The New Temporary Maintenance Guidelines

First, some definitions: The “payor” is the spouse with the higher income; the “payee” is the spouse with the lower income. Note that the value of separate property owned by each party is not relevant to this determination. “Income” is as defined in the Child Support Standards Act, plus income from income producing property (which, theoretically, is a part of the income as defined by the CSSA). The “payor's income” is capped, for purposes of the formulas, at $500,000, which amount is subject to be adjusted on Jan. 31, 2012, and every two years thereafter, following the change in the consumer price index.

Formula A: Subtract 20% of the Payee's Income from 30% of the Payor's Income.

Formula B: Multiply the sum of the Payee's Income plus the Payor's Income by 40%; then subtract the payee's income from the result.

Application of the Formula

To see how the formulas work, let's look as some examples.

Scenario 1:

Payor's Income: $80,000

Payee's Income: $40,000

Formula A: (.3 x 80,000) ' (.2 x 40,000)

24,000 ' 8,000 = 16,000

Formula B: (.4 x 120,000) ' 40,000

48,000 ' 40,000 = 8,000

Presumptive Award: $8,000

Result: Payor's Net Income (not tax adjusted): $72,000

Payee's Net Income (not tax adjusted): $48,000

Scenario 2:

Payor's Income: $250,000

Payee's Income: $100,000

Formula A: (.3 x 250,000) ' (.2 x 100,000)

75,000 ' 20,000 = 55,000

Formula B: (.4 x 350,000) ' 100,000

140,000 ' 100,000 = 40,000

Presumptive Award: $40,000

Result: Payor's Net Income (not tax adjusted): $210,000

Payee's Net Income (not tax adjusted): $140,000

Scenario 3:

Payor's Income: $1,000,000; capped at $500,000

Payee's Income: $400,000

Formula A: (.3 x 500,000) ' (.2 x 400,000)

150,000 ' 80,000 = 70,000

Formula B: (.4 x 900,000) ' 400,000

360,000 ' 400,000 = less than 0

Presumptive Award: $0

Result: Payor's Net Income (not tax adjusted): $1,000,000

Payee's Net Income (not tax adjusted): $4,000,000

The reader will note that in both scenario #2 and scenario #3, the Payor's Income starts out at 2.5 times that if the Payee; however, as a result of the Income Cap, there is no presumptive temporary award under scenario #3.

What the Formula Doesn't Tell Us

The new guidelines do not address the interplay of the temporary maintenance guidelines and temporary child support, or tell us which formula is to be applied first in determining the awards of both child support and maintenance. We do not know if the presumptive amount of temporary maintenance is to be taxable to the payee and deductible by the payor if the parties are to file separate returns. We are left to wonder who is to pay the mortgage, the maintenance, the utilities, and real estate taxes on any jointly owned and occupied property, and whether any part of such payments is to be deducted from the presumptive award if the payee is occupying the former marital residence.

When the Presumptive Amount May Be Adjusted

There are two scenarios under which the court may make an award that deviates from the amount derived from application of the formulas. First, pursuant to the new statute, courts “shall order the presumptive award of temporary maintenance ' unless the court finds that the presumptive award is unjust or inappropriate and adjusts the presumptive award ' based on consideration of” a series of 17 factors. Most of these factors are familiar to us, as they are the same factors that the court is to consider in determining maintenance awards under the prior statute. The seven new factors are discussed below.

Additionally, as discussed above, the formula applies to the first $500,000 of the payor's income (the “income cap”); however, if the payor's income exceeds the income cap, the court is to determine “any additional guideline amount of temporary maintenance through consideration of [19] factors.” The two additional factors considered under this analysis (but not explicitly included in the deviation factors if the award is unjust or inappropriate) are the length of the marriage and the substantial differences in the incomes of the parties.

