The Lawletter Vol 43 No 8
Permanent alimony awards are still alive and well in many states, especially when the marriage is long and there is substantial income disparity between the spouses. When the court determines the amount of alimony, what effect do the receiving spouse's assets have upon the award?
A good example of a modern permanent alimony case is Sweeney v. Sweeney, 420 S.C. 69, 75, 800 S.E.2d 148, 151 (Ct. App. 2017). The marriage there lasted for 28 years from marriage to filing of the divorce action. The husband had gross income of $34,100 per month, or $409,200 per year. The wife's gross income was very limited. Sweeney was clearly a permanent alimony case.
To limit his exposure to alimony, the husband made two main arguments. First, he retained a vocational expert to impute income to the wife. The wife had worked recently at a garden center, earning $8 per hour, and as a tutor, earning $25 per hour. The trial court accepted the husband's argument and imputed to the wife income of $1,500 per month. This amount is equal to 4.3 weeks for work at 40 hours per week earning $8.72 per hour. But the trial court rejected the husband's argument that the wife could earn even more if she were recertified as a teacher. The trial court also appears to have given only limited weight to the $25 per hour tutoring income. The appellate court affirmed on the imputed income issue, rejecting appeals by both parties.
Second, the husband noted that the wife received $1.2 million as her share of the marital property, and he argued that she should support herself by spending this money. Both the trial and appellate courts disagreed. "It would be inequitable to require Wife to invade her only assets to support herself while Husband may save and continue to draw a substantial salary and dividends from his company." Id. at 79-80, 800 S.E.2d at 153. This is the general rule nationwide. "The law does not require the spouse who seeks support to exhaust his or her own estate in order to qualify, relieving the other spouse of all obligation of support until that estate is depleted." Zipf v. Zipf, 8 Va. App. 387, 398-99, 382 S.E.2d 263, 269 (1989).
But the wife would be earning investment income on the $1.2 million. The husband argued that the historical five-year return rate on the parties' investment account was 6.71%, so that investment income of $6,710 per month should be assumed. The trial court adopted a narrower focus, noting that dividend and income interest had been $1,282 per month on a 2014 quarterly financial statement, and that dividends, interest, and capital gains together were only $785 per month on a 2013 financial declaration. The appellate court affirmed the trial court's refusal to use a larger number for investment income.
The higher number used, $1,282 per month, is $15,384 per year, which is 1.28% of $1.2 million. The court's investment return number was therefore rather conservative. But it may not be reasonable to expect the wife to invest the entire $1.2 million. Also, the grounds for the divorce was the husband's adultery, a fact which operated significantly in the wife's favor.
The end result was an alimony award of $5,000 per month—14.66% of the husband's income. The South Carolina Supreme Court has agreed to hear a further appeal. It will be interesting to see how that court treats the trial court's investment return calculation.