Maintenance & Alimony
Maintenance is the term used by Colorado courts to describe what is called alimony or spousal support elsewhere. This is the financial support provided by one spouse for the other. This is an often-contentious component of a divorce because of the emotional component of paying maintenance. Whether right or wrong, divorcing spouses often hate paying maintenance from a philosophical and emotional point of view.
Whether the law requires it is often beside the point for many clients, as having to pay a former spouse money for 5 years, 10 years, or even an indefinite amount of time can cause great frustration. Because it is fraught with so much emotion, you should be aware of the law because your judge, unlike the parties, does not care about the emotions and will simply follow the statutes that are applicable. You should do the same.
Whether maintenance is complicated or easy depends on how much you and your spouse earn. If the two of you earn less than $240,000 combined, use the guidelines and examples below to determine how much maintenance a court might award. If the two of you earn more than $240,000 combined, then your life is about to get much more complicated. This is because Colorado has adopted maintenance guidelines that tell trial courts how much maintenance ought to be awarded, but the guidelines only go up to $240,000.
As to the length of maintenance, it is calculated using a guideline too (an easier one). As a general rule of thumb, the length of maintenance is about 1/3 to 1/2 the length of the marriage. The term of years is about 1/3 if the marriage is about 3 years and goes up to about ½ if the marriage is 12.5 years. In some instances, courts may award maintenance for life.
Read on to calculate how much maintenance you could receive or pay.
Threshold Determination of Maintenance
Wait! Before you calculate the maintenance, you need to do the same thing that a Colorado court would do, which is to determine whether maintenance is even necessary. Colorado courts call this the “threshold determination of maintenance.”
Before the court can award maintenance, it must first determine that the requesting spouse lacks sufficient property, including marital property, to provide for his or her reasonable needs and cannot support themselves through appropriate employment. C.R.S. § 14–10–114(3); In re Marriage of Page, 70 P.3d 579, 583 (Colo. App. 2003). In plain English, this means that a court must first determine whether a party even needs maintenance. For example, if both spouses have enough property the court may determine that both can meet their reasonable needs without maintenance. What is “enough” property so that maintenance is unnecessary is a gray area and subject to much debate and argument among attorneys.
At the beginning of this guide, we explained that that it is “in the order” that a Colorado court decides your case. Property division is decided before maintenance because maintenance cannot be decided before determining whether the party has sufficient property to meet his or her reasonable needs.
Okay, now that you have done what a Colorado court would do, continue on to calculating maintenance / spousal support.
Calculating the Amount of Maintenance (How Much?)
Calculate Gross Maintenance Amount
Gross Maintenance = 40% of the combined, adjusted gross income minus the lesser-earning spouse’s adjusted gross income.
If this calculation results in a negative number, then maintenance is $0.00. Once you calculate Gross Maintenance, the gross amount must be reduced by the appropriate percentage of taxes to obtain the Net Maintenance amount, which is what is actually payable from one spouse to the other.
Calculate Net Maintenance Amount
If Combined Adjusted Gross Income is less than $120,000 per year then Gross Maintenance is multiplied by 80% (0.80) to arrive at Net Maintenance.
If Combined Adjusted Gross Income is between $120,001 and $240,000 per year then Gross Maintenance is multiplied by 75% (0.75) to arrive at Net Maintenance.
If Combined Adjusted Gross Income is greater than $240,000 then the guidelines do not apply, and the court must apply the factors for maintenance.
Step-by-Step Through the Basic Maintenance Formula
First, take both parties monthly, adjusted gross income and add it together to get their combined, monthly adjusted gross income.
Multiply that number by 40%.
Subtract the lessor-earning spouse’s monthly adjusted gross income.
If the number is zero or less, there is no maintenance payable.
If the number is greater than zero, multiply the number by the sum of one minus the parties’ tax rate.
A couple has one spouse that earns $120,000 and the other spouse earns $48,000. The monthly income of the spouse earning $120,000 is $10,000 and the other spouse earns $4,000.
The parties combined, adjusted gross income is $14,000 per month.
40% of $14,000 is $5,600.
The lessor-earning spouse’s adjusted gross income is $4,000.
$5,600 minus $4,000 is $1,600.
Suppose the effective tax rate is 25%. One minus the effective tax rate is 75%.
