Negotiations in Mediation: Calculating Spousal Support
Negotiations around spousal support (also known as alimony or spousal maintenance, depending on where you live) are often ripe with emotion. And, it's no wonder. When people reach out to me, they are often worried about what they will be able to afford after the final divorce. Common questions include:
- Will I be able to stay in my home, or will I have to move?
- Will I be able to keep my children in the schools where they have friends, or will there be a necessary transition?
- Will I be able to pay my bills, or will I need to get a second job or go back to work?
Calculating Spousal Support
All of these fears are very common and have to do with money coming in and money going out. But unfortunately, calculating spousal support is not cut and dry in most jurisdictions. Most jurisdictions don't offer a spousal support calculator.
For most families, there is not sufficient income to support two households that are similar to the marital standard of living without increasing income. As a result, there is often a fear that the recipient of spousal support will not be able to pay their bills or deal with an unexpected expense. For payors of support, there is often a concern that they will work for nothing. In other words, they will give up so much of their income that they won't have enough funds to do anything that they enjoy.
Spousal support is not meant to penalize anyone. The real purpose is to aid in the transition from married to single so that the lower-income spouse can make the financial transition over a period of time. Over time (depending on the length of the marriage and various factors), there is generally a goal that the recipient of support will become self-sufficient. However, there are a lot of factors that will impact how long that transition will take.
How do you calculate spousal support without a calculator?
Since one of the biggest challenges of negotiating spousal support is that most jurisdictions do not provide a calculator, I would argue that mediation is an excellent place to facilitate these negotiations. If I put on my financial planner hat for a minute, when I initially start looking at spousal support scenarios, my analysis starts with what the recipient needs and what the payor can afford. How do you know what one person needs and what the other can afford? It begins with an in-depth look at current income and expenses.
When negotiating spousal support, there are four things that need to be determined:
1. Amount of spousal support
The amount of spousal support that is agreed upon is not always a static figure. It could even be a one-time lump sum buyout of support. I've seen several cases where a greater amount of support is paid in the early years following a divorce, which is reduced over several years. I've also seen several cases where the parties negotiate a separate agreement around bonuses or other types of variable income.
Related Reading: How much spousal support will I get?
2. Duration of spousal support
The duration of support refers to how long support will be paid. Some jurisdictions that don't have a calculator for spousal support offer calculations regarding how long a person is entitled to spousal support. However, one of the great things about mediation is that it gives you some control to determine what works best for your family. If you are looking for guidance regarding the norm in your local jurisdiction, consult with an attorney who regularly practices in your local court.
3. Modifiability of spousal support
Sometimes spousal support orders can be changed, and sometimes they can't. It depends on what the order says. If it is modifiable, you'll want to agree under what circumstances the order could be modified. For example, if the payor lost his their job or had significant reduction in income, could support be reduced? What if the payor had a substantial increase in compensation, could that lead to a modification? It's common to have language around remarriage or cohabitation with a new partner being a triggering event for a modification of support.
4. How spousal support will be paid
How spousal support will be paid gets into the more practical aspects but is really important to understand. How will the support be paid, how will it be received, and how will that transaction be documented. Some jurisdictions require that support be paid via the child support enforcement agency while others offer greater flexibility allowing one party to pay the other directly. Before negotiating this point, make sure you know what's even possible.
Related reading: Considering an alimony buyout? Here's what you need to know.
Whether you are going to be the payor or payee of spousal support, it's important to understand how it's calculated and what options are available so that you can be prepared to negotiate with your ex.
How Our Financial Analysts Can Help Improve Your Mediation Outcomes
A key to maximizing the efficacy of your mediation is preparation. By ensuring you're well-equipped with knowledge, you can make the most of your time and efforts. We're here to provide clarity on potential financial outcomes, preparing you to negotiate your financial settlement with confidence. Reach out to us and discover how collaborating with a Certified Divorce Financial Analyst (CDFA) before and during mediation can simplify decisions and reduce stress throughout the process.
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