3.3 Spousal Support Provisions

• Library: Negotiating and Drafting Marital Agreements (Virginia CLE) (2019 Ed.)

3.3 SPOUSAL SUPPORT PROVISIONS

3.301 In General.

A. The Party Not Needing Support. In Orr v. Orr, ¹⁷⁴ the United States Supreme Court struck down Alabama's alimony statute, which provided that husbands, but not wives, may be ordered to pay alimony on grounds it was unconstitutional, and the Virginia alimony statutes were subsequently revised. Accordingly, counsel should consider including provisions regarding spousal support of each party by the other. Even when the current circumstances do not warrant an award of spousal support to a party, counsel

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should include a waiver of spousal support to prevent a party from requesting the court to reserve jurisdiction for such an award. ¹⁷⁵

The Virginia Court of Appeals held, in Bacon v. Bacon, ¹⁷⁶ that "where there is no bar to the right of spousal support [i.e., a finding of fault on the part of the moving party], it is reversible error for the trial court, upon request of either party, to fail to make a reservation in the decree of the right to receive spousal support in the event of a change of circumstances," even though at the time of the decree neither party needed support. ¹⁷⁷ Under section 20-107.1(D), there is a rebuttable presumption that the duration of a reservation of support is one-half of the length of time between the date of marriage and the date of separation. The practitioner should keep this presumption in mind when negotiating a reservation of support.

B. Formula for Pendente Lite Spousal Support. Before the 2007 enactment of section 16.1-278.17:1 of the Virginia Code, there was no legislative formula for determining pendente lite spousal support, which obviously affected child support guideline calculations. Many localities created various formulas to keep this from becoming a major impediment to settlement negotiations, but there was no uniformity. With the enactment of section 16.1-278.17:1, a presumption is created as to the correct amount of pendente lite spousal support for cases where the combined monthly gross income of the parties does not exceed $10,000 whether they have children or not. While enacted as a revision to title 16.1, the statute applies to any judicial proceeding involving pendente lite spousal support.

With no minor children in common, the presumptively correct amount of pendente lite spousal support equals the difference between 30 percent of the payor's gross monthly income and 50 percent of the payee's gross monthly income.

If the parties have a minor child or children in common, the presumptively correct amount equals the difference between 28 percent of the payor's gross monthly income and 58 percent of the payee's gross monthly income.

As with child support, deviations are allowed for good cause shown, and the application of the statute is somewhat limited. Even so, it promises to be of great assistance to counsel trying to reach negotiated out-of-court

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temporary settlements during the separation and pendency of the divorce suit.

3.302 Special Considerations.

A. The Wealthy Party. Counsel representing a party with substantially greater income or assets may wish to provide that the other party has not relied on the wealthier party's representations but has entered into the agreement based on his or her own investigations.

B. Criteria for the Level of Support. If the spousal support is subject to modification in the future, the criteria for the level of support should be set forth so that the court will have a basis for determining whether a change of circumstances has occurred since the level was set in the agreement.

3.303 Temporary Provisions. The parties may wish to agree to a temporary level of spousal support until some specified event occurs, such as the sale of a jointly owned residence. The agreement should provide for the level of support after the temporary situation has passed.

3.304 Waivers. ¹⁷⁸ If the agreement is to contain a complete waiver of spousal support, counsel should include as many factors as may be applicable as consideration for the waiver, to lessen the risk that the agreement will be set aside. A waiver of spousal support by one party may be consideration for a waiver by the other, resulting in a mutual waiver of support. A party's forbearance to claim support may be consideration for a contract ¹⁷⁹ and a statement of the property interest being conveyed in lieu of support may show it to be adequate consideration. ¹⁸⁰

While waivers are permissible, they have been invalidated in certain instances where the waiver was found to be unconscionable as a matter of law in light of the disability or necessity of a party. ¹⁸¹

An attorney for a client seeking waiver of spousal support should consider insisting that the waiving party be represented by counsel, even if his or her client has to pay for the counsel fees.

