As with child support and custody, post-separation spousal support (also known as “alimony”) may be modified even though a divorce is “final.” Alimony (or “alimony pendente lite”) is the term used in North Carolina family law for divorce actions filed before the law was changed on October 1, 1995. “Postseparation support” is the term now used for the same thing, and the following discussion is primarily based on the 1995 version of the law.
The North Carolina statute on modifications (North Carolina General Statutes § 50-16.9) only applies to post-separation orders for support and alimony. Awards of property may not be modified under this statute. Thus, the distinction between alimony and property division is important.
A poorly-drafted court order can lead to headaches when it’s not clear whether a series of payments is for future support (alimony) or to distribute the couple’s property (equitable distribution). If the former, then the court may modify the award; if the latter, it may not. If post-separation support isn’t incorporated into a court order, then a court has no power to modify it — unless the agreement between the parties gives the court that power. If the parties have not given the court that power, then (as with other contracts) the agreement can only be modified by the agreement of the parties.
When considering a motion to modify post-separation support, a court must take into consideration two competing public policy values:
- In the interests of the family and of society as a whole, courts need to be able to respond to changes in circumstances.
- In the interests of former spouses and conserving taxpayer-funded court resources, courts want to avoid repeated litigation of matters that have already been decided.
As with other motions for modification, the standard is “changed circumstances.”
Changed Circumstances
The law requires any alleged change of circumstances to be “substantial.” What kind of change is “substantial” is up to the trial court, depending on the relative financial status of the parties. For example, a change might be “substantial” for a family earning the minimum wage, but not for a family with millions in assets.
In general, a change of only a few hundred dollars in expenses or income would not be considered “substantial.” In order to be “substantial,” a change in circumstances must result in support payments that are inadequate to the needs of the person receiving them, or unduly burdensome for the person paying them. The relevant time periods are the time of the original (or previous) order awarding post-separation support and the time of the motion for modification.
The following case from 2008 shows how one court determined whether there had been a substantial change in circumstances that would merit a change in support.
Bailey vs. Bailey
Pamela Willis Bailey and Jerry Russell Bailey were married in 1974 and lived together until the year 2000. In September of that year, Pamela filed a complaint alleging that Jerry had abandoned her, removed their financial assets, and committed adultery. She alleged that she had been left without sufficient means to subsist and was dependent on Jerry. In 2001, the court ordered Jerry to pay Pamela alimony in the amount of $1,100 per month for a period of ten years. The court also gave Pamela exclusive use and possession of the marital residence. In 2006, Jerry filed a motion to reduce or terminate alimony, alleging a substantial change in circumstances. Among other things, he claimed that:
- Pamela’s income had increased by $1,033 per month due to a military retirement benefit from a previous marriage;
- his own income had been minimized due to his move from Florida to North Carolina; and
- Pamela’s expenses and ability to work had changed.
The trial court denied Jerry’s motion, determining that Jerry’s income had been reduced due to his “increased standard of living” and that Pamela’s monthly expenses, standard of living, and earned income had not substantially changed since the date of the original order. Jerry appealed. The court of appeals made note of the following findings of fact by the trial court:
- At the time of the original order, Jerry was earning an annual income of $54,504.
- Since the date of the original alimony order, the court had ordered equitable distribution of the couple’s property which resulted in Pamela receiving 26.96% of Jerry’s military benefits (about $440 per month).
- Pamela had started receiving the military pension from her first marriage.
- Pamela had made substantial repairs to the marital residence.
- Jerry’s income at the time of his motion was $51,437 (including his reduced military pension). Since the time of the original order, he had purchased a boat and trailer, had accumulated significant savings, and had increased his standard of living slightly.
- Pamela’s monthly expenses, standard of living, health issues, and income were about the same as at the time of the original order, and she was still working at the same job.
- Without the alimony from Jerry, Pamela would be unable to meet her reasonable monthly expenses.
Thus, the court of appeals agreed with the trial court that the circumstances of the parties had not changed substantially.
Determining the New Amount of Support
If a court does determine that there has been a change in circumstances sufficient to justify a change in support, then its next task is to determine the new amount of support. Only the needs of the party receiving support, and the ability of the other party to pay, are relevant. Moral misconduct, either during or after the marriage, is not relevant (except for the issue of cohabitation, discussed below).
In considering a motion for modification, a court must take into consideration all relevant economic factors, not just a single factor like a change in income. Courts must also recognize that changes in income are normal, and may be temporary and offset by other factors. For example, a party who loses a job may receive severance pay, accrued vacation pay, or unemployment benefits. He or she may be able to reduce her expenses for commuting, dry cleaning, etc.
Also, although the income of the supporting spouse may have decreased, the needs of the supported spouse might also have decreased. Conversely, a court should not increase support based on solely on an increase in the supporting spouse’s income or a decrease in the supported spouse’s income. A court will often look to the couple’s standard of living during their marriage to determine what an appropriate level of support is, but this does not necessarily set a ceiling for the level of support.
