Transitioning financially through divorce has many moving parts. Stress testing your strategy regarding how income and expenses can change your circumstances in the future is important to consider. Understanding how spousal or child support can be modified will help you answer questions such as ‘should I go back to work?’, ‘how much should I spend on rent?’ or ‘how much should I keep in my emergency fund?’ Overall, it also assists you in creating a workable settlement that you feel secure about moving forward.
This topic is subject to state statutes and legal counsel is always advised regarding your specific situation. The following are considered general guidelines. A.M. Financial does not provide legal or tax advice.
Start by reviewing your divorce papers as they might provide insight regarding allowable modifications regarding your case. Some arrangements allow for adjustments due to income changes within a specific percentage by either party. For example, receiving a significant pay raise or transitioning from part-time to full-time work could trigger modifications to support. Other changes in employment, living arrangements (moving in with a boyfriend or roommate) or injuries leading to long-term disabilities can also be cause for support to be modified.
Contractual spousal support agreements mean modifications cannot be made unless stated otherwise. Individuals who have concerns that an ex-spouse could potentially and purposefully be vindictive, e.g., risking their employment in attempts to avoid paying support, should speak with their attorney to see if a contractual support agreement or lump-sum payout would be a workable option for your case.
Be aware that if spousal support decreases more than $15,000 per year within the first three years after a divorce, significant tax consequences could result unless the changes were due to death or remarriage. It is important to speak to an attorney or tax professional to review your case.
Child support is determined by state guidelines which are based on overnight visits with each parent. If the number of overnight visits changes due to a move, change in school or other circumstance, parties can petition for a modification. Many of the same occurrences that can change spousal support also apply to child support - employment changes, disabilities, etc.
Child expenses such as medical expenses, daycare, educational expenses or extra-curricular activities are addressed either in the child support worksheet or the parenting plan. When items listed on the child support worksheet change, such as daycare expenses or child health insurance expenses, modifications can be made.
Spousal support is viewed as income to the recipient and affects the amount of child support. Therefore, if spousal support is modified then child support will most likely change as well.
How to Modify Support Arrangements
If changes have occurred that warrant a modification in either spousal or child support, paperwork should be submitted requesting an adjustment with an explanation for the change. Just like any other time in the divorce process, it is prudent to seek legal counsel to understand your rights and how to protect yourself. Depending on the situation, if a petition for modification is received in agreement with the other party the process can be straight forward and timely. In other cases, when parties are unable to come to an agreement, the issue will be decided in front of a judge.
It is important to note that individuals remain responsible for court-ordered arrangements until a request for modification has been submitted and alternate arrangements have been approved.
Disclosure: Divorce transition/financial planning services offered by A.M. Financial. Investment advisory services offered through WealthSource Partners, LLC ("WSP"). A.M. Financial and WSP are independent and unaffiliated entities. The statements and opinions expressed are those of A.M. Financial and Amy Mahlen and do not represent the views and/or opinions of WSP or any other associated or affiliated person of WSP. Furthermore, the statements and opinions expressed are for informational and educational purposes only and should not be construed as legal, tax, accounting or investment advice. All statements and opinions are current only as of the time made and are subject to change without notice.