The History and Science of Alimony in Colorado

Every divorcing client asks us: how much will I pay/receive in alimony? There’s an emotional element to paying spousal maintenance. Whether that is right or wrong, the first step is to ask whether there will even be spousal maintenance. 

Assuming that the situation passes the “threshold test” from our previous email, the next step is to decide the amount(s) and duration. There are different ways to analyze spousal maintenance. The first and most obvious way is to consider Colorado’s “guidelines.” Think of the guidelines as the science part in determining alimony.

However, in order to understand the guidelines and how they work, you should know the history of the law on maintenance and how we got to a place where formulas were even a consideration.

The History of Spousal Maintenance 

Historically, judges were allowed a tremendous amount of discretion when considering alimony in a Colorado divorce. Such latitude resulted in unpredictability. The amount and length of maintenance awarded by a judge would seemingly hinge on an arbitrary factor such as the likability of a party. The result was a political push towards a system where maintenance allocations are easier to predict.

The Alimony Reform Act of 2011 in Massachusetts was used as a model. After a number of failed attempts using various formulas and language on how a court should apply the formulas, the Colorado General Assembly finally settled on the “advisory guidelines” in 2014. These guidelines were updated in 2018 due to the change in the tax treatment for maintenance.

Colorado’s Spousal Maintenance Guidelines

The law (C.R.S. 14-10-114) contains two significant formulas – duration and amount.

Duration

The first deals with the maintenance term or length of maintenance. There are different policy reasons for alimony in a Colorado divorce.

One concept is “reimbursement” to compensate a spouse for supporting the other while in school or start-up phase of a business. 

Another reason may be “transitional support” to assist someone like a stay-at-home mother as they reenter the workforce.

Colorado’s maintenance guideline deals with these concepts in a rigid manner by simply providing a table for the suggested length of maintenance depending on the length of marriage. For example, a 3-year marriage results in a proposed maintenance term of 11 months, or 31% as long as the marriage. In contrast, a marriage of 13 years results in a suggested term of 6.5 years, or a maintenance award 50% as long as the marriage.

Remember, however, that the guideline amounts are “advisory.” They are not presumptive or binding on a court. There are factors that we will get into later on that militate in favor of longer or, much more frequently, shorter maintenance awards.

Amount

The second formula applies to the amount of maintenance. Colorado’s law on spousal support is generally calculated as follows:

40% of Parties’ Combined Adjusted Gross Income LESS 40% of Lower Income Party’s Adjusted Gross Income

If the calculation results in a negative number, the amount of maintenance is zero.

It used to be that this was the end of the story. However, there was a significant tax change for spousal maintenance in 2018. Spousal maintenance for divorces occurring after 2018 is no longer taxable income to the recipient or deductible for the payor. As a result, there is another step needed to calculate maintenance payable in Colorado.

The gross amount that one calculated above must be reduced by the appropriate percentage of taxes to obtain the “net maintenance” amount. Net maintenance is what is actually payable from one spouse to the other.

Calculating Net Maintenance Amount

If gross combined income is less than $120,000 per year then gross maintenance is multiplied by 80% (0.80) to arrive at net maintenance.
If gross income is between $120,001 and $240,000 per year then gross maintenance is multiplied by 75% (0.75) to arrive at net maintenance.

The rationale behind these percentages is that a party pays more in taxes as income increases. In other words, income of $120,000 per year is assumed to be taxed at 20% whereas income above that amount is taxed at least 25%.