Earlier this year, the Tennessee Court of Appeals addressed this issue in Malkin v. Malkin. And, as is so often the case, the answer to the question is “not necessarily,” and “it depends.” While retirement usually results in a significant reduction in your income, that faxt, standing alone, may not be enough to get you out of a long-term alimony obligation.
In Malkin, the parties divorced after a 19-year marriage. The husband, a lawyer earning about $273,000 a year from his law practice, was ordered to pay the wife $3,500.00 a month in alimony until her remarriage or death.
Several years later, the husband petitioned for a reduction or termination of his alimony obligation by reason of his retirement. (Previously, he had successfully petitioned for a reduction of his alimony obligation to about $2,800 a month, based on a decline in his income.)
The trial court reduced the husband’s alimony obligation to $1,035.00 a month, based on his retirement and the resulting decrease in his income. However, the Court of Appeals reversed, and awarded the wife her attorney’s fees for her appeal.
In its decision, the Court of Appeals began by recognizing that long-term alimony may be increased, decreased, terminated, extended, or otherwise modified upon a showing of a substantial and material change in circumstances, including the “objectively reasonable” retirement of the party paying alimony. The Court of Appeals also found that the 67 year-old husband’s retirement was “objectively reasonable” in light of evidence that his law practice had “dried up” and that his overhead would have increased substantially because he was faced with having to lease new office space and hire new staff as a result of his colleague’s retirement.
However, things went downhill for the husband from there. The Court of Appeals went on to write:
“However, this finding does not end our inquiry… Even when an obligor is able to establish that a retirement is objectively reasonable, and therefore that it constitutes a substantial and material change in circumstances, the obligor is not necessarily entitled to an automatic reduction or termination of his or her support obligations…. The alimony statute provides that an award of alimony in futuro “may” be modified upon a showing of a substantial and material change in circumstances… Although the statute lists numerous factors for consideration, the two most important considerations in modifying a spousal support award are the financial ability of the obligor to provide for the support and the financial need of the party receiving the support… In the case at bar, the trial court made few findings to justify its decision to modify Husband’s alimony obligation.”
The Court of Appeals then concluded, among other things:
“[A] flaw in the trial court’s analysis is its sole reliance on Husband’s decrease in income as the basis for modifying the alimony obligation. The trial court did not make any findings regarding Husband’s expenses, Wife’s income, Wife’s expenses, or any other factors relevant to setting an alimony obligation…. The trial court applied an incorrect legal standard, and therefore abused its discretion, by focusing solely on Husband’s income. Deciding whether an obligor has the ability to provide spousal support requires consideration of more than the obligor’s income.”
Finding that the husband had not adequately proven his entitlement to an alimony reduction, the Court of Appeals ordered that his petition be dismissed, and that he pay the wife’s attorney’s fees on appeal.
THE BOTOM LINE: If your income is reduced by reason of your objectively reasonable retirement, it is possible that you could successfully petition to have your alimony obligation reduced or terminated …, but, that may not be enough, and other factors could come into play to defeat your request. If you are faced with this situation, you should seek advice from a competent family law attorney.