Retirement and Modification of Alimony
October 16, 2014 § Leave a comment
Leo and Gracie Russell were divorced in 1978. Leo was ordered in the divorce to pay Gracie $2,500 a month in periodic alimony.
In 2006, Leo filed a petition to terminate or reduce his alimony obligation, which the chancellor dismissed without prejudice.
In 2011, Leo filed again to terminate or reduce alimony. In May, 2012, the chancellor reduced Leo’s obligation to $1,533, based on the fact that Gracie was receiving $947 a month in Social Security benefits based on Leo’s earnings. After hearing all of the evidence, the judge found that Leo had failed to prove a material change in circumstances or inability to meet his alimony obligation. Leo appealed.
The COA affirmed the chancellor’s ruling in Russell v. Russell, handed down October 7, 2014. Judge Carlton, writing for the majority, said this:
¶5. In his first assignment of error, Leo argues that the chancellor erred by denying his petition to terminate or modify his monthly alimony payments. Leo asserts that the chancellor erroneously found no material change in his circumstances and that his retirement and reduction of income were foreseeable at the time of the parties’ divorce.
¶6. With regard to our review of a chancellor’s award of alimony, this Court has previously stated:
An award of alimony, if allowed, should be reasonable in amount, commensurate with the wife’s accustomed standard of living, minus her own resources, and considering the ability of the husband to pay. The amount of an alimony award is largely within the discretion of the chancellor. Unless the chancellor is in manifest error and abused [his] discretion, we will not reverse.
Peterson v. Peterson, 129 So. 3d 255, 256-57 (¶5) (Miss. Ct. App. 2013) (internal citations and quotation marks omitted).
¶7. “The general rule has been that periodic alimony terminates upon death or remarriage.” Skinner v. Skinner, 509 So. 2d 867, 869 (Miss. 1987) (citing Wray v. Wray, 394 So. 2d 1341, 1344 (Miss. 1981)). When considering a party’s petition to modify or terminate an award of periodic alimony, a chancellor must first determine whether “an unforeseeable and material change in circumstances occurred since entry of the initial divorce decree.” Peterson, 129 So. 3d at 257 (¶7) (citing Holcombe v. Holcombe, 813 So. 2d 700, 703 (¶11) (Miss. 2002) (“The change in circumstance must not be anticipated by the parties at the time of the original decree.”). If no unforeseeable and material change has occurred, then a modification of the alimony award is improper. Id. However, where a substantial unanticipated change has occurred, the chancellor should consider the Armstrong factors to determine the proper amount of alimony. Id. at (¶8).
¶8. In the present case, Leo argues that his retirement and the resulting reduction in his income were unanticipated at the time the parties divorced in 1978. In his brief, Leo asserts the following:
[T]hough it may have been anticipated that at some time in the future [he] might retire and discontinue working, such an event is not an event that the [c]ourt can hold [him] to with respect to [the] same being a “foreseeable future event” that will preclude a termination of alimony or a reduction of alimony at the time of retirement.
¶9. In denying Leo’s petition to terminate or reduce his alimony payments, the chancellor found that retirement, by itself, proved insufficient to justify a modification. Although Leo had retired since the parties’ divorce, the chancellor found that Leo still possessed sufficient assets and income to satisfy his alimony obligation. The chancellor noted that Leo’s living expenses were approximately $10,000 a month and that Leo bought a new home about seven years earlier. Other than the remaining home payments, the chancellor found that Leo had finished paying all other significant debt.
¶10. The chancellor also noted that Leo’s other financial obligations resulting from the divorce, such as child support, had long since been fulfilled. In addition, the chancellor stated that Leo had received proper credit for the Social Security benefits Gracie received from his past employment earnings. Therefore, based on the evidence presented by the parties, the chancellor found that Leo failed to demonstrate a substantial and material change in his circumstances.
¶11. The chancellor also discussed whether any changes in Leo’s circumstances were unanticipated, stating, “There was no mention [made] at the time [of the parties’ divorce] . . . of what would transpire when one or the other party retired. Certainly it was foreseeable that [Leo] would retire, [but] it’s not mentioned.” As the record reflects, Leo retired in 2010 after turning seventy-five. Although he found that Leo’s retirement was a reasonably foreseeable event at the time the parties divorced, the chancellor still considered the Armstrong factors. Concluding his analysis, the chancellor stated:
There has been no substantial and material change. The fact that [Leo] is retired was foreseeable. And even if you do a—well, it’s impossible to do much of an analysis because we don’t have beginning information [for 1978,] . . . but if you do an analysis under Armstrong and you look at the assets and the income[s] of the parties, not only today but over the years, no reduction in alimony is warranted.
¶12. After reviewing the record and relevant caselaw, we find no abuse of discretion by the chancellor’s denial of Leo’s petition for modification of his alimony payments. See Peterson, 129 So. 3d at 256-57 (¶5). The chancellor found that no material change occurred and that Leo possessed sufficient financial resources to continue paying his monthly alimony obligation. The chancellor also found that no unanticipated event occurred since Leo’s retirement was reasonably foreseeable at the time of the parties’ divorce. Because the record contains substantial evidence to support the chancellor’s findings, we find no merit to this assignment of error.
The outcome should shock no one because retirement is always foreseeable. The real issue is what financial impact the retirement has on the ability to pay. And that latter statement is the unspoken, hidden issue in the question of foreseeability: isn’t it reasonably foreseeable that there will be a reduction in income resulting from retirement? That is something the cases just don’t seem to address in any meaningful way.
There was no baseline in this case for the judge to go back to in the 1978 judgment. The judge could not tell from the previous judgment what the parties’ situations were in 1978 compared to 2012 (34 years later). In my opinion, it’s always a good idea to include that kind of information in your PSA’s. This case illustrates one major reason why that is a good idea.
The chancellor’s action in reducing alimony to take into account the wife’s receipt of Social Security benefits is pretty much common practice when the benefits are based on the alimony-payer’s earning history. See, e.g., Spaudling v. Spaudling, 691 So.2d 435, 439 (Miss. 1997). I am not aware of any case law supporting a reduction or termination of alimony based on the ex-spouse’s receipt of Social Security due to that spouse’s earnings history.