The New Factors

Most of the criteria to be considered by the court in deviating from the results of the formula are the same factors that the court is to consider in determining maintenance awards under the prior statute. There are, however, seven new factors for the court to consider in deviating from the results of the application of the formula. Several of these factors relate directly to the inability of one party (presumably the payee) to earn income that allows him or her to be self-sufficient. These include the need of a party to incur education or training expenses, the inability to obtain meaningful employment due to age or absence from the workforce or, relatedly, the role that the care of children, stepchildren, disabled adult children or stepchildren, elderly parents or in-laws has played in inhibiting one's earning capacity or ability to obtain meaningful employment. Another new factor is the acts by one party against the other that have inhibited the other's earning capacity, such as acts of domestic violence.

One very practical new factor is the need to pay for exceptional expenses for the children, including schooling, day care and medical treatment, although one would have thought that the legislature would have done more to integrate this provision with the CSSA. Another interesting one is the existence of a premarital joint household or a pre-divorce separate household. The final new factor is the marital property subject to distribution; a factor that may well not be determinable at the time of the temporary maintenance award.

It should be noted that the new factors are also to be considered by the court in determining awards of post-divorce maintenance.

What if You Don't Know the Parties' Respective Incomes?

It is often the case that at the time of an award of interim support, discovery has only just begun and we do not know the parties' true incomes. In such an event, paragraph g of the new DRL ' 236B(5-a) applies, and “the court shall order the temporary maintenance award based upon the needs of the payee or the standard of living of the parties prior to commencement of the divorce action, whichever is greater.” This, of course, leaves us back where we started before the new statute went into effect; however, unlike under the prior statute where the remedy for a perceived unfair award of pendente lite support was a speedy trial, now, at least with regard to awards made under paragraph g, the “order may be retroactively modified upward without a showing of change in circumstances upon a showing of newly discovered or obtained evidence.”

Opting Out

The new statute allows parties to resolve temporary maintenance issues without submitting the matter to the court, and to have their agreement incorporated in an order of the court. It should be noted that if the agreed upon amount of temporary maintenance deviates from the statutory formulas, the agreement must specify the amount that the presumptive award would have been, and the reasons for deviation. This requirement, which is substantially the same as the requirements for final settlement agreements regarding child support, cannot be waived by counsel or the parties.

Some Observations

As of this writing, there is yet to be a published decision applying the new temporary maintenance guidelines. These decisions will be challenging for courts to write in the event that they opt to deviate from the formula, as they are required to set forth the factors considered in the deviation; however, it will be interesting to see what consideration is given to the seven new factors.

As with the prior maintenance statute, as regards deviations related to both the income cap and the “unfair and inappropriate” amount of support under an application of the formula, there is a “catch-all” factor. It will likely get a lot of use by both courts and practitioners opting out.

An important part of the newly enacted statute is the requirement that the Law Revision Commission conduct a study of the state's maintenance laws. The Commission is charged with reporting to the legislature and governor, no later than Dec. 31, 2011. It will report its findings and conclusions following its review, which will assess the economic consequences of divorce on the parties and review the state's maintenance laws and their effect on post-marital economic disparities. The Commission is also to make recommendations with proposed revisions to the maintenance statute with the goal of meeting the state's “objectives of ensuring that economic consequences of a divorce are fairly and equitably shared by the divorcing couple.”

Karen M. Platt, a member of the New York and New Jersey Bars, is an attorney with Mayerson Stutman Abramowitz, LLP, a nine-lawyer firm that limits its practice to matrimonial, divorce and family law issues, while maintaining offices in Manhattan and White Plains. Alton L. Abramowitz, a member of this newsletter's Board of Editors, is a partner in the firm and the national First Vice President of the American Academy of Matrimonial Lawyers.

The year 2010 saw a sudden and unexpected interest by the legislature in the reform of New York's Matrimonial Law. In mid-October, three important changes took place: New York joined the ranks of no fault divorce jurisdictions; equivalent counsel fees for the non-moneyed spouse became the “law of the land”; and temporary maintenance formulas provided the latest wrinkle in divorce litigation. Much has been written and said about the statute enacted this past year regarding temporary maintenance awards (DRL ' 236B(5-a)) and much criticism has been offered of the new law and its shortcomings. Practically speaking, for the moment, we need to live with the statute in its current form. To that end, following is a user guide to the new statute.

