financial contributions to the other with the idea that the other will reciprocate in the future; and

(J) An ability to pay by the party from whom the maintenance is being sought.

The attorneys at Nelson, Krueger & Millenbach, LLC will be able to evaluate the facts of your case and advise you as to the likely result of a maintenance request.

MY SPOUSE AND I HAVE ONLY BEEN MARRIED A SHORT TIME, WILL I GET MAINTENANCE?  HOW LONG DO I HAVE TO BE MARRIED TO GET MAINTENANCE?

Unless there is a large disparity between the income levels of the parties or the party requesting maintenance has health problems, a maintenance award in a short term marriage would be unusual. The longer the term of the marriage, the more likely a maintenance award is.  Once a marriage exceeds 20 years, maintenance is almost a certainty in a case where there is a disparity in income.

IS THERE A SPECIFIC GUIDELINE WHEN DETERMINING MAINTENANCE?

There are no specific guidelines in Wisconsin when determining maintenance. However, when there is a fairly long term marriage where one party has the ability to pay and there is a disparity in incomes between the parties, the court would generally award maintenance. In that situation, the goal of the Court is usually to either:

(A) Equalize the net disposable incomes of the parties, or

(B) Meet the budget of the payee spouse, assuming its reasonable, in an effort to maintain a standard of living equal to or similar to what he/she enjoyed during the marriage.

In these cases, the Court generally considers what are the needs of the party seeking maintenance based on her/his budget and what is the ability to pay of the other party. When analyzing support issues, taxes and other budgetary factors also must be considered.

HOW LONG DOES MAINTENANCE LAST?

The Court usually sets a definite term for maintenance except in certain cases such as an extremely long term marriage, if the parties are older or where the person requesting maintenance has an inability to work. If maintenance is ordered for a set period of time and the party receiving maintenance feels it should continue, he or she can file a motion requesting an extension. This must be done, however, before the term of maintenance expires.

CAN MAINTENANCE BE MODIFIED OR TERMINATED?

If a party dies or the receiving party remarries, maintenance would terminate. If the person receiving maintenance begins living in a marriage-like relationship, maintenance can be modified or terminated. However, unless the parties agree otherwise, maintenance is always modifiable based on a substantial change in the circumstances of either party. This change in circumstances could be a change in income, a change in earning ability or a change in living circumstances. When one party believes that there has been a substantial change of circumstances in either parties situation, that party may petition the Court to change the amount or duration of maintenance.

WHAT ARE THE TAX CONSEQUENCES OF MAINTENANCE?

The party receiving maintenance must declare the support received as income on his or her income tax return and that maintenance will be taxable to him or her. The party paying maintenance will be able to deduct those payments on his or her income tax returns. The tax factors of maintenance must be considered when originally determining the award of maintenance at the time of divorce or any modification of maintenance.

You can also usually deduct any attorneys fees paid directly attributable to you receiving maintenance. Discuss this further with your Certified Public Accountant or income tax preparer.

WHAT IF MY EX-SPOUSE RETIRES? WILL MY MAINTENANCE END?

The retirement of a paying spouse may justify modifying or terminating maintenance in certain circumstances. For example, if a paying spouse retires and has no other source of income except his or her retirement benefits, of which you received one-half at the time of divorce, maintenance most likely would be terminated. However, this would also depend on why the party retired, the age he or she retired, if he or she has other sources of income, the ability to pay maintenance after retirement and your ability to provide for yourself.

WHAT IF MY SPOUSE SEEKS MAINTENANCE FROM ME AND I DONT FEEL THAT MY SPOUSE IS EARNING TO HIS OR HER FULL POTENTIAL?

In cases when one spouse does not believe that the other spouse is maximizing his or her earning potential, the Court can impute an income to that party. This income could be a prior income that the party is no longer earning for whatever reason. Or, in some cases, a vocational evaluator can be hired to provide expert testimony to establish what the non- or under-earning spouse could make if working full-time and/or to maximum ability. The expert will review the education, work and earning history and consider market factors and statistical information related to incomes to determine an income for the under-earning spouse. The Court will then impute or assume that the under-earning spouse is earning that amount when deciding the issue of maintenance.

WHAT IF MY SPOUSE IS SELF-EMPLOYED OR EARNS CASH? HOW CAN INCOME BE DETERMINED TO CALCULATE MAINTENANCE?

In cases when one spouse is self-employed or receives cash payments for income, financial records and documents can be obtained or subpoenaed to determine income. Similar to the response in #8, the Court can impute an income to that party based on financial records and/or testimony of financial experts, such as a Certified Public Accountant, based on a review of financial documents, such as tax returns, bank statements, investment accounts, etc.

The Court will consider the testimony of financial experts and evidence in the form of financial documents when determining what income is available for support from all sources.