Alimony Payment Terms and Methods

Alimony Payment Terms and Methods

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When spouses divorce, both parties who previously enjoyed a similar lifestyle may suddenly face a significant financial disparity. Alimony—labeled spousal maintenance in Colorado—may be one of the most contentious issues between parties in a divorce, but the intention is to prevent one spouse from suffering from unfair economic impacts after a divorce.

If one person earned a higher income during the marriage and the other focused their time and attention on raising children and/or keeping a home, spousal support becomes compensation for the lower earner’s years of unpaid homemaking that may have had a negative impact on their work experience and earning potential. Most states consider it an unfair breach of the marital contract to suddenly remove financial support from the party who wasn’t able to, or chose not to, focus on furthering their education or career during the marriage.

Spousal maintenance or alimony is the financial support agreed to by divorcing spouses or ordered by the court for the higher-earning party in a divorce to pay to the lower-earning spouse as a bridge to cover the disparity gap in their incomes either temporarily or permanently. If you are going through the divorce process and have questions about alimony, speak with an experienced alimony attorney in Denver.

Alimony Payment Terms and Methods

Calculating Alimony Payments in Colorado

While once a subjective matter for the courts to decide, now Colorado uses a formula for calculating spousal support for divorcing couples with a combined gross annual income of under $240,000. This method helps to even out income disparities with the following formula:

  • Calculate 40% of the higher earner’s gross monthly income
  • Calculate 50% of the lower earner’s gross monthly income
  • Subtract the second number from the first number to arrive at a suggested monthly payment from the higher income earner to the lower.

For example, if the higher earner makes $8,000 per month, 50% of their income equals $3,200. If the lower-earning spouse earns $2,800 per month, 40% of their income equals $1,400. When you subtract $1,400 from $3,300 the difference is $1,800. Based on this formula, the higher-earning spouse would pay the lower-earning spouse $1,800 per month in spousal maintenance as well as any court-ordered child support if the couple has children.

This formula is not a mandatory requirement but is now commonly used in Colorado courts. A judge may make changes to the amount based on individual circumstances such as the following:

  • The current incomes and future earning potentials of both parties
  • The number of years the spouses were married
  • If one spouse stayed home to raise children and care for the home
  • If one spouse supported the other through college
  • The standard of living enjoyed during the marriage
  • The property and assets awarded to each party
  • Whether one spouse is still the primary caregiver to young children
  • If one spouse helped improve the value of the other’s property

For divorcing couples with over $240,000 in annual income, determining spousal maintenance typically relies solely on the above factors rather than taking the formulaic approach. In either circumstance, the formula is meant as a guide to address the former inconsistencies in the amounts and duration of spousal support in different judicial districts in Colorado.

The duration of spousal maintenance orders for marriages of less than 20 years is half of the years of the marriage but may be longer for longer marriages. Colorado places no cap on spousal support duration for marriages over 20 years.

Understanding Contractual vs Court-Ordered Alimony

When both parties in the divorce come to an agreement on a specific monthly amount of spousal maintenance and the duration of the maintenance payments, it’s considered a contractual agreement between the parties and not modifiable by the court. Court-ordered alimony or statutory maintenance is an amount decided on and ordered by a judge and remains modifiable by the court.

While it may be challenging for divorcing couples to overcome their contentious issues to agree to contractual alimony, there are several advantages to deciding these issues together rather than leaving it up to a judge to decide including the following points:

  • Spouses understand their individual circumstances in a way that a judge cannot
  • Contractual agreements for alimony are non-modifiable so a spouse cannot take the paying spouse back to court any time they get a pay increase, bonus, or commission

On the other hand, divorcing spouses should also consider the possible negatives:

  • If the paying spouse becomes unemployed they’re still obligated to make the payments and cannot modify the terms
  • The receiving spouse cannot ask for an increase even if the ex-spouse has a very large pay increase, inherits money, wins the lottery, or has other gambling earnings or financial windfalls