Alimony is officially known as spousal maintenance in Colorado. It is ordered by a court as appropriate, and according to state statutes, in situations when “a spouse needs support and the other spouse has the ability to pay support.”
Here are some essential things to know if spousal maintenance is a factor in your Colorado divorce:
- Types of Spousal Maintenance in Colorado
- Factors That Determine Spousal Maintenance Amounts
- Duration of Payments
- Modifying a Support Order
- Enforcement: Options When Non-Payment is an Issue
- Does Child Support Affect Spousal Maintenance?
- Does Asset Division Affect Maintenance?
- Spousal Maintenance and Taxes
Types of Spousal Maintenance in Colorado
Colorado courts recognize several types of spousal maintenance during and after a divorce, including:
Temporary support. This is also called “pendente lite support,” and is financial support paid by one spouse to the other during the divorce process. This is because courts typically accept that couples stop sharing incomes after separating.
Temporary support is most likely to be ordered when one spouse was a primary breadwinner for the family and the other spouse stayed at home or did not earn an income commensurate with the other spouse’s earnings.
Rehabilitative support. This is the most common type of spousal maintenance that is put in place so that the higher-earning spouse provides financial assistance to the lower-earning spouse, giving them time to acquire essential job skills or career training to become self-supporting.
Typically, the court orders rehabilitative support for a specific period in line with how long it should take for a spouse to gain financial independence.
Reimbursement support. This is more narrowly defined and is awarded in cases where one spouse paid for the other spouse’s education or job training during the marriage. During a marriage, both spouses benefit from the enhanced education or training, but after a divorce, only the recipient of the training will receive the benefits. This support attempts to level the playing field.
Permanent support. This is less common and only awarded in challenging divorces where one spouse is unable to become financially independent due to advanced age, illness, disability, or other similar reasons.
Factors That Determine Spousal Maintenance Amounts
Spousal maintenance is gender neutral and will be awarded to either husbands or wives as appropriate. The court is only concerned that support is fair and equitable to both parties.
Most Colorado courts only consider spousal maintenance in marriages lasting more than three years. For marriages less than three years, the court can take into account how a property division is proposed and may award maintenance if that part of the divorce isn’t equitable.
Courts also consider several other factors as well, including:
- each spouse’s financial resources, including the actual or potential income from separate or marital property
- the paying spouse’s ability to meet each spouse’s financial needs
- the spouse’s lifestyle during the marriage
- the property distribution in the divorce
- both parties’ income, employment, and employability, obtainable through reasonable diligence and additional training or education
- whether one party has historically earned higher or lower income than the income reflected at the time of the permanent orders and the duration and consistency of income from overtime or secondary employment
- the length of the marriage
- the amount and duration of temporary support during the divorce proceedings
- each party’s age and health, including whether either spouse has significant health care needs or uninsured or unreimbursed health care expenses
- whether either spouse significantly contributed to the other’s economic, educational, or occupational advancement, and
- any other factor the court deems relevant.
After the court determines that support is appropriate, the judge then determines the amount and duration.
Colorado law is different from other states in that judges are offered an advisory guideline formula to determine the support amount.
Courts use what is known as presumptive alimony when the parties’ combined income is $75,000 or less. In those cases, there is a presumption in favor of an award of temporary alimony to be calculated by taking 40% of the higher income party’s income minus 50% of the lower-income party’s income. If the remainder is zero or less than zero, then the presumption is that no alimony is appropriate. If the remainder is positive, then the positive amount is what the presumptive alimony would be.
In other instances, this formula is used as a starting point for most maintenance negotiations when spouses have combined gross incomes of up to $240,000 or less (or a combined gross income that is at the uppermost limits of child support obligations), and the marriage has lasted at least three years.
In basic terms, the formula provides a monthly payment to the lower earner of 40% of the higher earner’s monthly adjusted gross income minus 50% of the lower earner’s adjusted gross income. The amount is adjusted after the court takes into consideration whether either spouse makes or receives child support or spousal maintenance payments for children or an ex-spouse outside the current marriage.
Also, either spouse can request a deviation from the formula by making a case that it is unfair, and a judge granting this type of request must specify the reasons for the decision.
