The recent Supreme Judicial Court (SJC) decision in the case of Cavanaugh v. Cavanaugh has changed the way lawyers think about alimony and child support in Massachusetts family court cases. The SJC’s decision, which was issued in June 2022, has caused a significant shift in the way family court cases are approached, as it has revised the way in which income is calculated when determining support payments.
In Cavanaugh v. Cavanaugh, the Court noted the differences between alimony, used to support a former spouse, and child support, used to support children of the marriage. The Court also reconsidered the issue of what income may be included or excluded when calculating support, such as employer contributions to retirement or health savings accounts. This decision has significant implications for those who are going through a divorce, as it will impact the amount of support that is paid.
Additionally, the Court introduced a new method for calculating alimony and child support in cases where both elements of support are involved. Traditionally, alimony was not a consideration in divorces with child support and in which the parties earned under $400,000.00 per year. Under the Cavanaugh decision, however, the Court stated that alimony should be considered as it is not equitable for the calculation of alimony to exceed the calculation of child support. The decision instructed parties and their attorneys to calculate alimony before child support and apply the alimony income or expense in the parties’ incomes for the child support calculation.
However, in September 2022, the SJC issued a revision to its decision, now suggesting that both “alimony first” and “child support first” calculations should be considered when determining what is the most equitable support payment. This change has caused some confusion among lawyers, who are now tasked with considering both approaches when determining the best way to proceed in a support case.
The tax impacts of this decision have added even more difficulty to support calculations. Under the Tax Cuts and Jobs Act, alimony payments are no longer eligible to be deducted from the payor’s income, and the payee does not have to report alimony as income. This results in a payee receiving a significant portion of tax-free money while the payor is taxed on income that is paid to their former spouse. In many cases, a tax analysis should be considered to determine the true cost of the alimony payments.
The Cavanaugh decision has already had a significant impact on pending divorce cases and will continue to impact settlements in the Probate and Family Court. This decision has up-ended traditional approaches to support payments and will require lawyers to be more creative and thoughtful in their approach to these cases. It is important that those who are going through a divorce or seeking support payments understand the implications of this decision, as it may have a significant impact on their financial situation.
The Cavanaugh v. Cavanaugh decision has significantly changed the way lawyers approach alimony and child support cases in Massachusetts family court. The Court’s decision to include employer contributions to retirement as income and its introduction of a new method for calculating support has caused a shift in the way support payments are determined. With the SJC’s recent revision, it is more important than ever for lawyers and those going through a divorce to be aware of the implications of this decision and to be prepared to consider multiple approaches when determining support payments.