Saving for a Rainy Day: Court Rules on Considering Savings in Alimony

As a divorce attorney in Massachusetts, I often advise clients on alimony and the factors that determine the amount and duration. A recent decision from the state's highest court provides valuable guidance on an issue that frequently arises: whether a couple's practice of regularly saving money during the marriage should be factored into the alimony calculation.

Details of the Case

Amy and Glen Openshaw were married for nearly 30 years and enjoyed an upper-middle-class lifestyle. Despite earning over $1.3 million annually, their spending was relatively modest, as they habitually allocated significant portions of their income to savings and investment accounts. Upon divorce, the key dispute centered on alimony and the division of their $4.5 million marital estate.

Marital Lifestyle and Saving

The court ruled that a couple's customary practice of saving should be considered part of their marital lifestyle when determining alimony. Essentially, the marital lifestyle encompasses not just consumption spending, but also the deliberate choice to regularly devote income to savings.

Echoing a principle I often emphasize, the court stated, "Where the family budget during the marriage is characterized by regular saving, fewer resources necessarily are available for pure consumption spending." Failing to account for saving could force the recipient spouse to either reduce their standard of living or abandon a key component of the marital lifestyle.

Maintaining the Marital Standard

The court reasoned that when the parties' combined post-divorce income permits both spouses to maintain the marital standard of living, the recipient spouse's need for support generally equals the amount required to continue that lifestyle, including any routine saving practices.

Importantly, the court differentiated circumstances where the couple's collective income is inadequate after divorce, noting, "Where, as so often happens, the couple's collective income is inadequate to allow both spouses to maintain the lifestyle they enjoyed during the marriage after their household is divided in two through divorce, 'the recipient spouse "does not have an absolute right to live a lifestyle to which he or she has become accustomed."'"

Takeaways for Divorcing Couples

This decision provides valuable guidance for divorcing couples, especially those accustomed to setting aside substantial portions of their income for savings and investments. If your marital lifestyle included regular saving practices, I can now advocate for incorporating those savings into the alimony calculation – provided your combined post-divorce income allows both parties to maintain that standard.

Ultimately, the court's ruling underscores the importance of carefully examining a couple's complete financial picture during the marriage, including not just their spending habits but also their saving and investment practices.

Disclaimer: The content provided in this blog is for informational and educational purposes only. It should not be construed as legal advice and readers should not act upon any information provided without seeking professional legal counsel. The author does not guarantee the completeness or accuracy of the information provided. This blog is not intended to create an attorney-client relationship between the author and the reader.