Facts: Husband and Wife divorced in 1998. Wife was awarded alimony in futuro of $3500 per month until her death or remarriage.
Five years later, the trial court reduced Husband’s monthly alimony obligation to $2870 because of a decline in Husband’s income.
Years later, Husband petitioned to modify his alimony obligation on the grounds that he had recently retired.
Relying solely on Husband’s post-retirement decrease in income, the trial court modified Husband’s alimony obligation to $1035 per month. The trial court did not make any findings regarding Husband’s expenses, Wife’s income, Wife’s expenses, or any other factors relevant to setting an alimony obligation.
On Appeal: The Court of Appeals reversed the trial court.
Tennessee Code § 36-5-121(f)(1) says alimony in futuro, a.k.a. permanent alimony, is appropriate when one spouse is unable to achieve, with reasonable effort, an earning capacity that will permit the spouse’s standard of living after the divorce to be reasonably comparable to the standard of living enjoyed during the marriage, or to the post-divorce standard of living expected to be available to the other spouse.
An award of alimony in futuro remains in the court’s control for the duration of the award and may be increased, decreased, terminated, extended, or otherwise modified upon a showing of substantial and material change in circumstances. The party seeking modification of the alimony award bears the burden of proving that a substantial and material change in circumstances has occurred.
When an obligor’s retirement is objectively reasonable, it constitutes a substantial and material change in circumstances — irrespective of whether the retirement was foreseeable or voluntary — so as to permit modification of the support obligation. However, it is equally clear that an obligor cannot merely utter the word “retirement” and expect an automatic finding of a substantial and material change in circumstances. The trial court must examine the totality of the circumstances surrounding the retirement to ensure it is objectively reasonable.
Even when an obligor is able to establish that a retirement is objectively reasonable, and therefore that it constitutes a substantial and material change in circumstances, the obligor is not necessarily entitled to an automatic reduction or termination of his or her support obligations. The alimony statute provides that an award of alimony in futuro “may” be modified upon a showing of a substantial and material change in circumstances. As evidenced by its permissive language, the statute permitting modification of support awards contemplates that a trial court has no duty to reduce or terminate an award merely because it finds a substantial and material change in circumstances. Instead, the change in conditions resulting from retirement merely allows the obligor the opportunity to demonstrate that reduction or termination of the award is appropriate. The actual modification of the award, if any, is addressed to the trial court’s discretion after considering the relevant factors listed in Tennessee Code § 36-5-121(i). Although the statute lists numerous factors for consideration, the two most important considerations in modifying a spousal support award are the financial ability of the obligor to provide for the support and the financial need of the party receiving the support.
After reviewing the record, the Court concluded:
The trial court applied an incorrect legal standard, and therefore abused its discretion, by focusing solely on Husband’s income. Deciding whether an obligor has the ability to provide spousal support requires consideration of more than the obligor’s income. A decrease in income should not be viewed in a vacuum. To the contrary, we must consider the obligor’s “ability to pay” the alimony obligation, which can be impacted by a variety of factors. Income is but one of the factors to be considered. The obligor’s expenses are another important factor for consideration. Moreover, the trial court should carefully consider the relevant factors of Tennessee Code Annotated § 36-5-121(i) in deciding by what amount, if any, the award should be modified. The need of the receiving spouse cannot be overlooked; it is an important consideration in modification cases.
[W]e find that Husband failed to meet his burden of demonstrating that modification of his alimony obligation was appropriate. Even though Husband experienced a decrease in income due to his retirement, he was still receiving approximately $8,166 per month from social security and retirement benefits. His retirement funds were valued at around $1.2 million. Husband testified that he decided how much to withdraw from his retirement accounts by using online formulas and annuity tables based on his life expectancy. He acknowledged that if he continued his current level of withdrawals from his retirement accounts (paying Wife’s existing level of alimony), his retirement funds would last until his mid-eighties, which corresponds to his life expectancy. He added that the value of his portfolio could change based on the stock market.
Despite Husband’s burden of proof, he did not produce any evidence of his monthly expenses in an effort to demonstrate an inability to pay his current level of alimony. In fact, the limited evidence regarding Husband’s expenses showed that his current monthly income enabled him to pay Wife’s alimony and all of his expenses without going into debt. Husband was paying the bulk of the household expenses for himself and his new wife, who was 49 years old and had accepted a voluntary buyout that enabled her to retire during the same month as Husband. He testified that his new wife was paying about 40 percent of the household bills. Husband’s testimony indicated that his monthly expenses included considerable discretionary spending. He was voluntarily paying off his daughter’s student loan, which totaled $20,000, and he said he had always paid “everything” for his children, including “tuition, clothes, cars, health insurance, education, whatever it is, plane tickets, I paid for it….”
Husband’s lifestyle indicated that he had no trouble paying for luxuries in addition to meeting his obligations. Husband testified that he had been traveling to France every year “for years,” and he rents an apartment there because it doesn’t cost “much.” When asked about his deposition testimony that he spends $6,000 per year on travel, Husband said, “If I did, that’s fine. I mean, I wouldn’t know. That’s a possibility.” Our review of the evidence presented leads us to conclude that Husband still has the financial ability to pay Wife’s current level of alimony in the sum of $2,870 per month….
In sum, we hold that Husband’s retirement constituted a substantial and material change in circumstances, but Husband failed to prove that the change in circumstances significantly diminished his financial ability to pay alimony or Wife’s need for it.
Accordingly, the trial court’s judgment was reversed. Wife was also awarded her attorney’s fees on appeal.
Information provided by K.O. Herston: Knoxville, Tennessee Divorce, Matrimonial and Family Law Attorney.