Support issues for Baby Boomers:?A primer

It is a common misconception that just because you retire you will get a reduction in your spousal support obligation – that may not be the case, so beware. The terms of the obligation, when you retire, and the way you retire may significantly affect your ability to get a reduction.

Does this mean the court will expect you to work until age 67? age 70? even older? While no bright line rule exists, the short (though painstakingly indefinite) answer is: Possibly. You may have to work beyond your chosen retirement age, if that is what it takes to meet your existing support obligation. Like so many issues in family law, it all depends on the particular facts of your case.

When requesting a modification or termination of spousal support upon retirement, there is a two prong test: 1) Did a material change in circumstances relevant to the determination of spousal support occur? 2) If so, does that change warrant a modification? Virginia Code §20-109(b). As baby boomer clients begin retiring, this issue of modifying support upon retirement will arise more often.

A material change in circumstances is not always easily shown: the receipt of pension payments or social security benefits by a payee is insufficient when offset by an increased financial need. Also, you may have to use your own benefits to pay your support obligation, even where the former spouse already received half of your retirement. However, with other circumstances such as declining health or involuntary unemployment, courts have found that a material change in circumstances merits a reduction in a spousal support obligation.
In the seminal case on the issue, the Virginia Court of Appeals determined that retirement may be viewed as a voluntary decision not to work, which does not justify a support reduction. Stubblebine v. Stubblebine, 22 Va. App. 703, 708, S.E.2d 72 (1996).

In Stubblebine, the husband was an active 64-year-old retired from both military and civilian positions, and drew pensions from each. At the time of his modification request, he spent over 50 hours a week engaged in volunteer work. The husband’s active lifestyle supported the court’s ruling that he was capable of gainful employment, and could have been earning $40,000 per year as a consultant.

His former wife, on the other hand, was disabled, suffering from chronic diseases and unable to work. Although she received one-half of his retirement income pursuant to their divorce decree, she had a monthly shortfall of $2,000. The trial court determined that Ms. Stubblebine continued to need spousal support.

Ms. Stubblebine’s need for support, taken in conjunction with each party’s respective ability to work, supported the trial court’s decision to impute income to the husband. Ultimately, the ruling was based on the specific facts of this case and did not provide a bright line rule.

The court followed the Stubblebine rationale in a divorce case and affirmed an initial spousal support award requiring a 71-year-old husband to pay permanent support to his wife despite his arguments that this obligation prevented him from retiring. As in Stubblebine, the specific facts determine the case’s outcome. The court ruled that the husband’s retirement to be with his girlfriend in Florida, where few job opportunities were available, was a voluntary choice not to work. His wife was struggling financially as a cashier at a grocery store. Under these circumstances, the court affirmed the spousal support award. Harber v. Harber, Record No. 2956-08-1, (Va. Ct. of App. July 7, 2009).

The court, therefore, strives for equity in an initial spousal support assessment, as well as when considering modification. In the most recent case on this issue, the court balanced a retired surgeon’s ability to pay support with his former spouse’s ongoing needs and ruled against a reduction. Driscoll v. Hunter, 59 Va. App. 22 (2011).

Dr. Driscoll had considerable assets, including $1,376,000 in an IRA, $230,000 in a money market account, and $1,164,000 in other investments. Each month, he withdrew only $4,000 from his investments and argued that this was his income for support purposes. The Court of Appeals held that the husband’s need to make additional withdrawals from the principal of his investment accounts did not require the trial court to modify his support obligation.

What if the husband’s retirement was already divided in the divorce and his share of that retirement is his only source of income with which to pay his spousal support obligation? This may warrant a decrease, but not necessarily a termination.

For instance, the trial court reduced a support obligation from $2,600 to $800 when the parties each received monthly payments from the husband’s pension and the husband had relocated to Thailand where employment was unavailable. Unsatisfied with the reduction in support, the husband claimed the trial court “doubled dipped” by expecting him to use his half of the pension to pay spousal support. The Court of Appeals rejected his “double dipping” argument: the division of an asset upon divorce does not preempt considering it as available income in a future spousal support analysis. Moreno v. Moreno, 24 Va. App. 190 (1997).

In other cases, however, courts have ruled that a payee’s receipt of retirement or social security benefits failed to constitute a material change in circumstances when other factors offset the additional income. A former wife’s receipt of $1,312 in retirement and social security benefits was offset by an increase in her cost of living and therefore was not a material change in circumstances. Tindall v. Tindall, Record No. 0666-04-1, (Va. Ct. App. July 27, 2004). See also Blair v. Blair, (a wife’s receipt of social security benefits was not a material change in circumstances; however, the husband’s health caused an involuntary loss of income, which was a material change in circumstances).

To guarantee a reduction upon retirement, it is best not to leave it up to the courts, but to plan ahead. To best serve our clients, we should try to draft agreements providing detailed instruction with respect to the modification of support upon retirement. If you can successfully negotiate these terms, you will save your clients the emotional and financial expense of a modification hearing.

– By Irene Delcamp. Delcamp practices law with Barnes & Diehl PC in Chesterfield. She is the Young Lawyer Representative for the Virginia Bar Association Domestic Relations Council.