Facts: Husband and wife married in 1976 and divorced in 1988. They resumed living together in 1989 and married a second time in 1991. Their second marriage lasted 22 years.
At the time of the divorce trial, Husband was 58 years old while Wife was 57.
The trial court equally divided the marital estate.
Husband earns in excess of $175,000 per year. While many years ago Wife earned as much as $70,000 per year, her earnings for the previous three years averaged about $28,000 per year. Wife’s current income was only $21,000 per year.
Wife was found to be the economically disadvantaged spouse. Husband was found to have the ability to pay alimony.
The trial court awarded transitional alimony to Wife in incrementally decreasing amounts over 10 years. Specifically, Wife was awarded $2750 per month for three years, $2000 per month for three years, $1750 per month for two years, followed by $1000 per month for two years. This monthly payment was to be inclusive of the child support Husband paid such that, for example, if Husband owed $1000 for child support in year one, his $2750 monthly payment would be considered $1000 for child support and $1750 for transitional alimony.
On Appeal: The Court of Appeals reversed the trial court.
Alimony in futuro. Wife argued the court erred in awarding transitional alimony rather than alimony in futuro.
Tennessee law recognizes four types of spousal support: (1) alimony in futuro, also known as periodic alimony or permanent alimony; (2) alimony in solido, also known as lump-sum alimony; (3) rehabilitative alimony; and (4) transitional alimony. Tennessee law recognizes a preference for the short-term forms of spousal support, rehabilitative and transitional alimony, over the long-term types of support, alimony in futuro and alimony in solido.
When determining the nature and amount of an alimony award, the trial court must consider all the relevant factors set forth in Tennessee Code Annotated § 36-5-121(i). Although each of those factors must be considered when relevant to the parties’ circumstances, the two that are considered the most important are the disadvantaged spouse’s need and the obligor spouse’s ability to pay.
After reviewing the record, the Court commented:
Even at the peak of Wife’s earned gross income [of $70,000 many years ago], she earned only thirty-eight percent of Husband’s 2012 gross income of $190,000.00. In 2012, Wife’s gross yearly income was only $21,000.00. In contrast, as the trial court found, Husband’s earning power is likely to improve…. Finally, the unusually long duration of transitional alimony awarded in this matter indicates that the trial court recognized Wife’s need for alimony beyond a transitional period.
We agree with the trial court’s determinations that Wife is in need of alimony and that Husband has the ability to pay alimony. We further determine, however, that due to the widely disparate respective incomes and future earning capabilities of the parties, the trial court’s award of transitional alimony should be modified to an award of alimony in futuro.
Alimony in solido. Wife also argued she was entitled to an award of alimony in solido.
Alimony in solido, also known as lump-sum alimony, is typically awarded to adjust the distribution of the marital estate and, as such, is generally not modifiable and does not terminate upon death or remarriage.
After reviewing the record, the Court concluded:
[T]he trial court noted the approximately equal division of the marital estate and found that both parties would therefore be able to “begin their single lives in an essentially equal position as it relates to cash assets.” We agree with Wife that this finding was somewhat in contradiction of the trial court’s overall conclusion that “[Husband’s] past income, as well as what the court expects to be his future income, is far greater than [Wife’s] past income, and what the court expects to be [Wife’s] future income and her potential to earn future income.” . . . Upon a thorough review of the record, we conclude that Wife as the disadvantaged spouse was entitled to a lump-sum award in order to more equitably adjust the distribution of the marital estate. We therefore reverse the trial court’s denial of Wife’s request for alimony in solido.
Accordingly, the trial court’s judgment was reversed and the matter remanded for an award of alimony in solido.
K.O.’s Comment: (1) Several months ago in Lunn v. Lunn, the Eastern Section noted the longest period of transitional alimony ever affirmed on appeal was eight years. If a trial court finds a disadvantaged spouse’s need for alimony will last longer than eight years (as was the case here), then the very length of the award weighs in favor of alimony in futuro instead of transitional alimony. Here the Court referred to a 10 year award of transitional alimony as being one of “unusually long duration” such that it showed Wife’s “need for alimony beyond a transitional period.”
(2) The trial court was also reversed for awarding Wife a maximum monthly payment of $2750 that was to include both alimony and child support. This was held to be reversible error because child support must remain modifiable and cannot be “capped” at a maximum amount.
(3) The case also presented a property classification issue. The Court of Appeals affirmed the trial court’s ruling that the assets of the nonprofit corporation founded by Husband and Wife could not be considered marital property because of the entity’s status as a nonprofit corporation.
Information provided by K.O. Herston: Knoxville, Tennessee Divorce and Family Law Attorney.