Increases in Support
A dependent party may seek an increase in support by showing that his or her expenses have increased, and that the supporting party has the ability to meet these increased expenses. The ability to pay may be shown by the supporting party’s lifestyle, including the purchase of luxury items and the pursuit of expensive hobbies.
For example, in the 1978 Roberts case, the parties had entered into a consent judgment that the former husband would pay the former wife $100 per month in alimony in addition to $300 per month in child support. The former wife moved for an increase in both alimony and child support based on her increased needs and the failure of her income to keep pace with inflation. In contrast, her former husband had recently purchased a boat and a new home and owned two other vehicles.
The trial court ordered an increase in support, and the court of appeals affirmed, finding that the evidence supported the former wife’s claim that she was unable to adequately support herself and her child. The following 2008 case also illustrates the factors a court will consider when ruling on a motion to increase support.
Pierce vs. Pierce
Joanne Pierce and James Pierce were married in 1960 and separated in 2002. Joanne filed a complaint for post-separation support, alimony, and equitable distribution in 2004. The trial court ordered James to pay Joanne alimony of $700 per month. Pamela sought modification of support in 2006, and the court granted it. James appealed.
The court found that Pamela’s situation had worsened. She had used her share of equitable distribution funds to pay her bills, and that money would be exhausted within 15 months. At the same time, her credit card debt was increasing. The court also found that James’s situation had improved. In 2004, he was living alone, whereas in 2008 he was living with another person and sharing expenses. His expenses that had increased were mostly discretionary, including for entertainment and meals out. And while his expenses had increased 34%, his income had increased 77%. For these reasons, the court of appeal upheld the trial court’s order increasing support to Pamela.
Decreases in Support
The analysis is similar when a supporting spouse seeks to decrease payments to a dependent spouse. The supporting spouse will need to show that the dependent spouse has decreased expenses, increased income, or both. A supporting spouse’s retirement may support a decrease in, or elimination of, that spouses’s support obligation. However, this is not automatic. The court must still look at the current expenses of the dependent spouse and the impact of reduced alimony on the dependent spouse’s standard of living. The following 2002 case illustrates how a court may consider issues that arise due to retirement.
Honeycut vs. Honeycut
Patricia Honeycutt and Walter Honeycutt were married in 1956. They separated in 1989 and divorced in 1990. In 1991, Patricia was found to be a dependent spouse and Walter was ordered to pay her alimony of $3,261.74 per month “until the death of either party, or the remarriage of the plaintiff [Patricia], whichever event should first occur.”
Patricia was also given the marital home as part of the equitable distribution of the marital property. In 1998, Walter filed a motion to reduce his alimony payments on the grounds that there had been a substantial change of circumstances. He was in the process of selling his dental practice and retiring.
At the same time, Patricia sought an increase in alimony payments because she contended that Walter was receiving increased income from rental properties he owned, from the sale of his dental practice, and from annuities. The parties entered a consent order resolving these issues. Then in 2000 Walter sought to terminate his alimony obligations altogether, on the basis of the following alleged changed circumstances:
- Walter was 66 and Patricia was 65. Both were receiving social security and either were or soon would be receiving Medicare.
- Walter was no longer employed and no longer had a monthly income from his practice.
- The parties had already divided up the retirement plans 50-50.
- Patricia’s needs had declined since 1991 since she now owned a home, her car was paid for, she had Medicare to cover her medical bills, and she had no household help.
- Patricia’s investments and social security payments were enough to provide for her needs.
- Patricia was living in the couple’s 5000-square-foot, five bedroom luxury home. She could easily sell the house and move to a more suitable residence if she needed additional resources.
The trial court concluded that Patricia was no longer a dependent spouse and terminated alimony. Patricia appealed. She disagreed with the conclusion that she was no longer a dependent spouse, and she also disagreed with the court’s findings about her earning capacity.
The court of appeals found that the trial court had improperly concluded that Patricia was no longer a dependent spouse, as that issue had been “permanently adjudicated” at the original alimony hearing. The court of appeals noted that the trial court could reduce the amount of alimony to zero, without finding that Patricia was no longer a dependent spouse.
However, the court of appeals found it improper for the trial court to calculate what Patricia’s expenses would be if she sold her home and moved to a smaller one, without taking into account her moving expenses and the reduction in her standard of living. The court of appeals also found that Patricia was entitled to claim the expense of supplemental insurance, even though she was eligible for Medicare: The record reflects no reason for the court to require her to lessen her standard of living by reducing the quality or availability of health care in this manner.
To the contrary, the record reflects that by carrying this insurance, the plaintiff has taken reasonable steps to provide for her known health care needs. For these reasons, the court of appeals reversed the trial court’s decision. In the following case from 2008, the court addressed a variety of factors that must be considered when ruling on a motion for reduction in alimony.
Dodson v. Dodson
Deborah Dodson and David Dodson were married in 1977 and separated in 2004. At arbitration, David was ordered to pay Deborah alimony of $2,200 per month for ten years. At the time, two of the couple’s three children were legally adults, and two lived with Deborah. One was home schooled at the age of 18, and the minor child had severe medical conditions.
