Maintenance (formerly known as alimony) is financial support for a spouse when a marriage ends by divorce or legal separation. In Wisconsin, maintenance is governed by Wis. Stats. Sec. 767.56, which provides that the court “may” grant maintenance to either party.
If the court considers awarding maintenance, it must evaluate the factors listed at Wis. Stats. Sec. 767.56(1c). The first, and arguably most significant, factor is the length of the marriage. Courts very rarely award maintenance in a short-term marriage. In addition to the length of the marriage, the court considers among other things the age and physical and emotional health of the parties; their education levels; their income or earning capacity; and whether one of the parties contributed to the other party’s increased earning capacity.
In its discretion, the court can order indefinite maintenance, or order maintenance for a limited term. A party to a divorce can seek a modification of a maintenance order after the final judgment of divorce, as provided by Wis. Stats. Sec. 767.59. To do so, the party must show there has been a substantial change of circumstances since the maintenance order was entered. If a recipient of maintenance remarries, maintenance is immediately terminated. However, the parties can agree that maintenance continues after remarriage.
Maintenance awards have income tax ramifications for both parties. If the court orders maintenance, the person paying maintenance can reduce their income for tax purposes under the Internal Revenue Service, 26 U.S.C. Sec. 72. The party receiving maintenance must include the maintenance payments as income under 26 U.S.C. Sec. 215.
It is possible to avoid maintenance by providing for an unequal distribution of property to accommodate the maintenance needs of a spouse. The court can order this result, or the parties can reach such an agreement (referred to in settlement negotiations as a maintenance buyout). When we consider a maintenance buyout, we look at the amount and length of a likely maintenance award. Once we have that information, we can calculate a figure that would be a present-day equivalent to a stream of income for a period of years. Among other things, we consider the potential investment income from the lump sum, the likelihood that the maintenance recipient would remarry, and the likelihood of the death of either party. We use sophisticated calculators that rely on actuarial tables and calculate potential interest on investments to help us reach these numbers.