When a marriage is dissolved in Virginia, spousal support is often awarded by court decree or negotiated into the settlement. Also referred to as alimony or spousal maintenance, spousal support is especially common in cases in which one spouse earns all (or the majority of) the income and the other does not have the skills or education to support themselves. Alimony may be temporary (for a specified length of time) or permanent, depending on the circumstances of the case.
As time goes by, circumstances often change, and one party (typically the payor spouse) wants to go back and modify the amount of spousal support they are required to pay. Examples may include a job loss, disability, illness, or another type of financial hardship. This is referred to as a “material change in circumstance.”
A new Virginia law that took effect July 1, 2018 made it easier to modify alimony when the circumstances warrant it. Under the new law, there are two major changes to the spousal support modification guidelines:
When the Settlement Agreement is Silent about Modification
Prior to July 1, if a divorce decree or marital settlement agreement was silent about whether or not spousal support could be modified, the presumption of the court was that an alimony award was fixed and not modifiable. Under the old law, many divorcing couples signed spousal support agreements with the assumption that they could be revisited later on if needed, only to find out that because the agreement did not address the issue, they were unable to modify the amount of alimony they were paying.
Virginia Senate Bill 614 amended the law to require explicit language in a separation agreement for spousal support to be non-modifiable. In other words, unless the agreement explicitly states that the alimony award is non-modifiable, the presumption will be that alimony can be modified based on a material change in circumstances. All agreements executed after July 1, 2018 are subject to these new guidelines.
Modification of Spousal Support in Retirement
In addition to clarifying the issue of modifiability, the new law allows retirement to be considered a material change in circumstance for the purposes of modifying an alimony award. The court is now required to consider six new factors with regards to modification of spousal support and retirement:
- Whether or not retirement was anticipated and specifically considered at the time the alimony was awarded;
- The terms and conditions of the retirement (e.g., voluntary or mandatory);
- How retirement affects the incomes of both parties;
- The duration and amount of alimony that has already been paid;
- The age and health of both parties;
- The property and assets of both parties.
A Word about Alimony and Taxes
At the end of 2017, Congress passed sweeping tax reform legislation. While most of the headlines focused on the changes to the corporate tax rate, hidden in this legislation was a major change to how alimony is treated for tax purposes. Previously, payor spouses were allowed to deduct their support payments on their federal income taxes, and payee spouses were required to claim it as income. The new law does away with the deduction for payor spouses and the requirement for receiving spouses to claim the income.
The changes in tax law at the federal level have the potential to harm both the payor and the payee spouse, depending on the specific financial circumstances of each party. The one piece of good news is that this provision of the tax code does not take effect until December 31, 2018. Any divorces finalized up until that date are subject to the previous alimony and tax laws, and divorces finalized on January 1, 2019 and thereafter are under the new laws. If you are considering divorce or have already begun the process, insist that your spousal support agreement be completed before the December 31 deadline.
Speak with an Experienced Virginia Divorce Attorney Today
If you are currently considering a divorce or you want to modify the alimony you are paying from a previous settlement, it is important to speak to an attorney with in-depth knowledge of these issues. At the Law Offices of Olmstead & Olmstead, P.C., we have extensive experience representing clients in divorce cases involving even the most complex financial issues. We have helped numerous clients negotiate favorable spousal support agreements and when necessary, petition the court for post-decree alimony modifications. We can thoroughly assess your circumstances to determine your best legal options, so you can make an informed decision.
For a personalized consultation with one of our skilled attorneys, contact our office today at (703) 361-1555.