The Temporary Maintenance Formula

Under the new Temporary Maintenance Guidelines, which apply only in actions commenced on or after Oct. 12, 2010, the presumptive amount of maintenance is determined based on a two-pronged formula. The results of the two formulas are compared, and the lesser amount is the presumptive award. The net effect of the formulas is that there will only be a presumptive award of temporary maintenance if the payee's income is less than 60% that of the payor's.

First, some definitions: The “payor” is the spouse with the higher income; the “payee” is the spouse with the lower income. Note that the value of separate property owned by each party is not relevant to this determination. “Income” is as defined in the Child Support Standards Act, plus income from income producing property (which, theoretically, is a part of the income as defined by the CSSA). The “payor's income” is capped, for purposes of the formulas, at $500,000, which amount is subject to be adjusted on Jan. 31, 2012, and every two years thereafter, following the change in the consumer price index.

Formula A: Subtract 20% of the Payee's Income from 30% of the Payor's Income.

Formula B: Multiply the sum of the Payee's Income plus the Payor's Income by 40%; then subtract the payee's income from the result.

Application of the Formula

To see how the formulas work, let's look as some examples.

Scenario 1:

Payor's Income: $80,000

Payee's Income: $40,000

Formula A: (.3 x 80,000) ' (.2 x 40,000)

24,000 ' 8,000 = 16,000

Formula B: (.4 x 120,000) ' 40,000

48,000 ' 40,000 = 8,000

Presumptive Award: $8,000

Result: Payor's Net Income (not tax adjusted): $72,000

Payee's Net Income (not tax adjusted): $48,000

Scenario 2:

Payor's Income: $250,000

Payee's Income: $100,000

Formula A: (.3 x 250,000) ' (.2 x 100,000)

75,000 ' 20,000 = 55,000

Formula B: (.4 x 350,000) ' 100,000

140,000 ' 100,000 = 40,000

Presumptive Award: $40,000

Result: Payor's Net Income (not tax adjusted): $210,000

Payee's Net Income (not tax adjusted): $140,000

Scenario 3:

Payor's Income: $1,000,000; capped at $500,000

Payee's Income: $400,000

Formula A: (.3 x 500,000) ' (.2 x 400,000)

150,000 ' 80,000 = 70,000

Formula B: (.4 x 900,000) ' 400,000

360,000 ' 400,000 = less than 0

Presumptive Award: $0

Result: Payor's Net Income (not tax adjusted): $1,000,000

Payee's Net Income (not tax adjusted): $4,000,000

The reader will note that in both scenario #2 and scenario #3, the Payor's Income starts out at 2.5 times that if the Payee; however, as a result of the Income Cap, there is no presumptive temporary award under scenario #3.

What the Formula Doesn't Tell Us

The new guidelines do not address the interplay of the temporary maintenance guidelines and temporary child support, or tell us which formula is to be applied first in determining the awards of both child support and maintenance. We do not know if the presumptive amount of temporary maintenance is to be taxable to the payee and deductible by the payor if the parties are to file separate returns. We are left to wonder who is to pay the mortgage, the maintenance, the utilities, and real estate taxes on any jointly owned and occupied property, and whether any part of such payments is to be deducted from the presumptive award if the payee is occupying the former marital residence.

When the Presumptive Amount May Be Adjusted

There are two scenarios under which the court may make an award that deviates from the amount derived from application of the formulas. First, pursuant to the new statute, courts “shall order the presumptive award of temporary maintenance ' unless the court finds that the presumptive award is unjust or inappropriate and adjusts the presumptive award ' based on consideration of” a series of 17 factors. Most of these factors are familiar to us, as they are the same factors that the court is to consider in determining maintenance awards under the prior statute. The seven new factors are discussed below.

