Alimony Recipient’s Cohabitation with Adult Children at Issue in Crossville, TN Alimony Modification: Schrade v. Schrade

Facts: During the marriage, Husband and Wife lived off the income from a trust fund and stock portfolio.

When they divorced in 2008, the trial court approved their marital dissolution agreement, which provided that Husband would pay 35% of the income from the trust fund and stock portfolio to Wife as alimony in futuro. Notably, the marital dissolution agreement provided that “Wife shall never receive less than $1200 per month, even if $1200 is greater than the previously agreed 35%.”

knoxville alimonyIn 2013, Husband petitioned to modify his alimony obligation on the grounds that the value of the assets and income from the trust fund and stock portfolio had substantially declined. Husband argued the substantial drop in his investment income since the divorce was a substantial and material change in circumstances that was not anticipated when the marital dissolution agreement was signed.

The trial court found there had not been a substantial and material change in circumstances because the the parties anticipated the ups and downs of the stock market by establishing a minimum floor of $1200 in the marital dissolution agreement.

The proof also showed that Wife’s two adult children were now living with her. The trial court found the adult children did not provide any financial support to Wife and, therefore, there was no reason to modify alimony on this basis.

For these reasons, Husband’s petition to modify his alimony obligation was denied.

Husband appealed.

On Appeal: The Court of Appeals affirmed in part and reversed in part.

Modification of alimony. Alimony in futuro is intended to provide support on a long-term basis until the death or remarriage of the recipient. Tennessee Code Annotated § 36-5-121(f)(2)(A) states that alimony in futuro remains in the trial court’s control for the duration of the award and may be increased, decreased, terminated, extended, or otherwise modified upon a showing of a substantial and material change in circumstances. Thus, a court may not modify or terminate a spousal support award unless it first finds that a sufficient change in circumstances has occurred since the entry of the original support order.

Husband argued the parties could not have foreseen that the investment income would ever produce less than $1200 per month. The Court rejected this argument, explaining:

The language of the MDA is clear and unequivocal. The baseline for Wife’s alimony is at least $1,200 per month “regardless of the distribution from the stock portfolio. . . even if $1,200.00 is greater than the previously agreed 35%.” We find unavailing Husband’s arguments about the unforeseeability of the market downturn. On the contrary, that the market fluctuates is both self-evident and acknowledged by the MDA itself. The MDA provision setting a baseline minimum of $1,200 reasonably could be viewed as a nod to the market’s instability, establishing a minimum despite its variations. The lone fact that the stock market underwent a sharp downturn in 2008, while a devastating economic event, cannot in itself constitute a material change in circumstances because such downturns, even drastic ones, are part and parcel of the risk of the stock market and are therefore eminently foreseeable. Further, the parties, as found by the Trial Court, “anticipated the variances of the stock market by putting in a minimum floor of $1,200.00 . . . .”

Thus, the trial court’s decision was affirmed.

Cohabitation. Tennessee Code Annotated § 36-5-121(f)(2)(B) provides that where a person is receiving alimony in futuro and the recipient lives with a third person, a rebuttable presumption is raised that the third person is contributing to the support of the alimony recipient or is receiving support from the alimony recipient such that the alimony recipient does not need the amount of support previously awarded.

Under the statute, the trial court’s remedy is to suspend all or part of the alimony obligation, not forever terminate the alimony. The implication is that if the situation justifying the suspension ceases to exist, the alimony recipient may seek reinstatement of the support award from the former spouse.

The Court of Appeals vacated the trial court’s ruling regarding cohabitation, explaining:

[It] was undisputed that Wife’s two adult children reside with her on her property. This implicates the rebuttable presumption contained in Tennessee Code Annotated § 36-5-121(f)(2)(B). The Trial Court found that the adult children did not provide any monetary aid to Wife. The Trial Court, however, did not address whether the services provided by her adult children to Wife contributed to her support or whether the adult children received support from Wife and, if so, whether Wife still showed a need for the alimony, as required by the statute.

For these reasons, the case was remanded to the trial court for a specific determination as to whether Wife overcame the rebuttable presumption created by her cohabitation with her adult children and, if not, to reconsider whether to suspend all or part of Husband’s alimony obligation.

Schrade v. Schrade (Tennessee Court of Appeals, Eastern Section, February 13, 2017).

Information provided by K.O. Herston: Knoxville, Tennessee Divorce and Family-Law Attorney.

Posted by

K.O. Herston is a family-law attorney in Knoxville, Tennessee whose practice is devoted exclusively to family law, including divorce, child custody, child support, alimony, prenuptial agreements, and other aspects of family law.

Leave a Comment