You and your spouse have decided to divorce. And you've got a lot of worries on your mind.
“Will I be able to stay in the house?”
“How am I going to make ends meet?”
“Can I really afford my own health insurance?”
“Will I ever be able to retire or contribute to my IRA / 401(k)?”
These fears are typical for couples seeking a divorce in Michigan, and have one main thing in common:
When it comes to money and divorce, there's one topic that's more painful to think about, more sensitive to discuss, and more challenging to resolve than this one.
So whether you call it alimony or spousal support (the commonly used term in a Michigan divorce), or maintenance, coming to an agreement that will require one ex-spouse to pay money to the other ex-spouse to support their lifestyle is complicated, to say the least.
What is the Purpose of Alimony?
Alimony is one of four topics that are discussed and agreed upon by the parties in mediation along with:
Alimony in Michigan is based on a series of 14 factors. And while the purpose can vary greatly from couple to couple, in our experience it is primarily paid and / or received for two reasons.
In some cases, the idea of Michigan spousal support is to strike a balance in the parties post-marital earnings. Allowing them to live “roughly on par with each other” for a set period, just as they did during the marriage.
While in other cases, alimony provides a financial “safety net” to one ex-spouse while they pursue the training or education they’ll need to get back on their feet and become self-sufficient post-divorce.
Either way, alimony is intended to aid the lower earning spouse in making the transition from married to single.
And as you'll learn later in this post, can come in many different forms.
There are a few things you need to understand about the challenges of determining alimony in Michigan:
The law is extremely vague on how to resolve this issue since unlike some states, there is no Michigan alimony calculator;
Since the Tax Cuts and Jobs Act (TCJA) passed in 2017 has eliminated the deduction of spousal support payments for payors and recipients are no longer required to report payments as taxable income on both their Federal and Michigan State returns, long-standing tactics used to foster agreement are no longer useful;
While on the surface, it might appear as if this tax change benefits the recipient and hurts the payor, it actually negatively impacts both parties;
With news of record government deficits due to Covid-19, and a new president in the White House, calls to repeal the 2017 TCJA may grow louder throughout 2021, once again reversing the tax treatment of alimony;
This topic has less to do with alimony laws and more to do with money and negotiation;
There is more than meets the eye on this issue and this topic is much too complex (and emotional) for you to try to resolve on your own.
"With emotions running high and no Michigan alimony calculator to help you come up with an amount for periodic alimony payments, things can quickly go off the rails in your case if you involve attorneys.
That’s why it's better to work with an experienced divorce mediator like me.
I’ll take you through my proven, step-by-step process and help you and your spouse negotiate and come to an agreement (out of court) on alimony that's fair to both of you."
There is no such thing as a Michigan alimony calculator.
Back in the day, it was entirely up to each family law judge to come up with a child support award they felt was fair. Leading to a wide variety of child support settlements based solely on an individual judge’s own reasoning.
In the early 1980’s, the Federal government stepped in. And charged each of the states to come up with a repeatable way to determine child support. Instead of leaving it in the hands of individual judges.
Now when child support is determined in a Michigan divorce, a child support calculator is used to output a specific dollar amount the parties should pay to support their children. And the formula is based on a series of clearly defined inputs.
But when it comes to determining spousal support, there is no such thing as a Michigan alimony calculator.
Michigan provides some general guidelines regarding alimony, but nothing about it is formulaic, or outputs a specific number like the child support calculator does.
