Q. Can you help me understand why my lawyer is recommending I settle for something less than the law requires? He is very adamant that I accept my husband’s offer to pay me only 20% of his bonus as alimony on top of the child support I receive. I stay home with our four children and my husband has a big job that requires a ton of travel so I can’t work even if I wanted to right now as he is never able to help. My former teacher’s salary is less than I would have to pay for childcare if I were to return to work.
My lawyer says my husband’s salary all goes toward calculating child support and that only his bonus is available for alimony. I can live with that, but my husband sometimes gets huge bonuses – the last two years were a million dollars. The alimony law says I’m entitled to 30-35% so I cannot understand why he is telling me to settle for only 20%. Am I missing something or do I need a different lawyer?
A. When the law changed several years ago and alimony was no longer taxable income to the recipient and deductible to the payor, the family law bar recognized the inequity of continuing to apply the percentages set out in the Alimony Reform Act. The Alimony Reform Act was drafted at a time when there were tax implications on alimony orders so it was fair. Now, if we apply those numbers your husband could be in a situation where he is paying the government 38% (or more) of his bonus in taxes. If he then has to pay you 30 -35%, he is only seeing 27-32% of his bonus. The question becomes a matter of fairness and incentive. Is it fair for him to work and get to keep less than you? Put another way, if he is ordered to pay you more than he gets to keep – what is his incentive to continue to work as hard as he presumably does to earn that level of income?
You might think it is absolutely fair because you are doing the hard job of raising the children. You wouldn’t necessarily be wrong. But, I have yet to see a judge order the payor spouse receive equal or less of their after-tax income than the recipient spouse.
It would be great if the Legislature would fix this problem by changing the alimony statute to reflect the current percentages being used by most practitioners now that alimony is no longer taxable, so people have confidence in the advice lawyers give.
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