SJC THROWS AN ALIMONY AND CHILD SUPPORT CURVE BALL WITH RECENT CAVANAGH RULING
By Jessica Peterson
In a rather upending decision, the Massachusetts Supreme Judicial Court in Cavanagh v. Cavanagh issued rulings on several issues regarding alimony and child support orders in divorce cases, which changes the way we look at those issues. To understand the Court’s holdings, and how it affects divorce cases moving forward, it’s helpful to know a little bit about how these alimony and child support awards traditionally worked in Massachusetts.
Pre-Cavanagh, in divorce cases involving possible alimony and child support orders (where one spouse was the recipient of both), Probate and Family courts typically only ordered a spouse to pay alimony to the other if the spouses’ combined income exceeded $400,000. Why? Well, because that statement is consistent with the 2021 Child Support Guidelines and the provision in G.L.c. 208 § 53(c)(2) of the Alimony Reform Act; “when issuing an order for alimony, the court shall exclude from its income calculation: gross income which the court has already considered for setting a child support order.” The 2021 Child Support Guidelines tell us that child support is calculated on the first $400,000 of the combined income of the parties. So, if the parties’ combined income was less than $400,000, and child support was calculated first, then all of that income would have already been used for the child support calculation, meaning that there would be no income leftover to use to calculate an award for alimony.
Here’s a basic example: two divorcing spouses earn a combined income of $300,000, with one spouse being the custodial parent and earning significantly less than the other spouse. If the Court calculated child support, all $300,000 would be used to calculate an award, since the Child Support Guidelines tell us that the first $400,000 of their combined income is used. Since all of their income was used, there would be no income left over to calculate an alimony award. Try to think of it as “double dipping” – the Court already used the income for the child support order, and so they cannot use it again to calculate alimony.
Then came the recent Cavanagh decision. Here’s the crux of the case as it pertains to support calculations: in a post-divorce dispute, both parties sought a modification of the child support order issued as part of their divorce judgment, and the Mother also sought alimony for the first time in the proceedings. The central issue of the case was whether G.L.c. 208 § 53(c)(2) of the Alimony Reform Act (as stated above) prohibits an award of alimony where child support has been ordered. Traditionally, as discussed above, most judges only ordered child support on the first $400,000 of the combined income of the parties, while permitting alimony only in those cases involving combined income greater than $400,000.
Surprisingly, the Supreme Judicial Court in the Cavanagh case said that the Alimony Reform Act and the Child Support Guidelines actually do allow for the concurrent awards of both child support and alimony, even where the combined income of the parties exceeded $400,000. The Court isn’t saying that alimony will always be awarded, but it is saying that such an award must at least be considered. In their decision, the Supreme Judicial Court said that judges must follow a three-part formula; the first step is to calculate child support first and alimony second, the next step is to calculate alimony first and child support second, and the last step is to then compare the tax consequences of those two calculations and choose the one that is more equitable.
Along similar lines, the Court also held that the Probate Court judge (who made the initial rulings in the case) made an error when they didn’t count the contributions made by the Father’s employer to his retirement and health savings account as income for purposes of calculating child support. In its decision, the Court reasoned that if an employer’s matching contributions were not counted as income, then nothing would prevent the employee from entering into an agreement with his employer to take less wages in exchange for a heightened matching contribution. In effect, this would allow the employee to shield his or her income as a way to reduce their child support obligation. The more income a person earns, the higher a child support order could potentially be and vice versa.
Similarly, the Court also voided a provision in the parties’ separation agreement that stated that the earnings from the Father’s second job wouldn’t be considered income for purposes of calculating future child support obligations. The parties initially agreed to such a provision in their separation agreement, given that the Father took a second job to help pay for the children’s education costs and related expenses. The Supreme Judicial Court, however, ruled that the provision was unenforceable. The Court reasoned, “parents may not bargain away the rights of their children to support,” so any provision in a settlement agreement to the contrary would not be enforceable. Further, in support of its holding, the Court went on to say that it would have been an abuse of discretion for a judge not to consider such income, especially where it falls directly within the category of “salaries, wages, overtime and tips,” all of which are considered for purposes of calculating child support. This means that if parties put any provision in their settlement agreement stating that a parent’s income, especially income that falls within the “salaries, wages, overtime and tips” category, as it did in Cavanagh, would not be considered for purposes of child support, and the Court is almost certain not to enforce it. In that case, the Court would be free to consider any and all income of the parties for child support calculations, regardless of what the parties had previously agreed to.
The recent Supreme Judicial Court decision therefore not only has a significant effect on alimony and child support cases moving forward but may also have an effect on existing cases where the parties had not utilized the payor’s additional income from benefits or another income stream in calculating support and could be the basis for filing a Complaint for Modification.
If you are going through a divorce or support case and seeking legal advice or representation, please contact the attorneys at Levine-Piro Law, P.C., (978) 637-2048. Our attorneys are experienced in divorce cases, including the issues of alimony and child support, and will help walk you through the process every step of the way.