The 14 Michigan spousal support factors may include, but are not limited to:
(1) Cohabitation. If the potential spousal support recipient is cohabitating post-divorce, alimony may not be applicable.;
(2) Each of your abilities to find employment outside of the home. Spousal support may be applicable where one party worked inside the home raising children, for much of the marriage. Chances are that individual has very few marketable skills if they have been out of the workforce for an extended period. Making returning to work, and becoming financially self-sufficient, difficult;
(3) Fairness. Simply put if the payment or receipt of spousal support is fair. How one determines if the payment or receipt of spousal support is fair, is a conversation best saved for mediation as there are no easy answers;
(4) How long you were married. Typically, the longer you are married, a longer the spousal support might be. In some cases, it may be very short if the duration of your marriage was brief period while in other cases, if the duration of your marriage was long, it may be what is considered permanent. This is one of the grayest areas of spousal support Michigan couples face;
(5) If you have others to support. If you are the full-time caregiver for an elderly parent, that may severely restrict (or eliminate) your ability to work outside the home and financially support yourself, alimony may be applicable. Or if the higher earning spouse finds themselves in a caregiving position, and their income is greatly reduced, the payment of spousal support may be reduced or eliminated;
(6) The ability for one of you to pay support. In any spousal support conversation, there needs to be a balance between how much one of you can pay, versus how much one of you can earn were you to return to work, or be fully employed;
(7) The Equitable Distribution of your Marital Assets and Liabilities. Sometimes the amount of liquid assets a party receives can play a factor in spousal support. Michigan allows for “alimony buyouts” whereby instead of paying alimony to an ex-spouse, an amount of cash or other liquid assets are given to them from the party's assets instead;
(8) The other side of this equation are debts. If in exchange for paying alimony, one party agrees to take on a series of the parties' debts, this can also be factored into Michigan spousal support.
(9) The role each of you played in the marriage. While not as common as it used to be, there are still cases where one person works “outside the home” earning a paycheck, and one works “inside the home” caring for the children. In cases like these spousal support recognizes that both parties “worked” and contributed to the marriage. Even if it wasn’t by earning a paycheck;
(10) Your ages. As people get older, job prospects usually become more limited. And in turn you may be more likely to need spousal support. But what if both of you are retired, and living on fixed incomes? If that's the case, there may not be enough money for one ex-spouse to pay alimony to the other ex-spouse;
(11) Your current living situations. If one of you is currently not working, but could do so and earn a salary that would no longer make spousal support necessary, that can be a factor in determining alimony. Similarly, if the party who is not working previously had a job which provided them with a significant income, and they left that job voluntarily, that too could be considered when discussing alimony;
(12) Your health. If both of you are healthy enough to return to work and can each earn a comparable income, spousal support may not be applicable. But if one of you has a medical condition that prevents you from being gainfully employed, then spousal support might be appropriate;
(13) Your marital lifestyle. The starting place for most Michigan spousal support conversations is the marital lifestyle. If no spousal support were to be paid, and one party is enjoying a similar lifestyle that they enjoyed while married, while the other party is living far below the marital lifestyle, spousal support could be applicable. Conversely, if both parties were able to maintain the same lifestyle they had while married without any financial aid from the other, then the need for spousal support may be reduced or eliminated;
(14) Your respective needs. Alimony is typically based on need. Meaning if one party is earning more than the other party, and there is a significant enough disparity in their incomes, the payment of spousal support is worth exploring. However, if your incomes are roughly on par with each other, there may not be a need by one party, an in turn no spousal support would be paid.
As you can now see by reading through these factors, there is very little guidance on how to resolve this topic. As not one of the factors listed above results in an actual dollar amount or specific alimony payment.
Leaving you and your spouse no choice but to negotiate it.
Which, given the nature of divorce itself and specifically, this heated issue, is very difficult to do.
Don't Forget About Cost of Living.
As if figuring out Michigan spousal support wasn't hard enough, there's yet one more factor we need to add to the mix. And that's where you live.
Say your marital home was in Ann Arbor, and you're the one who will be paying alimony. But your spouse decides to move to Grand Rapids post-divorce, to be near family.
So... do you pay alimony to them based on what it cost you both to live in Ann Arbor while you were married? Or do you pay them based on what it will cost to live in Grand Rapids - recognizing it will be less expensive to live there?
When discussing spousal support, Michigan couples usually only think of the "check in the mail" approach.