Just two months after the arbitration, David sought to modify the alimony award on the grounds that the children were no longer minors, Deborah’s income was higher than the court had assumed, and David’s income was lower than the court had determined. In 2005, the trial court granted David’s motion and reduced his payments to $1,826. Apparently still unhappy with this reduced amount, he appealed.
The court of appeals found that the trial court had imputed income of $600 to Deborah but that her actual net income was $1,725 per month. However, the court of appeals also found that the trial court had failed to take into account all the factors surrounding this increase in income, and that this was an error. The court of appeals found that the trial court was in error when it calculated David’s income as $3,841 per month rather than the actual figure of $3,371 per month. The arbitrator had determined David’s reasonable and necessary living expenses to be about $2,300 per month.
Thus, after deducting the $1,826 in alimony David would be left with a negative balance. As the court commented, “Alimony payments cannot reduce the supporting spouse to poverty.” Thus, the court of appeals concluded that the trial court abused its discretion in setting the amount of the alimony award. The court of appeals also found that the trial court erred in finding that Deborah’s fixed expenses had increased by $630.50 per month.
During their marriage, the couple had lived in a manufactured home. It was unclear from the record whether the three-bedroom home that Deborah was living in at the time of David’s motion increased her standard of living. If it did, David would not be required to pay the increased cost.
Finally, the court of appeals held that the trial court erred by not considering the additional financial support that Deborah possibly received from her adult children. The court of appeals concluded that the trial court had abused its discretion in setting the amount of alimony. It reversed the trial court’s decision and sent the case back so that the trial court could determine the proper amount of alimony, based on all the relevant factors.
Third Party Income and Expenses
As in the Dodson case, a court must take into consideration support that the dependent spouse receives from third parties, as well as the expenses related to third parties, such as a supporting spouse’s new family.
For example, a dependent spouse may seek an increase in support because the supporting spouse has a higher family income due to remarriage. Conversely, the expense of supporting a new spouse and children may lead the supporting spouse to seek a reduction in alimony. Courts are allowed to consider income from third party sources. This does not count as a spouse’s own income, but does affect that spouse’s financial needs. For example, this new income can reduce the household expenses of the dependent spouse and may result in a change of circumstances.
However, the income must be regular and used for household support in order to be considered. When it comes to the expenses of a new family, North Carolina law gives judges the discretion to balance the needs of the new and old families. However, a court cannot reduce alimony simply because the supporting spouse has a new family: Payment of alimony may not be avoided merely because it has become burdensome, or because the husband has remarried and voluntarily assumed additional obligations.
Remarriage and Cohabitation
Remarriage of a dependent spouse will terminate court-ordered alimony under North Carolina law. This applies to divorces both before and after October, 1995. However, remarriage only terminates future alimony payments. It does not excuse any overdue payments from before the remarriage. If support payments are subject to a separation agreement between the parties that has not been made part of a court order, then the terms of the agreement apply. Such an agreement may or may not include a clause that terminates support upon remarriage.
If the agreement is incorporated into a court order, then it is modifiable by the court and the support obligation may be terminated on remarriage. In North Carolina, for actions filed after October, 1995 post-separation support and alimony will also usually terminate when a dependent spouse “engages in cohabitation.” Alimony terminates when cohabitation has an economic impact on the dependent spouse. Public policy dictates that a supported spouse should not be able to avoid in bad faith the termination of alimony that would result from remarriage while engaging in a relationship that has most of the characteristics of remarriage.
“Cohabitation” means continuous and habitual living together with evidence of “the voluntary mutual assumption of those marital rights, duties, and obligations which are usually manifested by married people.” A North Carolina court of appeals decision found that “cohabitation” existed when a couple had been in a monogamous relationship for ten months and slept over up to five times per week.
However, a court might also (in a rare case) find cohabitation to exist when the parties didn’t ever spend the night together. Factors such as whether the parties maintain separate residences, and where they keep personal belongings, are factors courts can consider. The more “rights, duties, and obligations” associated with cohabitation, the more likely it is to have an economic impact on the dependent former spouse, and the more it will appear that the dependent former spouse is avoiding the formalities of marriage primarily in order to continue receiving alimony.
Factors include:
- how the members of the couple share household chores and child care duties,
- whether they have co-mingled their finances,
- how they hold themselves out to society,
- whether they go out in public together and attend worship services together,
- whether they vacation and spend holidays together, and
- even whether they kiss when leaving for work in the morning.
However, activities such as walking the dependent party’s dog, parking in that party’s garage, moving furniture into the party’s home, carrying in groceries, spending 11 consecutive nights together, etc. were help not to support a finding of cohabitation. Whether a relationship is exclusive and monogamous is an especially important factor in determining whether cohabitation exists. Actual sexual intercourse between the dependent spouse and the new partner is not required in order for there to be cohabitation that will terminate alimony.
Living with roommates or family members is not considered “cohabitation,” although this can reduce a party’s expenses and have an impact on the amount of support, as discussed above. One difficulty is that cohabitation, unlike remarriage, may not have a definite start date. At the latest, courts will date the cohabitation to the date that one party brings a motion to terminate support based on it.
