Part 2 of 2: The interplay of child support and alimony
Massachusetts revises its Child Support Guidelines approximately every four years. New guidelines have been enacted which became effective on October 4, 2021. In Part 1 of our 2-part blog series, we talked about what changed and why it matters.
Now in this Part 2, we discuss the interplay of child support and alimony, which has always been subject to negotiation, as the law is not definitive about how to address support when both alimony and child support are at issue.
The Alimony Reform Act of 2011, which became effective March 1, 2012, states when setting a child support order, gross income already being taken into account for child support should be excluded from income calculation for purposes of issuing an alimony order. However, the statute also makes it clear that unallocated or undifferentiated alimony and child support can be ordered at the court’s discretion.
Under the 2018 Massachusetts Child Support Guidelines, when the threshold for applicability of the Guidelines was $250,000 of joint household income, it was not uncommon to look first at joint household income of $250,000 and below to determine child support, and income above the threshold as the basis for negotiating alimony.
The new 2021 Massachusetts Child Support Guidelines, effective as of October 4, 2021, raised the threshold for applicability of the Child Support Guidelines to $400,000 of joint household income.
While the new Guidelines don’t change the alimony laws, they do provide greater clarification regarding the relationship of both child support and alimony, by giving parties the ability to look at either:
- Alimony first and then child support, or
- Child support first and then alimony, or
- Use of unallocated support
The new Guidelines do not favor one approach over the other. Instead, they recognize that there are different mechanisms for calculating child support and alimony, and these different mechanisms may have different results.
When calculating child support and alimony, there are a variety of factors that are influential, including:
- Age of children
- College education expenses
- Length of time that alimony and/or child support might be payable
- Tax implications of child support and alimony
- Actual needs of children and adults, along with the financial ability of a family to meet those needs
Additionally, the new Guidelines encourage the use of tax analyses to understand the implication of child support and alimony on net incomes. Tax analyses prepared by CPAs usually include various alimony and child support scenarios, and what each party’s net after-tax income will be under each of those scenarios. In negotiations, this can help the parties understand what income they will actually have available to meet their expenses—and this helps to ensure that both households have sufficient funds to provide for their children, as well as the adults.
By encouraging the use of these analyses—which formerly were more commonly done when only alimony was at issue—the Court adds another layer of complexity, but also provides more options for parties to consider when trying to reach an agreement about payment of child support and alimony. For this purpose, parties can even consider retaining a joint financial neutral, such as a CPA, who may help save time and money by focusing on the practical outcomes of different alimony and child support scenarios when negotiating.
By recognizing that there are different ways in which support might be calculated if child support and alimony are dual components of a support order or agreement, the new Guidelines give clients additional tools to negotiate what works best for them and their family, such as:
- All child support
- All alimony
- A hybrid model
It’s important to find the right environment to have negotiations about child support and alimony: For example, consider the use of Settlement Counsel, Collaborative Law or Mediation either before ever going to Court—and even if in Court—to come to a resolution, rather than remain in what sometimes can be an endless loop of litigation.