This article was originally published by the Union Leader and can be found here.
NH Legal Perspective: A Review of New Hampshire’s New Alimony Statute
August 24, 2019
On Jan. 1, changes in New Hampshire and federal law concerning alimony became effective. Eight months later, the changes have legal and financial professionals calling for an amendment to New Hampshire’s alimony statute.
Even if you have not been divorced, you probably know that “alimony” or “spousal support” are payments to an ex-spouse to provide for the recipient’s reasonable living expenses. Although sometimes mocked as an unjust “get rich” scheme, alimony is meant to provide the recipients with a reasonable amount of income so that they can meet reasonable living expenses while taking steps to become self-supporting, provided the payer has the ability to pay.
For years, New Hampshire’s alimony laws provided judges with significant discretion in issuing alimony orders based upon the parties’ income and expense figures and certain statutory factors. Also for years, federal tax law provided that alimony payments were tax-deductible for the payer and taxable income for the recipient, allowing parties to attempt to decrease the family’s total tax liability.
As of Jan. 1, new alimony awards are now nontaxable and not deductible under federal law. Prior orders are grandfathered. New Hampshire’s current alimony statute now provides formulaic guidelines for the amount and length of an alimony award. The interplay of the two has raised eyebrows throughout the Granite State, especially for high wage earners.
Specifically, New Hampshire’s current alimony statute provides that, unless the parties agree otherwise or justice or special circumstances warrant deviation, an alimony award will be in an amount not more than 30 percent of the difference in the parties’ gross incomes, to be paid over a period not to exceed half the length of the marriage as defined by the statute. The amount is further tempered by the payer’s ability to pay and the recipient’s reasonable need.
The added structure to the alimony analysis has been welcomed by some who thought the prior statute left too much uncertainty and hope the change yields more predictable court orders. Others have criticized the formulaic approach as too restrictive, favoring the ability for family division judges to have wider discretion in issuing alimony orders. Some divorce practitioners, financial professionals, tax professionals, and private individuals have complained, however, that because alimony payments are no longer deductible, the statute yields unfair after-tax results for certain individuals depending on the parties’ respective tax liability.
In part to address the probability of unfair after-tax results, another change to New Hampshire’s alimony law may be forthcoming. As fall nears, legislators, lobbyists and advocacy groups are preparing proposed legislation for New Hampshire’s 2020 legislative session. Critics of New Hampshire’s current alimony statute may be pleased to read that one or more proposed bills may be directed at changing the current alimony framework by decreasing the percentage and providing a modification mechanism to alter existing alimony awards that were derived from the formula using the current percentage.
Until the next change occurs, if it ever does, the current alimony statute controls and is an important piece of many divorces. Readers divorcing should consult an attorney in conjunction with their financial and tax professionals if alimony is at issue to better understand their options under New Hampshire’s alimony statute.