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The Impact of COVID-19 on Spousal Support & Co-parenting Economics

    

Written by Attorney Laura Wasser, It's Over Easy Founder & C.E.O.

We are in week two of our remote law firm. Safe at Home is firmly in place and now that folks have figured out that the state of emergency may intensify, 

I am getting calls and emails from clients and It’s Over Easy customers with questions about how this global health crisis—which has in turn, caused a global economic crisis—is going to affect pre-coronavirus court orders or agreements made regarding spousal support and child support.

We have clients requesting immediate reductions of their support obligations, and those who are receiving support telling us that their ex-spouse or co-parent is threatening to reduce payments. It is all part of the panic, and it does make me worry. (Yes, I have seen the memes and Instagram posts about how divorce lawyers are going to be the only ones who come out of this crisis ok based on the post quarantine spike in divorce filings in China. But things are slow and we are working remotely and as the managing partner of a 17 attorney firm and the owner of a small startup, I promise, I too am feeling the angst.) There will absolutely be negative financial ramifications of the COVID-19 epidemic for nearly everyone. But from a Family Law perspective, everyone would do well to take a breath and wait a beat.

Here’s why;

You may not have the option of reducing support

Take a look at the terms of the Judgment or Court Order which governs support. Whether you agreed to support by virtue of a settlement you reached with your ex, or a Judge made an order after a hearing, the terms of support were at some point memorialized in a Court Order.

Many of us either write or receive a check each month but rarely, if ever, actually look back at the document which sets out the provisions that dictate the payments. In some instances, spousal support may be non-modifiable for a certain period of time. This would likely be a bargained for exchange reached by the parties at the time of the agreement—which then makes it hard to change after the fact.

Check whether there were findings made at the time the order was made

Generally, a court will make findings or recitations about the financial circumstances of the parties at the time it makes an order. Good attorneys will include findings in a stipulation or agreement regarding support. These findings make it easier to go back and figure out why the numbers are what they are and would help determine whether a change makes sense.

For example, if the facts were that at time of divorce Wife/Mom made $150,000 per year as a regular cast member on a weekly comedy sketch TV show and Husband/Dad made $95,000 as a professor and they shared custody of their 6-year-old daughter equally and shared tuition and child care expenses. Wife/Mom agreed to pay $325 as spousal support and $300 as child support each month. As a result of COVID related events, Wife/Mom’s TV show ceased weekly production and her payments stopped. Husband/Dad’s classes were suspended but the state university kept him on payroll to coordinate on line virtual classes and a syllabus for summer sessions. Looking at the findings from when the parties divorced two years ago would make it easier to determine whether Wife/Mom’s support obligation should be reduced or terminated even temporarily and if perhaps, Husband/Dad should be increasing his financial responsibilities.

Is the support order compound?

Many support orders (particularly in industries where income vacillates from year to year) provide for a compounded amount of support that comes in the form of a hybrid payment, typically comprised of a base amount plus a percentage of bonuses, distributions or other irregular income that goes toward support. If you have this kind of an order (in California it is often called a Smith/Ostler order), a court may have to think twice about reducing the base support as base amounts were factored to exclude the additional bonus income.

Keep in mind that spousal and child support obligations may not be modified unilaterally.

Even in the most dire of circumstances, support obligations may not be modified absent a written agreement or court order. I have had several clients over the years tell me that if they didn’t get to see their kids at the agreed upon time they would withhold court ordered support. Not ok. Two wrongs do not make a right and you could be held in contempt of court for failing to adhere to a court order. Pay your support and arrive upon an agreement for retroactivity. This insures that if the current number isn’t appropriate the new amounts will be applied beginning at the date upon which you agreed.

Be mindful that these are stressful and uncertain times—if you and your ex agree between yourselves to a reduction it is not advisable to act on it or make any changes without that agreement being reduced to writing and filed with the court.

Take the current circumstances into consideration and look to the - not just immediate - future

Even if the world went back to normal tomorrow – which it won’t – it would take a week or two for businesses, schools and administration teams to get back on track. Time and money that were lost over the past few weeks would still factor into the equation, but not as significantly as if we remain shut down for additional weeks and months.

When setting initial support orders, courts generally request at least 12 months of the parties’ income and expense records in order to get an accurate reflection of what kind of support is necessary and appropriate. Factors to consider are lifestyle, income, and income producing assets, debts and each party’s ability to contribute to support. In order to modify the support, a judicial officer would need the same information and back up documentation for what has changed. Three weeks (and even three months) is unlikely to be compelling in this regard. In addition to the uncertainty regarding income during the COVID -19 epidemic, there is an uncertainty incident to expenses as well. We have no idea what kind of governmental assistance we can expect; tax breaks, business assistance and bail outs may be forthcoming.

For more financial advice, check out this video from Financial Advisor & Certified Divorce Financial Analyst Laurie Itkin

As a mom of two kids successfully co-parenting with their fathers, and an attorney who has been practicing Family Law for over 20 years, Laura Wasser has made it her life’s work to take the mystery and misery out of divorce for people of all backgrounds. She is the Founder and Chief Executive Officer of It’s Over Easy, which picks up where she left off in her best-selling book It Doesn’t Have To Be That Way:  How to Divorce Without Destroying Your Family or Bankrupting Yourself – a digital platform that can reach more people and assist them through every stage of the divorce process. Follow her on social @laurawasserofficial

 

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