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3.305 Fault Grounds. If one spouse has been guilty of a fault ground of divorce and thus would be precluded from receiving spousal support under Virginia law, a recital of that bar should be included. The recital may be included twice—once in the preparatory provisions relating that the parties are separated and the basis for that separation and again within the support provisions.

Section 20-107.1 limits the bar to spousal support to a ground of divorce under section 20-91(A)(1) (adultery, or sodomy or buggery committed outside the marriage). Even these grounds are not a bar if the court determines, from clear and convincing evidence, that a denial of support and maintenance would constitute a manifest injustice, based on the respective degrees of fault during the marriage and the relative economic circumstances of the parties. The bar also applies to a reservation of spousal support. ¹⁸²

In Wallace v. Wallace, ¹⁸³ the wife, although guilty of post-separation adultery, retained the right to spousal support notwithstanding the prohibition of the statute then in effect against awarding support to a party against whom a fault ground for divorce existed. The court found that the husband had been responsible for the termination of the marriage and that he was not entitled to a fault-based divorce.

In Hall v. Hall, ¹⁸⁴ the parties' prenuptial agreement provided certain penalties in the event of infidelity. Specifically, if the husband was proved unfaithful, he would have a spousal support obligation of a longer duration than he would have had if he had been faithful. If the wife was proved unfaithful, she would receive no support. They defined the "proof" required as "a photographic or video record or a finding of adultery in a court of law." The wife filed for divorce based on separation. The husband answered but propounded discovery on the wife's adultery and only tried to amend his answer to allege adultery when the wife declined to respond to his discovery. The trial court struck his pleadings, but the Court of Appeals reversed, finding the wife's adultery or lack thereof to be relevant to the prenuptial agreement.

3.306 Retirement. Subsection (G) was added to section 20-109 in 2018 to require, in a contested case, that any order granting, reserving, or denying a request for spousal support provide whether the retirement of either party was considered by the court in reaching its decision. While the statute applies only to contested cases, language in an agreement should

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address this issue when the spousal support term is being negotiated so that it could not later be raised as a material change in circumstances. ¹⁸⁵

3.307 Amount of Support. ¹⁸⁶

A. Factors. The amount of spousal support should be agreed to after consideration of all factors that would be considered by the court ¹⁸⁷ and also factors the court may not consider, such as an agreement to maintain insurance, provisions for limitations on increases, college education of the children, conveyances of property, and, sometimes, duration of the spousal support beyond remarriage.

B. Lump Sum Versus Periodic Payments. The parties can fashion spousal support as a one-time lump sum payment, a lump sum amount to be paid in future installments, standard periodic (usually monthly) payments, or any combination of payments. ¹⁸⁸ A lump sum settlement will have tax consequences that counsel for each party should consider. ¹⁸⁹ With changes made by the TCJA, spousal support is now taxable to the payor and tax-free to the payee, so this reversal of the prior tax treatment will affect past bargaining strategies.

C. Purpose of Support. When fashioning an award of spousal support, the court's aim is to provide a sum for the period needed to maintain the spouse in the manner to which he or she was accustomed during the marriage, balanced against the other spouse's ability to pay. ¹⁹⁰ The balance must be struck and awards made on the basis of the circumstances disclosed by the evidence at the time of the awards. ¹⁹¹

D. Reforms. Reforms in the laws of most states have minimized fault and furthered the divorce court's ability to sever not only the bonds of matrimony but also the parties' financial relationship. If one spouse is financially dependent on the other, a property division rather than spousal support may be preferred. If the parties' property is not sufficient to achieve

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the desired result, spousal support may be awarded for a specified duration until the financially dependent spouse reaches financial independence. ¹⁹²

E. Taxation of Support. Under the Tax Cuts and Jobs Act of 2017 (TCJA), ¹⁹³ alimony payments are no longer deductible by the payor spouse or included in the income of the receiving spouse. The amendments under the TCJA are applicable to any divorce or separation instrument executed after December 31, 2018 and any divorce or separation instrument executed on or before that date and modified after that date if the modification expressly provides that the TCJA amendments apply to the modification. Marital agreements qualify as divorce or separation instruments. ¹⁹⁴...