The Massachusetts alimony statute provides that when alimony is set, the court shall exclude from the calculation gross income which the court has already considered for setting a child support order. Effectively, this has meant that for most divorcing parties with minor children, where the parties together make less than $400,000 per year, there is only a child support order but no alimony. To the chagrin of many who spent years working on alimony reform, the Supreme Judicial Court has determined that the alimony statute does not mean what it says.
In August 2022, in the case of Cavanagh v. Cavanagh, the SJC determined that a judge abused her discretion when she calculated child support and then, without conducting a fact-specific analysis of the family’s circumstances, denied the wife any alimony based upon the following language in G.L. c. 208 § 53(c)(2):
When issuing an order for alimony, the court shall exclude from its income calculation: … gross income which the court has already considered for setting a child support order.
The SJC held that a plain language interpretation of § 53(c)(2) resulting in alimony being nearly prohibited where child support has already been awarded is untenable. Further, the SJC noted that it makes little sense to tie the availability of alimony to child support, where child support and alimony serve distinct purposes. Child support is intended to provide financial support for the parties’ children, whereas alimony is intended to provide financial support to an economically dependent former spouse.
After holding that the alimony statute should not be interpreted to mean what it says, the SJC issued a directive relative to the calculation of alimony and child support in all future cases as follows:
In cases where child support is contemplated, before a judge properly may exercise her discretion to decide whether and in what format and amount to award alimony, the judge must do the following:
(1) Calculate alimony first, in light of the statutory factors enumerated in § 53(a) and the principle that, with the exception of reimbursement alimony, the amount of alimony should be determined with reference to the recipient spouse’s need for support to allow the spouse to maintain the lifestyle enjoyed prior to the termination of the parties’ marriage. Then calculate child support using the parties’ post-alimony incomes.
(2) Calculate child support first. Then calculate alimony, considering, to the extent possible, the statutory factors enumerated in § 53(a). We acknowledge that in the overwhelming majority of cases, the calculation of child support first will preclude any alimony being calculated in this step.
(3) Compare the base award and tax consequences of the order that would result from the calculations in step (1) with those of the order that would result from the calculations in step (2), above. The judge should then determine which order would be the most equitable for the family before the court, considering the mandatory statutory factors set forth in G. L. c. 208, § 53(a), and the public policy that children be supported as completely as possible by their parents’ resources, G. L. c. 208, § 28, and determine which order to issue accordingly. Where the judge chooses to issue an order pursuant to the calculations in step (2) or otherwise that does not include any award of alimony, the judge must articulate why such an order is warranted in light of the statutory factors set forth in § 53(a).
It is critical that the tax consequences of the SJC directive be considered. Alimony awards (excluding orders entered before 2018) are no longer taxable to the recipient or deductible by the payor for federal income tax purposes. This means that the federal income taxes are the responsibility of the party paying alimony and the alimony received by the other party is all available to spend, with no taxes to be paid. When alimony is calculated first and child support second, simply adding the alimony to the recipient’s income and deducting it from the payor’s income for purposes of running the Child Support Guidelines fails to account for the fact that the payor has tax obligations and the recipient does not – meaning the income comparison is not apples to apples. Parties, particularly payors, must have experts on stand-by to make calculations when support orders are set.
If this new directive were not 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 persuasive the conclusion of the Superior Court of Pennsylvania that “if we were to determine that an employer’s matching contributions are not income, it would be possible for an employee to enter into an agreement with his employer to take less wages in exchange for a heightened matching contribution. This would effectively permit an employee to shield his income in an effort to reduce his child support obligation.” The SJC determined that allowing such shielding of resources would violate the public policy of the Commonwealth. Although the fact that employer contributions to a retirement account are not available to an employee to meet any living expenses, the SJC held that employer contributions to a retirement account constitute income for calculating child support.
Perhaps the legislature will again take up the issue of alimony reform to make plain language plainer. Until then, Cavanagh is the law of the land.
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