What Happens to Your Obligation to Pay Alimony When You Retire?
Posted on October 18, 2010 by Gail Otis
Rudolph F. Pierce vs. Carneice G. Pierce, 455 Mass 286, 916 N.E. 2d 330 (2009) is a significant family law case that was recently decided. The gist of this case is that retirement, standing alone, does not end one's obligation to pay alimony. However, retirement is one important factor that can influence a court's decision to either terminate alimony or reduce the amount of alimony owed. The other factors that can influence a court's decision to either reduce or terminate alimony follow:
- employment opportunities available to the paying ex-spouse;
- the financial impact of alimony termination on the recipient ex-spouse;
- whether the word "retirement" was included in the original alimony agreement between the parties. That's to say, is there evidence in the original separation agreement that the payor's retirement would warrant alimony modification or termination?
Here are some interesting details of this landmark case that will help clarify how retirement specifically affects alimony in Massachusetts. In 1999 a husband and wife ended their thirty-two year marriage by divorcing. Rudolph was initially required to pay Carneice $110,000 in alimony annually and indefinitely. Nine years later Rudolph voluntarily retired at age sixty-five.
At the time of the divorce Rudolph was earning approximately $500,000 annually as a partner at his law firm. His second wife was employed and earning $125,000 annually. When Rudolph retired his income substantially diminished. Rudolph subsequently asked the Probate and Family Court to terminate his alimony obligation since he was retired. The lower court agreed to significantly reduce but not eliminate his alimony obligation. Dissatisfied with this decision Rudolph appealed; however, the Massachusetts Supreme Judicial Court (SJC) affirmed the lower court's ruling. The SJC considered the factors listed above when deciding to affirm the Probate and Family Court's ruling.
First, Rudolph had a lucrative post-retirement employment opportunity. He was able to earn $250 hourly for any casework he performed. This could have been used to pay Carneice alimony. Second, the financial impact of alimony termination on Carneice would have been significant since she was unemployed at the time of the judges ruling and her reported total annual income was less than $1,000. Finally, "retirement" was not contemplated in the original separation agreement. The agreement was deemed unambiguous regarding when support should cease, and the parties' original intentions take precedent.
Retirement and the age of the supporting spouse are important factors to be considered in deciding whether to terminate alimony. However, the SJC ruled that retirement and age, standing alone, do not automatically terminate an alimony obligation. Additional factors need to be considered when deciding whether to reduce the amount of alimony owed, or whether to terminate alimony altogether. Looking forward, we might see paying spouses postponing retirement since it won't terminate their alimony obligations. Moreover, spouses contemplating divorce who are nearing retirement should clearly state in their separation agreements how 'retirement' will affect alimony obligations, if at all.
Written by Graydon Sommer, EsquireDivorce, Alimony Tags: alimony, appeal, divorce, modification, retirement Comments (0) Trackbacks (0)