Consideration of Revenue from Property in Altering Alimony Burns & Levinson LLP

The Massachusetts Court of Appeals recently issued another interpretation of the Maintenance Reform Act that went into effect in 2012. In Dolan’s v. Dolan ruling dated March 2, 2021, the Court of Appeal provides guidance on the meaning of Chapter 208, Section 53 of General Law (c) (1) which states:

(c) When issuing a maintenance order, the court shall exclude the following from its income calculation:

(1) Investment income as well as dividend and interest income arising from assets that are fairly shared between the parties in accordance with Section 34.

In Dolan, the husband requested a downward change in his maintenance obligation to the wife following a 2016 divorce decree after he sold his business, which left him on a lower income. The husband continued to receive payments from the sale of the business. He argued that investment income from the sale could not be taken into account in determining his ongoing maintenance obligation because the business was an asset that was assigned to him at the time of the divorce. The woman argued that changing the alimony is a two-step process: the judge must first determine that the circumstances have changed significantly, and only when this threshold is reached can the judge calculate a modified alimony allowance. The appeals court agreed with the woman.

In deciding whether someone is charged with demonstrating a material change in circumstances necessary to reduce an existing maintenance order, the judge must take into account the entirety of the circumstances, including all income and assets. The Court of Appeal found that there is a clear difference between ordering a party to pay alimony with income from an asset received in the divorce and determining whether a party’s income and assets together have the ability to continue an existing maintenance obligation to pay. GL c. 208, sec. 53 (c) (1) does not apply until the judge first determines that circumstances have changed materially. The appellate court further ruled that the trial judge’s decision to grant the husband a reduction in his maintenance obligation but delay the implementation of that reduction did not constitute an abuse of power. The trial judge found that the husband could continue to pay the original alimony for five months as he continued to receive payments from the sale of his business.

The Dolan ruling states that investment income can be accounted for in an amendment where that income allows a debtor to continue paying an existing maintenance contract – and therefore the circumstances have not changed significantly. However, if the Court finds that circumstances have changed materially as a result of the totality of the financial circumstances, the investment income should be excluded when setting a change in the maintenance amount.

Am I the only one scratching my head?

Until next time,

Robin