Additionally, as discussed above, the formula applies to the first $500,000 of the payor's income (the “income cap”); however, if the payor's income exceeds the income cap, the court is to determine “any additional guideline amount of temporary maintenance through consideration of [19] factors.” The two additional factors considered under this analysis (but not explicitly included in the deviation factors if the award is unjust or inappropriate) are the length of the marriage and the substantial differences in the incomes of the parties.

The New Factors

Most of the criteria to be considered by the court in deviating from the results of the formula are the same factors that the court is to consider in determining maintenance awards under the prior statute. There are, however, seven new factors for the court to consider in deviating from the results of the application of the formula. Several of these factors relate directly to the inability of one party (presumably the payee) to earn income that allows him or her to be self-sufficient. These include the need of a party to incur education or training expenses, the inability to obtain meaningful employment due to age or absence from the workforce or, relatedly, the role that the care of children, stepchildren, disabled adult children or stepchildren, elderly parents or in-laws has played in inhibiting one's earning capacity or ability to obtain meaningful employment. Another new factor is the acts by one party against the other that have inhibited the other's earning capacity, such as acts of domestic violence.

One very practical new factor is the need to pay for exceptional expenses for the children, including schooling, day care and medical treatment, although one would have thought that the legislature would have done more to integrate this provision with the CSSA. Another interesting one is the existence of a premarital joint household or a pre-divorce separate household. The final new factor is the marital property subject to distribution; a factor that may well not be determinable at the time of the temporary maintenance award.

It should be noted that the new factors are also to be considered by the court in determining awards of post-divorce maintenance.

What if You Don't Know the Parties' Respective Incomes?

It is often the case that at the time of an award of interim support, discovery has only just begun and we do not know the parties' true incomes. In such an event, paragraph g of the new DRL ' 236B(5-a) applies, and “the court shall order the temporary maintenance award based upon the needs of the payee or the standard of living of the parties prior to commencement of the divorce action, whichever is greater.” This, of course, leaves us back where we started before the new statute went into effect; however, unlike under the prior statute where the remedy for a perceived unfair award of pendente lite support was a speedy trial, now, at least with regard to awards made under paragraph g, the “order may be retroactively modified upward without a showing of change in circumstances upon a showing of newly discovered or obtained evidence.”

Opting Out

The new statute allows parties to resolve temporary maintenance issues without submitting the matter to the court, and to have their agreement incorporated in an order of the court. It should be noted that if the agreed upon amount of temporary maintenance deviates from the statutory formulas, the agreement must specify the amount that the presumptive award would have been, and the reasons for deviation. This requirement, which is substantially the same as the requirements for final settlement agreements regarding child support, cannot be waived by counsel or the parties.

Some Observations

As of this writing, there is yet to be a published decision applying the new temporary maintenance guidelines. These decisions will be challenging for courts to write in the event that they opt to deviate from the formula, as they are required to set forth the factors considered in the deviation; however, it will be interesting to see what consideration is given to the seven new factors.

As with the prior maintenance statute, as regards deviations related to both the income cap and the “unfair and inappropriate” amount of support under an application of the formula, there is a “catch-all” factor. It will likely get a lot of use by both courts and practitioners opting out.

An important part of the newly enacted statute is the requirement that the Law Revision Commission conduct a study of the state's maintenance laws. The Commission is charged with reporting to the legislature and governor, no later than Dec. 31, 2011. It will report its findings and conclusions following its review, which will assess the economic consequences of divorce on the parties and review the state's maintenance laws and their effect on post-marital economic disparities. The Commission is also to make recommendations with proposed revisions to the maintenance statute with the goal of meeting the state's “objectives of ensuring that economic consequences of a divorce are fairly and equitably shared by the divorcing couple.”

Karen M. Platt, a member of the New York and New Jersey Bars, is an attorney with Mayerson Stutman Abramowitz, LLP, a nine-lawyer firm that limits its practice to matrimonial, divorce and family law issues, while maintaining offices in Manhattan and White Plains. Alton L. Abramowitz, a member of this newsletter's Board of Editors, is a partner in the firm and the national First Vice President of the American Academy of Matrimonial Lawyers.