The ongoing Covid pandemic has had a serious and lasting impact on divorce across many verticals. While many people focus on the impact of Covid on custody and childcare related issues, such as Covid and vaccines for children in a divorce, Covid impacts family law financials as well.
The Impact of Covid on Alimony
Covid has not only changed the way we live, it has also changed the way we work. Some of the changes include increased unemployment, child care issues, financial troubles for business owners, federal stimulus checks, an increase in people pursuing graduate school, and an emphasis on working remotely.
As with anything, there have been winners and losers in the Covid economy. Certain industries have done quite well, and others have struggled or even disappeared.
Change—whether it be positive or negative—likely impacts a potential alimony award. If someone lost their business during Covid, then it may be difficult to impute the same type of income to them in a subsequent divorce. (Assuming it can be demonstrated that the business owner was acting in good faith and not using Covid as a shield to hide behind to reduce or eliminate alimony).
What is the Alimony Formula?
Unlike child support—which utilizes specific guidelines—there is no formula for alimony. Although many practitioners may use a percentage (20%, 25%, etc.) in attempt to negotiate and settle a divorce case before it heads to trial, alimony is actually based upon a normal of statutory factors.
Some of the alimony factors include:
- The income levels of the parties.
- Whether additional income may be imputed based upon prior education or experience.
- The age and health of the parties.
- The marital standard of living, and
- The length of the marriage.
What Covid throws into flux is how much income may be imputed in certain types of cases. If both parties were W-2 employees, and Covid did not impact their employment, then it’s likely that Covid had no impact on their alimony. But what if one of the parties lost their job as a result of Covid? What if one of the parties was a small business owner whose profits were cut in half during Covid? What if one of the parties got sick and is now a Covid “long-hauler” because of continuing issues from the disease?
As you can see, there are numerous ways that Covid could impact an alimony analysis. One of the things that courts and practitioners will need to analyze is whether the changes are short-term, long-term, or permanent. Such issues would like also impact a child-support analysis, though the analysis may be limited to the imputed income amount if actual salaries are not utilized.
Similar arguments will need to be made if you’re a party who financially benefited during Covid. Perhaps your medical supply company has enjoyed unparalleled financial success the last two years, but should you be imputed at that higher income for the next ten years you pay alimony? Your lawyer will need to work your case to make arguments based on averages, to make sure you’re not overpaying alimony (and perhaps child support) in the future.
Covid has brought sweeping changes, and that makes it difficult for alimony analysis, which is easier to analyze when consistent factors are at play.
Your lawyer may suggest that you retain experts such as business evaluation experts or employability experts to determine an appropriate sum of alimony, as well as the proper valuation of business(s) for purposes of equitable distribution (division of marital assets).
What if I’m Unemployed or Underemployed Because of Covid?
Covid opened up many different avenues of unemployment. For instance, unemployment became available (for a period of time) to struggling business owners and independent contractors. Covid unemployment benefits also increased under the Federal PUA program. Other business owners took out business loans through the federal PPP program. For 2020, unemployment income may not have been subject to federal taxes.
All of this means that for certain individuals, they might have received more money in unemployment benefits than what they enjoyed while employed. But such benefits were likely temporary, and alimony must often take a longer view of duration and sum.
For other individuals, perhaps they have lost stable careers because of the pandemic. Child care obligations have not made it any easier as many schools were or remain closed (or remote) because of the pandemic.
Finding an appropriate income to be imputed will be necessary to finalize any alimony discussions.
Negotiating alimony will continue to be challenging so long as the pandemic persists. In truth, alimony was one of the more contentious items to negotiate even before Covid.
You should work with your lawyer to help determine how much income should be imputed to you and your ex, to help ensure a fair alimony number
(or no alimony at all).
If you’re looking for an attorney in Central or Southern New Jersey, we look forward to your call to discuss the specifics of your unique case.