Multiply $1,600 by 75% (0.75) and the result is $1,200 in maintenance payable from the higher-earning-spouse to the lower-earning-spouse.
Common Maintenance Formula Scenarios
Earns $23,088 (minimum wage).
Under the guidelines, Party A would pay $409.60 per month to Party B in maintenance.
Under the guidelines, no maintenance would be payable.
Earns $23,088 (minimum wage).
Under the guidelines, Party A would pay $1,634.10 per month to Party B in maintenance.
Under the guidelines, no maintenance would be payable.
Earns $23,088 (minimum wage).
Under the guidelines, Party A would pay $2,884.20 per month to Party B in maintenance.
Under the guidelines, Party A would pay $375.00 per month to Party B in maintenance.
Earns $23,088 (minimum wage).
Under the guidelines, Party A would pay $4,509.00 per month to Party B in maintenance.
Calculating the Term of Maintenance (How Long?)
Calculate Term of Maintenance
A court will also calculate the term of maintenance using a predefined, statutory guideline. See C.R.S. § 14–10–114(3)(b)(II)(B). The formula starts with marriages of three years (36 months) and applies a percentage to the number of months of marriage to calculate how many months of maintenance there should be. Although the actual table has a different amount for every month of marriage, here are some of the highlights.
(Percentage applied = 31%) /// (Term of Maintenance = 11 months)
(Percentage applied = 37%) /// (Term of Maintenance = 27 months)
(Percentage applied = 45%) /// (Term of Maintenance = 54 months)
(Percentage applied = 50%) /// (Term of Maintenance = 90 months)
(Percentage applied = 50%) /// (Term of Maintenance = 120 months)
20+ Year Marriage
120 Months or Indefinitely
Applying & “Deviating” From the Guidelines
The guideline amounts above are exactly that—guidelines. Once the “guideline” amount has been determined, Colorado courts can “deviate” from the guidelines by increasing or decreasing the amount of maintenance. Also, when the parties’ incomes exceed $240,000, the court will necessarily move beyond the guidelines to analyze the “statutory factors” for maintenance. To do so, the court will look at the following factors:
- The amount of each party’s gross income;
- The marital property appointed to each party;
- The financial resources of each party, including but not limited to the actual or porential income from separate or marital property;
- Reasonable financial need as established during the mariage; and
- Whether maintenance awarded pirsiant to this section would be deducible for federal income tax purposes by the payor and taxable income to the recipient.
Then, the court shall then determine the amount and term of maintenance by considering the following three items:
- The guideline amount and term of maintenance, the duraton of the marriage, and the combined gross incomes of the parties;
- The factors relating to the amount and term of maintenance set fourth in the maintenance “factors” below; and
- Whether the party seeking maintenance has met the “threshold” for maintenance described above.
The factors that the court is to consider are:
- The financial resources of the recipient spouse, including the actual or potential income from separate or marital property or any other source and the ability of the recipient spouse to meet his or her needs independently;
- The financial resources of the payor spouse, including the actual or potential income from separate or marital property or any other source and the ability of the payor spouse to meet his or her reasonable needs while paying maintenance;
- The lifestyle during the marriage;
- The distribution of marital property, including whether additional marital property may be awarded to reduce or alleviate the need for maintenance;
- Both parties’ income, employment, and employability, obtainable through reasonable diligence and additional training or education, if necessary, and any necessary reduction in employment due to the needs of an unemancipated child of the marriage or the circumstances of the parties;
- Whether one party has historically earned higher or lower income than the income reflected at the time of permanent orders and the duration and consistency of income from overtime or secondary employment;
- The duration of the marriage;
- The amount of temporary maintenance and the number of months that temporary maintenance was paid to the recipient spouse;
- The age and health of the parties, including consideration of significant health care needs or uninsured or unreimbursed health care expenses;
- Significant economic or noneconomic contribution to the marriage or to the economic, educational, or occupational advancement of a party, including but not limited to completing an education or job training, payment by one spouse of the other spouse’s separate debts, or enhancement of the other spouse’s personal or real property;
- Whether the circumstances of the parties at the time of permanent orders warrant the award of a nominal amount of maintenance in order to preserve a claim of maintenance in the future;
- Whether the maintenance is deductible for federal income tax purposes by the payor and taxable income to the recipient, and any adjustments to the amount of maintenance to equitably allocate the tax burden between the parties; and
- Any other factor that the court deems relevant.