In Michigan the “check in the mail” approach to alimony is known as a “periodic payment.”
But there are other, more creative ways to resolve this because some payor spouses just don’t like making periodic alimony payments.
For example, as was mentioned in one of the 14 factors above, soon-to-be ex-spouses may trade liquid assets or debts in lieu of making periodic alimony payments (known as an “alimony buyout”.) While others may offer to pay for an ex-spouse to return to school to take on a new career (known as “rehabilitative alimony”.)
The bottom line is there's no such thing as "typical alimony" payments.
And there are many creative ways to resolve this issue.
There is more than meets the eye when it comes to alimony.
Alimony is not a one-size-fits-all topic and every couple’s situation, circumstances and determining factors are unique.
So coming to a fair agreement on alimony with your soon-to-be ex-spouse requires more than just a passing conversation or a wild guess. And as you’re starting to see, there’s a lot involved in this highly complex matter.
And a lot of places you can make costly mistakes.
In the majority of cases, this issue is much too complex and emotionally charged for you to attempt to determine on your own, especially if you have a long-term marriage.
When lawyers get involved, it’s a problem.
Because there's no formula or hard and fast alimony laws, if you go the divorce attorney route, your lawyers can drag your negotiations on for years.
Fighting and fighting. Around and around in circles - in a very gray area. All while billing you their outrageous hourly fees.
Until neither you nor your spouse has any money left to keep paying your legal fees.
And there's no money left for alimony!
Just one more reason it’s better for both spouses not to involve lawyers in their divorce negotiations.
When a judge gets involved, it’s a problem.
And if the issue cannot be resolved between the two of you and your lawyers, your case will go to litigation in court.
There’s something you need to understand here: In a litigated divorce, a judge determines who gets what on a case-by-case basis.
Sounds scary, doesn’t it?
Because they’ll dictate the terms of the settlement in court and tell you what you’re going to pay or receive.
And each of you might wind up with an alimony outcome you don’t think is fair or that doesn’t meet your needs.
That’s why it’s better to negotiate an amount and duration each spouse finds fair. And negotiation is exactly what divorce mediation is all about.
In mediation, you get to decide - and come to an agreement you both agree is fair, out of court - instead of letting your future be decided by a stranger.
You’ll get the best result by mediating with us.
Using our extensive financial knowledge into the complex matters of alimony and spousal support, we'll help you determine which of the factors apply in your situation and discuss with you both how they may impact the amount and/or duration of alimony in your Michigan divorce.
We'll discuss which of the three types of alimony in Michigan may be appropriate in your case. And explore the feasibility of using some combination of alimony types in conjunction with child support and equitable distribution, as all three topics are inter-connected.
We’ll actively guide you through our comprehensive budgeting process to reflect your marital as well as projected post-marital expenses. So we can take a close look together at the income each of you earn, spend and will need to move forward.
We’ll then help you negotiate an alimony result you both find fair and will best enable both of you to meet your financial obligations after you're divorced.
And since we offer all-inclusive, flat-fee mediation services, we have no vested interest in prolonging the conflict because we don’t bill you hourly like a lawyer would.
Equitable Mediation enables you to get a fair alimony outcome.
Why be forced to accept a settlement created by an attorney or judge when you can have a direct say in your financial future instead?
If you want to arrive at an agreement on alimony out of court - that’s fair to each of you and doesn’t bankrupt you in the process, mediate your divorce with Equitable Mediation.
If you and your spouse have both agreed to divorce and both want to mediate, take the next step and book an initial meeting for the two of you.
Joe Dillon, MBA is a professional divorce mediator and founder of Equitable Mediation Services. Joe is passionate about helping couples avoid the destruction of attorney-driven litigation and specializes in helping couples resolve the issues required for divorce -peacefully, fairly and cost-effectively. When he’s not mediating, you can find him exercising, cooking, and watching Cubs baseball.