The threshold test in modification motions in family law cases is that the requesting party must establish a change in circumstance(s) from the prior order. It is applied in requests for child custody changes, basis for adjustments in child and/or spousal support orders. This prevents re-litigation of facts or circumstances that have not materially changed.
What is a material change? It is a case by case analysis using the facts of your particular case with the current cases and law to support your position with the court. In re Marriage of West, the court notes that “spousal support is modifiable only upon a material change of circumstances since the last order. ‘Change of circumstances’ means a reduction or increase in the supporting spouse’s ability to pay and/or an increase or decrease in the supported spouse’s needs.”
The facts in West, are they were married for 20 years and have two children ages 15 and 5. Husband (H) built up an insurance marketing corporation which was in the process of being sold. H agreed to pay spousal support with the expectation wife (W) would become self-supporting at some future date. The agreement also contemplated the community business would be sold and proceeds divided between H and W, with a small amount going to the older child. Each party received a payment of $65,000 and a promissory note for $388,388 to be paid off at 8% interest rate over 6 years. Each received a quarterly payment of just under $20,000 and spousal support paid to the W, would be $8,500, then 9$,500 and finally $6795. The fluctuations are due to factors detailed in the case but primarily because of the H’s income changes.
The W wanted to be an elementary school teacher then changed to be realtor. H filed a motion to modify support contending that W was not making reasonable academic progress as contemplated by the marital settlement agreement and asserting his income had dropped. The trial court, citing the factors enumerated in Family Code (FC) section 4320, found no issue as to H’s earning capacity, obligations or ability to pay support. The court did not fault the W for changing her career path finding her decision to be consistent with her obligation to earn to the extent of her abilities.
A trial court considering whether to modify a spousal support considers the same criteria set forth in FC 4320 as it considered in making the initial order. (In re Marriage of Shaughnessy and Bower ) The court held that the parties had a significantly comfortable lifestyle at the time of separation, which allowed them to employ a maid, gardener, a nanny, to travel often, to shop at high-end stores and to drive expensive cars. The court found W’s current monthly expenses to be approximately $8500. She continued to enjoy a comfortable lifestyle but did not enjoy the many extras of the marital household.
The W was not able to maintain any savings from the approximately $500,000 that was paid to her for sale of the business. The court ordered permanent spousal support at $4,000 based on her decreasing need due to the following factors: favorable earnings outlook as testified by her employer, she has been provided with significant cash assets from sale of business, and the duration of the marriage.
The law is clear that spousal support is modifiable only upon a material change of circumstance since the last order. “Change of circumstances” means a reduction or increase in the supported spouse’s needs. It includes all factors affecting need and the ability to pay. If there are no substantial evidence of material change of circumstance, an order modifying a support order will be overturned for abuse of discretion (In re Marriage of McCann; In re Marriage of Rabkin).
The court held that, “it does not make sense to reduce W’s spousal support because she received her rightful share of the community property than it would be to increase W’s support because H received his rightful share of community property. On a similar note, it makes no more sense to reduce W’s support because she failed to invest her share of the community asset than it would be to increase H’s payments because he failed to invest his share. Thus, it is unfair to penalize W for failing to invest the principal without first warning her that she would be expected to invest it. (In re Marriage of Gavron):
FC 4320 (l) requires the court to consider “the goal that the supported spouse become self-supporting within a reasonable period of time. (In re Marriage of Gavron) “A reasonable period of time is a period generally equal to one half the length of the marriage except in case of marriage of long duration. FC 4336 defines long term marriage as a marriage of 10 years of more thus 4320 (l) would not apply.
In re Marriage of Hibbard: Both parties are lawyers and negotiated a settlement agreement. H agreed to pay $4000 per month family support until younger child reached 18 and residence was sold, after which it would be modified to an amount mutually agreed upon, “but shall not be reduced to an amount lower than $2,000 per month, and it is agreed by the parties that ss is an ongoing obligation of H, and will only terminate upon death or remarriage or the death of H.”
H files to modify. He was diagnosed with PTSD and cannot work more than 2 or 3 hours per day. W opposed his request to modify and further assert that she suffers from potentially blinding eye ailment and of advanced age (63). She stated she could not make ends meet without support. The trial court held while it had jurisdiction over spousal support, it was constrained by the parties’ agreement that ss could not be less than $2000. The appellate court affirmed the trial court’s decision.
In re Marriage of Minkin, H was to pay W 41% of his “annual bonuses” as additional spousal support for 10 years. The problem was, the stipulated judgment did not define what annual bonuses meant. The W’s position was that all income over base salary. H’s contention is that discretionary income over base salary was based on performance. He paid according to his understanding and continued for nearly 10 yrs.
H files motion to modify and that is when she learned she did not receive additional income from which she received a percentage. W files a request to determine arrears from 2012 to 2015. H had 4 different types of income plus base salary. He has only been paying W from 1 type of income which was the senior management incentive plan. Both hired competing experts.
The trial court agree with H and held that income paid in the discretion of employer is what constitutes bonus income. Based on the court’s decision of what constitutes income, W was overpaid. The court awarded her the overpayment as a need-based attorney fees and costs.
The Minkins court explains which income is included in an Ostler/Smith provision. A bonus is a fluctuating and discretionary payment received by the payor based on performance. Employers can get creative as to how they structure compensation packages. A good way to avoid confusion is state clearly what the payor’s base salary is at the time of the judgment, Then state that a percentage of income over the base salary is to be paid as an Ostler/Smith order, and specifically exclude others such as increases in salary, health insurance, moving allowance, perquisites, retirement contribution. Moreover, as long as an Ostler/Smith order is in effect, the payor will provide annually a copy of his tax return, form W-2, year to date paystub and any paystubs in which bonus was paid. Also add a cap on the amount of bonus income that is to be paid as additional condition on any agreement, so it does not exceed marital standard of living.
The issues as outlined in the above referenced cases pertaining to spousal support modifications are complex and requires legal expertise. If you have any questions, call my office at 310-601-7144 or email me at [email protected]
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