New steering on the intersection of alimony and little one help | Burns & Levinson LLP

Massachusetts’ alimony law provides that when determining alimony, the court excludes from the calculation gross income that the court has already considered in ordering a child support order. What this effectively means is that for most parties to a divorce with minor children, where the parties collectively make less than $400,000 per year, there is only alimony, but no alimony. To the chagrin of many who have worked for years on child support reform, the Supreme Court has ruled that the Child Support Act does not mean what it says it does.

In August 2022, in Cavanagh v. Cavanagh, the SJC found that a judge had abused her discretion when she calculated child support and then, without conducting a fact-specific analysis of the family circumstances, denied the wife any alimony payments based on the following language in GL c. 208 § 53(c)(2):

In the maintenance order, the court must exclude from the income calculation: … gross income that the court has already taken into account for the maintenance order.

The SJC found untenable a plain language interpretation of Section 53(c)(2) which resulted in a near prohibition on the payment of child support when child support had already been awarded. In addition, the SJC found that there is little point in linking the availability of child support to child support when child support and support serve different purposes. Child support is for the financial support of the children of the parties, while alimony is for the financial support of an economically dependent ex-spouse.

After finding that the Child Support Act should not be construed as it states, the SJC issued a policy regarding the calculation of alimony and child support in all future cases as follows:

In cases where child support is contemplated, before the judge can exercise its discretion to decide whether and what form and amount of child support to award, it must do the following:

(1) Calculate maintenance first, taking into account the legal factors enumerated in Section 53(a) and the principle that, with the exception of substitute maintenance, the amount of maintenance shall be determined taking into account the need for maintenance of the receiving spouse, the spouse to maintain the lifestyle, which he enjoyed prior to the termination of the parties’ marriage. Then calculate child support based on the post-support incomes of the parties.

(2) Calculate child support first. Then calculate the maintenance, taking into account as much as possible the legal factors listed in Section 53(a). We recognize that in the overwhelming majority of cases, calculating child support initially precludes calculating child support at this step.

(3) Compare the basic allocation and tax consequences of the arrangement that would result from the calculations in step (1) with those of the arrangement that would result from the calculations in step (2) above. The judge should then determine what arrangement would be fairest for the family in court, having regard to the overriding legal factors set out in GL c. 208, § 53(a), and the public policy that children are supported as fully as possible by their parents’ resources, GL c. 208, § 28, and determine which order is to be issued accordingly. If the judge elects to make an order according to the calculations in step (2) or otherwise that does not involve payment of alimony, the judge must explain why such an order is made, given the considerations set forth in Section 53(a).

It is crucial that the tax consequences of the SJC Directive are taken into account. Support payments (excluding orders entered prior to 2018) are no longer taxable to the recipient or deductible by the payer for federal income tax purposes. This means that federal income taxes are the responsibility of the party paying alimony, and alimony payments received from the other party are available in full with no taxes payable. If alimony is calculated first and then child support, simply adding the alimony to the recipient’s income and deducting it from the payer’s income for the purpose of applying child support guidelines does not take into account that the payer has tax obligations and the recipient does not – which means that the income comparison is not apples to apples. Parties, particularly payers, must have experts on standby to make calculations when alimony orders are issued.

As if this new policy weren’t enough, the SJC took up another issue in the Cavanagh decision — whether employer contributions to a retirement account count as income when calculating child support. Surprisingly, the SJC found convincing the Superior Court of Pennsylvania’s conclusion that “if we were to find that an employer’s matching contributions did not constitute income, it would be possible for an employee to reach an agreement with his employer for reduced wages in exchange for one.” increased matching contribution. This would effectively allow a worker to shield their income to reduce their child support obligations.” The SJC found that allowing such resource shielding would be contrary to Commonwealth public policy. Despite the fact that employer contributions to a retirement account are not available to an employee to defray living expenses, the SJC ruled that employer contributions to a retirement account constitute income for the calculation of child support.

Perhaps the legislature will take up the topic of maintenance reform again in order to make the plain text more understandable. Until then, Cavanagh is the law of the country.

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