If it is not clear by now, Colorado courts have broad discretion as to whether they will award maintenance, for how long, and for how much. In fact, the statute specifically states this:
“The court has discretion to determine the award of maintenance that is fair and equitable to both parties based upon the totality of the circumstances.”
Complex Maintenance Issues
Because maintenance has so many factors, disputes often arise in divorces over how the court ought to apply each factor. The most contentious, of course, is the adjusted gross income of the parties. Almost every party to a divorce argues in one way or another that their income is low (or lower) and that their spouse’s income is high (or higher).
Spouse’s to a divorce are often pleasantly surprised to find that their spouse who belittled their earning potential during the marriage now thinks they could lead a Fortune 500 company as the chief executive earning millions of dollars per year.
Other unique issues also arise, such as when a spouse gets paid their income in a particular fashion like at the end of the year or at the end of each quarter. In these cases, the manner in which maintenance is typically paid would be unworkable.
Read on to learn more about some of the advanced and unique circumstances:
One common question that we get from clients relates to variable income when calculating maintenance. Many spouses earn their income on strange or unique schedules. For example, many salespersons earn a “base” salary and then commissions at the end of the month, quarter, or year. In these situations, maintenance may be payable in two forms. The first form will be a monthly “base” maintenance payment and the second form might be a percentage of the commissions paid.
A salesperson earns $50,000 per year as a base salary and then $150,000 more in commissions and bonuses for a total of $200,000 per year. In this instance, the person earning such income could pay a small amount of maintenance on a monthly basis and then pay out a portion of their commissions and bonuses when they are received.
This method of paying maintenance protects both spouses from the upside and downside of earning income this way. If the spouse earning this income earns less, they pay less maintenance. However, if they earn more, then they pay more. This helps the spouse paying maintenance by ensuring they have no maintenance obligation they cannot fulfill and helps the spouse receiving maintenance by providing them with additional maintenance if additional commissions are paid.
However, not all judges follow this method and some simply average your income over time. This is precisely why many attorneys and judges advise settling your disputes. With a settlement, you can guarantee the type of payment method used.
Imputed Income, Unemployment, and “Underemployment”
Imputed income is a concept a court uses to attribute income to a spouse when the spouse does not actually earn that amount. This can occur when the spouse is unemployed, but should be employed, or is underemployed and should earn more. Often, spouses will hire an expert called a “vocational evaluator” to determine the earning potential of their spouse. These individuals will evaluate the earning potential of a spouse by interviewing them and reviewing their resume and other credentials.
If the court determines that somebody is of working age and that the person should be employed, then the court may say, at a minimum, that the person could earn minimum wage. If the court determines this then it will “impute” income to the person of minimum wage (or more under some circumstances).
The more complicated cases are those where the party is, “underemployed.” For example, the party could be making $80,000, but instead is making $40,000 because they took a job that earns less just to spite their spouse (and pay less maintenance and child support). In this case, although the party may be earning $40,000 a year, the court might “impute” them an income of $80,000 because that is what the party should be making.
Tip: Imputed Income is Hard to Prove
Although it is possible to show that someone is voluntarily underemployed or voluntarily unemployed, doing so is difficult, time consuming, and often expensive. Moreover, there are a lot of reasons for the judge to simply rule that they are going to use the person’s current income level and if anything changes it will be subject to modification.
Like “economic fault” discussed above, imputed income can be something that ends up being a side show in your case as the judge is not going to entertain arguments related to income that are really “disguised” arguments about marital fault (he/she needs to work harder as he/he was lazy during the marriage or something to that effect).
College After Divorce – A “Good Faith Educational Plan”
While it is not uncommon for a spouse to attend college or other professional schooling after they get divorced, it does happen. In these situations, the court will look at whether such a decision is a “good faith educational plan.” While the spouse is engaged in such a plan, the court may determine that their income is $0.00 or some amount that is less than minimum wage (if the court believes the person can work part time). In this circumstance, maintenance might “step down” when the person becomes educated because their income would go from 0.00 to whatever they earn when they graduate (thereby reducing maintenance).
For example, in the first two years after a divorce, a spouse may attend college and the court may determine their income to be $0.00. Thereafter, the court might impute the person an income equivalent to the reasonable amount of money a person seeking that degree could earn upon graduation. For more information about college costs related to your children, read our extensive blog on the topic.