A husband with $3.5 million in assets still could afford the $2,100 in monthly spousal support he agreed to pay his former wife in their 2000 property settlement agreement, according to a Court of Appeals decision released Oct. 25.
It did not matter that the wife had left a law firm job after only a few months, because she was unhappy with the stress, compensation and commute.
The decision in Driscoll v. Hunter (VLW 011-7-320) is the appellate court’s first published opinion that explicitly endorses the idea a payor spouse can be required to draw down investment income in order to continuing paying support, according to Lawrence D. Diehl. It’s an issue that continues to arise, he said.
The husband’s appeal challenged how a Staunton trial court decided to keep support at the 2000 level.
The parties’ originally “agreed temporarily” to the $2,100 monthly payment. Their Feb. 29, 2000, property settlement agreement called for the pendente lite agreement to stay in force until modified by further written agreement, or entry of a new court order. That PSA was incorporated into the parties’ 2000 final divorce decree.
Health problems prompted the husband to retire from his oral surgery practice in 2002, and later, to seek a support reduction based on a $2,300 drop in his monthly income. At the time of the trial court hearing, the husband had an IRA worth $1.376 million, stocks and investment accounts worth $1.164 million and additional accounts valued at $230,000.
Recognizing the husband’s work-related income had gone down, the Court of Appeals opinion by Judge Stephen R. McCullough said the crucial question was his ability to pay. The fact that he had to draw down investments did not relieve him of his support obligation.
The husband said his wife, who quit a law firm job after a few months, was voluntarily unemployed. Given that the change in the husband’s circumstances did not affect his ability to pay support, the trial court did not have to consider the wife’s voluntary unemployment, the Court of Appeals panel said.
A court considering a support reduction only has to look at whether there’s a material change in the payor’s circumstances, and then whether the payor is no longer able to pay, said Waynesboro lawyer C. Lynn Lawson, who represents the wife. “If you don’t prove both those things, then you can’t start arguing about other things like imputing income,” she said.
Courts do not necessarily have to distinguish between earned income and other sources of income, according to Lawson.
The court appears to rule there is no change in circumstances unless a payor spouse is “completely unable to pay,” said Staunton lawyer John C. Wirth, who represents the husband.
The case can be interpreted to hold if a spouse has an ability to pay by tapping into other assets, a court need not even consider other equitable factors, such as imputing income to a spouse who chooses not to work.
“You don’t even reach the stage” where other statutory factors under Virginia Code § 20-107.1 are considered, Wirth said.
“It seems to set a precedent that could compel a payor spouse to deplete all assets prior to being entitled to a reduction in support,” he said, a question that has his client thinking about an appeal.
In the future, lawyers “may want to specifically define what they mean when they say a ‘material change in circumstances,’” Wirth said.
Diehl said increasingly, retirement is one of the changes that people try to anticipate in their agreements so they can set some boundaries on when retirement can trigger a change in support.
For instance, a particular PSA might specify retirement at a “normal” age of 65 will be a “material change” that could prompt re-examination of support. But retirement prior to that time would be excluded as a “material change,” leaving the risk of income reduction where it stood at the time of the PSA.