The Supreme Judicial Court’s recent decision in the case of Cavanaugh v. Cavanaugh has had a major impact on how alimony and child support are calculated in Massachusetts Probate & Family Court cases. The Court’s decision, which was issued in June 2022, has significantly revised the way in which income is considered when determining whether support payments are child support or alimony. The SJC has introduced a new approach to calculating alimony and child support in cases where both elements of support are involved.
Retirement Contributions to be Considered in calculating Support
One of the key changes brought about by the Cavanaugh decision is the inclusion of employer contributions to retirement plans as income when determining support payments. This decision has significant implications for those cases involving a support calculation as it will impact the amount of support that is paid and will not consider a stream of income that the payor simply does not have actual access to in the present. Those who are seeking support payments, or who are going through a divorce, should understand the implications of this decision and be prepared to consider the impact of employer contributions on their support payments.
Calculating Alimony and Child Support
One of the most important aspects of the Cavanaugh decision is the introduction of a new three-step approach to calculating alimony and child support in cases where both elements of support are involved. Alimony and child support must be calculated in all cases to determine which is the appropriate type of support from a tax and income perspective. Previously, child support was calculated first, which often made an alimony calculation unnecessary as the child support guidelines indicated that any combined income under $400,000,.00 was deemed to be a child support case only. The Cavanaugh decision has created a three-step process as follows:
Step One: Calculate the alimony first in conjunction with the factors enumerated in M. G. L. c. 208 § 53 (a). This means that, with the exception of reimbursement alimony, the amount of alimony should be determined with regard to the recipient spouse’s need for support to allow that spouse to main the lifestyle of the marriage. Then calculate child support using the Parties’ post-alimony incomes.
Step Two: Calculate child support first. Then calculate alimony, considering, to any extent possible, the statutory factors of c. 208 § 53 (a). The Court in Cavanaugh acknowledged that the in the overwhelming majority of cases, the calculation of child support first will preclude any alimony being calculated.
Step Three: Compare the base aware and tax consequences of the Order that would result from the calculations in Step One with those of an Order that would result from the calculations under Step 2. The judge should then fashion an order that would be the most equitable for the family while taking into account the statutory factors under c. 208 § 53 (a) and the public policy that children be supported as completely as possible by their parents’ resources (M. G. L. c. 208 § 28 and determine which Order to issue.
Cavanaugh Decision Revised in September of 2022
In September 2022, the SJC issued a revision to its decision, now suggesting that both “alimony first” and “child support first” calculations should be considered when determining what is the most equitable support payment. This change has caused some confusion among lawyers, who are now tasked with considering both approaches when determining the best way to proceed in a support case. However, it also provides greater flexibility in determining what is the most equitable support payment, taking into account the unique circumstances of each case. It also means that many clients will need to utilize a financial professional to help prepare cases for Court so that your attorney can provide the Judge with supporting evidence for your position.
The Impact on Divorce Settlements
The Cavanaugh decision has already had a significant impact on pending divorce cases and will continue to impact settlements in the Probate and Family Court. Lawyers will need to be more creative and thoughtful in their approach to these cases, taking into account the various factors that may impact support payments. For example, the court may consider factors such as the length of the marriage, the payee’s earning capacity, and the payor’s ability to pay in more cases now that both calculations are required.
It is also important to note that the Cavanaugh decision may have a significant impact on those who are seeking support payments, as well as those who are going through a divorce. Those who are seeking support payments should be prepared to provide information about their income, including employer contributions to retirement, and should be prepared to consider the implications of the Cavanaugh decision when determining the amount of support they will receive.
The Cavanaugh decision has had a major impact on the way alimony and child support are calculated in Massachusetts Probate & Family court cases. The inclusion of employer contributions to retirement as income and the introduction of a new approach to calculating support has caused a significant shift in how lawyers and courts approach support cases. It is important for individuals involved in support cases to understand the implications of this decision, and to be prepared to consider the impact of employer contributions on support payments, as well as the new approach to calculating support. The Cavanaugh decision highlights the importance of seeking the guidance of experienced legal professionals in order to ensure that support payments are calculated fairly and equitably.
