When it comes to divorce litigation, few issues raise more controversy than alimony. Love it or hate, alimony in NH is not going anywhere. Whereas the law has always allowed for alimony in NH, New Hampshire judges have been all over the place in deciding when to award it, in what amount, and for how long. That’s about to change with the new alimony law.
The new law is scheduled to go into effect for cases filed starting in 2019. However, judges can choose to look at the new law to decide cases currently pending.
What does the old law say?
The existing alimony law basically says that judges can award alimony if one spouse has a need for it, and the other spouse can pay it. That is pretty broad language that leaves it mostly up to each individual judge. As you can imagine, some judges were much more likely to give alimony than others. This led to a lot of unpredictability. It also led to unnecessary litigation. If lawyers and clients don’t know what a judge will do with their case, how can they settle without going to court?
How does the new alimony law change things?
It was largely because of this unpredictability that divorce lawyers pushed for the new alimony law. While a lot of the basics stay the same, the important thing about the new law is it sets a guideline formula for the amount and length of alimony. Alimony shall be the lower of the lower-earning spouse’s “reasonable need”, or the guideline formula.
And the formula is … (drum roll):
- 30% 23% of the difference between the gross income of the parties (that is, before taxes).
- This was edited to reflect a change from 30% to 23% based on the fact that, effective 2019, federal tax no longer allows alimony to be deductible by the payor, or declarable income by the payee. If this changes again, then the New Hampshire guideline alimony percentage will revert to 30%.
- For a time period of half the length of the marriage.
So, if Jane makes $12,000 per month, and Jerry makes $2,000 per month, the formula says Jane should pay Jerry $3,000 per month (30% of $10,000, which is the difference in their gross incomes).
If you were married for ten years, you should pay for five. Ouch.
Important things to consider
These figures are guidelines and not automatic. The judge can go down (or even up!) for various reasons, including such things as health of the parties or special needs of the children.
Also, know that the judge deducts child support from the gross income of the person who pays it, and adds it to the person who receives it. So, in the above scenario, if Jane is paying Jerry $2,000 in child support already, her income would be reduced to $10,000 and his would be raised to $4,000. This would change the alimony formula to $1,800.
Don’t forget about taxes!
Finally, the new alimony law does not address a huge change in federal tax law. Currently, alimony can be deducted from income for the person paying it, and must be added to income for the person receiving it. Since the person paying almost always makes more, and therefore pays taxes at a higher rate, this rule has the effect of reducing the total income paid by the two spouses.
Under the new tax law, for alimony orders starting in 2019, the deduction will no longer shift. This could end up being a double whammy for people being order to pay alimony. They will probably have to pay more than before, and it will not be deductible.
How Does this Change Things?
The biggest change from our perspective is that in most cases, under this new formula, higher earners are more likely to have to pay alimony, in greater amounts, and for longer. Perhaps this will not be universally true. But we do not often see current alimony orders in the amounts and durations that this new law suggests.
Of course, our information is primarily anecdotal, based on cases we have personally been involved (and cases reported to us by our network of colleagues). What would be fascinating is if someone did a study that could compare a representative sample of alimony orders both before and after. Any researchers with an extra 100 hours to kill out there?
The most actionable advice we can give based on this new law is to plan as best you can. If you are about to get married, strongly consider broaching a pre-nuptial agreement well in advance of the date. If you are already married, you may want to look into drafting a post-nuptial agreement.