While it is not grounds for divorce in Colorado, domestic violence is not grounds for divorce in Colorado, but it will impact child custody, visitation, and support issues. This occurs in cases where it can be demonstrated that a spouse’s physical or emotional health, income, earning power, or employability were adversely affected by domestic violence.
Read More: Everything You Need to Know About Alimony
Duration of Alimony in Colorado
Statutory guidelines also apply to determine how long spousal maintenance is paid. The exception is when a couple has been married for 20 years or more, in which case courts can award maintenance for an indefinite amount of time.
Modifying a Support Order
Courts have the discretion to modify spousal maintenance when a material change takes place with either spouse. A job loss, protracted illness, or other financial setbacks may be viable reasons to adjust payments.
Maintenance payments also end with the recipient remarries or either person passes away.
Either spouse can ask the court to modify or terminate spousal maintenance, but a judge will only change or end the award if the requesting spouse demonstrates a substantial change in circumstances since the previous order.
Options When Non-Payment is an Issue
If the paying party fails to make payments in a timely manner, the recipient spouse has options to seek payment.
If the paying spouse has the means, the court sometimes allows payment of support in a lump sum with property or cash. The benefit of lump-sum payment is that there is no ongoing obligation to pay monthly support, and the recipient doesn’t have to worry about non-payment through the years.
For missed periodic payments, Colorado courts have the power to issue an income withholding order directing the paying spouse’s employer to withhold the award directly from the employee’s paycheck.
If this does not remedy the situation, the court can impose fines, mandatory court appearances, a loss of licenses, order bank account and tax return intercepts, or sentence a party to jail time.
Does Child Support Affect Spousal Maintenance?
It can. This is one of the factors judges must take into account when determining the amount and duration of maintenance. It’s important to note that spousal maintenance is considered income for the party who receives it, impacting the calculation of child support. Higher income for the party receiving child support results in lower child support.
Read More: The Ultimate Guide to Child Support
Does Asset Division Affect Spousal Maintenance?
Colorado is an equitable distribution state and that means material possessions and other assets are divided in a fair and equitable manner, but not necessarily with a 50/50 split.
Judges have the discretion to adjust how assets are divided based on several factors, including contributions to the marriage as a homemaker and parent, each spouse’s economic circumstances, how income and debts were acquired, dissipation of assets (i.e., substance abuse, gambling, or other reckless pursuits).
The court must also decide whether assets are marital assets or should remain separate. For example, gifts and inheritance given to one spouse are separate. But pensions, 401k accounts, and other retirement assets may be considered property of both spouses. However, this generally only applies to value that was accrued during the marriage and not before or after marriage.
Spousal Maintenance and Taxes
Beginning January 1, 2019, as part of the Tax Cuts and Jobs Act, spousal support or separate maintenance payments are not deductible from the income of the payer spouse or includable in the income of the receiving spouse if made under a divorce or separation agreement executed after December 31, 2018.
You can’t deduct alimony or separate maintenance payments made under a divorce or separation agreement executed before 2019 but later modified if the modification expressly states the repeal of the deduction for alimony payments applies to the modification. Alimony and separate maintenance payments under such an agreement are not included in your gross income.
According to the IRS, a payment is alimony or separate maintenance if all the following requirements are met:
- The spouses don’t file a joint return with each other
- The payment is in cash (including checks or money orders)
- The payment is to or for a spouse or a former spouse made under a divorce or separation instrument
- The spouses aren’t members of the same household when the payment is made (This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance.)
- There’s no liability to make the payment (in cash or property) after the death of the recipient spouse
- The payment isn’t treated as child support or a property settlement.
If you paid amounts that are considered taxable alimony or separate maintenance, you may deduct from income the amount of alimony or separate maintenance you paid whether or not you itemize your deductions.
Not all payments under a divorce or separation instrument are alimony or separate maintenance. Alimony or separate maintenance doesn’t include:
- Child support
- Noncash property settlements, whether in a lump sum or installments
- Payments that are your spouse’s part of community property income
- Payments to keep up the payer’s property
- Use of the payer’s property
- Voluntary payments (that is, payments not required by a divorce or separation instrument).
Child support is never deductible and isn’t considered income. Additionally, if a divorce or separation instrument provides for alimony and child support, and the payer spouse pays less than the total required, the payments apply to child support first. Only the remaining amount is considered alimony.