The New Year will ring in big changes in Colorado for those filing for divorce or looking to modify child support. In what some are calling “groundbreaking legislation,” Colorado has joined the national alimony reform movement and will change the way maintenance payments are calculated beginning January 1, 2014. Also arriving are increases to the Schedule of Basic Child Support Obligation which will increase the combined gross annual income from $240,000 per year ($20,000 per month) to $360,000 per year ($30,000 per month).
The revised maintenance law, which uses the child support guidelines to determine the maximum combined annual income, will have the largest impact on marriages that are three to twenty years in length in which the couple’s combined annual income does not exceed $360,000. The new formula essentially subtracts 50 percent of the lower earner’s monthly income from 40 percent of the higher earner’s monthly income. The period of support is then based on 45 percent of the length of the marriage.
An example of how this formula will work:
Length of Marriage: 10 Years
45% of Marriage Length: 4.5 years
Husband’s Income: $200, 000
40% of monthly income: $6, 667
Wife’s Income: $40,000
50% of monthly income: $1,667
Resulting Alimony Payment: $5,000/month for 4.5 years
Parties should be aware that a receiving spouse cannot receive in total (combined income and maintenance), more than 40% of the parties combined adjusted monthly gross income.
Lawmakers hope that relying on a standard equation will take some of the emotions and unintentional bias out of these financial verdicts. Additionally, the anticipation is that the formula will create a more uniform playing field and work towards the elimination of vast discrepancies in alimony allowances between different counties. While Boulder once cultivated a reputation as a “maintenance haven,” the hope is that awards should become more consistent across the state as judges begin using the new calculation method.
It is important to keep in mind that this formula is only intended as a suggested guideline for judges. That means it’s just a framework to help determine an alimony settlement, not a set-in-stone mandate. The judge will still take into consideration all financial resources and needs before determining whether, and how much, alimony needs to be paid.
Our attorneys are well-versed in the application of the new laws, so please do contact us if you have questions about your own case. Find us on the web at www.divorce-matters.com