Maintenance is Colorado’s word for alimony. It is an important way to help someone get back on his or her feet. On the other hand, sometimes a person has stars in their eyes about a big maintenance number, not realizing the downsides. I have seen many a client who paid another firm top dollar to go to court and obtain a maintenance award, only to walk away with very little in his or her pocket.
I am totally in support of a person’s ability to receive maintenance as permitted by Colorado law. My objection is when people pay attorneys more than they will likely receive without understanding the risks. I believe if some of my clients had understood the following about spending a fortune on their maintenance award, they would have considered other options of better benefit to them such as dividing property to their advantage.
Getting less money up front through division of property is often the better way to go, especially when you consider the following.
Sometimes it seems like every penny you get in maintenance is worth two cents of grief. While Child Support Enforcement (CSE) will help you get paid, they rarely offer the same services for maintenance. It is up to you to enforce and collect the debt, which can be hard to do. Keep this in mind BEFORE you ask for maintenance and have a backup plan in case you are not paid.
2. Income Tax Consequences
As a general rule, the recipient no longer is taxed on maintenance as of 2019; however, this may change. In the meantime, Colorado revised its maintenance law to give less maintenance due to the new tax consequence. If you think about the math, if the wealthier party pays MORE tax, that is less tax for everyone.
If you have modifiable maintenance, you may be going back to court all the time to revise the amounts every time there is a substantial and continuing change in income for either of you. The cost, time and stress become an increasing burden over time.
4. Golden handcuffs
Unless agreed otherwise, the general rule is that you do NOT receive maintenance after you remarry. Some agreements include a statement that maintenance ends if the recipient cohabitates (lives with) a person of the opposite gender and/or romantic partner. Having maintenance as a factor in romantic relationships can be a hassle at best and deal breaker at worst. Consider this effect before you agree to a long drawn out period of maintenance.
5. Child Support
The maintenance recipient may have to PAY child support out of the maintenance if their income increases and the other party’s income decreases. It is simple math: The higher income pays child support, and if your income plus maintenance is higher than their income minus maintenance, suddenly you have this obligation. As mentioned, child support is enforced by CSE free of cost. The consequences can be very dire because courts often consider child support the main obligation that protects children from poverty.
6. Career Killer
It is my impression after handling many maintenance cases that people who do not take home more money, even when they up their earnings, are less incentivized to make more money. They work hard in good faith, but their drive seems tarnished once they realize that making more money may not mean much more money in their pocket. Suddenly, going to school or working part-time is appealing whereas giving up those extra hours or trying for that high paying job is less enticing. I cannot prove it but I believe the negative impact to earnings takes the wind out of people’s sails when it comes to maximizing earning. Not to the point of bad faith, but to the point of dampening the extra edge of entrepreneurial drive. Some people (like me) try to maximize earnings anyway.
If the paying party gets sick or retires, the obligation can end. If someone is ill or has an addiction, their earning potential may not be very reliable as time goes by.
I have seen what I consider a “bait and switch” used in maintenance cases. The paying party fails to pay and then offers the recipient an asset such as a house or annuity in exchange. Turns out the asset is subject a lien and often it is that person’s attorney’s lien. If the recipient is not adequately aware of his or her rights, they may end up with a worthless asset.
Believe it or not, people sometimes move abroad when they owe six figures or more in maintenance. It can be hard to enforce an old debt if you cannot find the person or cannot afford to hire an attorney in that other country to help you collect.
Under Colorado law, if you do not enforce the maintenance debt on a timely basis, you lose the right to enforce it at all. This means you must continue to try to collect or risk losing your claim based on the laches defense.
11. Children in the Middle
A parent should NEVER EVER inform children about the maintenance obligation. Saying something like, “I would pay for college if I did not have to pay your mom this maintenance” is NEVER a good idea, for a variety of reasons. Foremost, this stresses out even a young adult child by placing adult financial issues on their shoulders and putting them in the middle of their parents’ financial fight. Nonetheless, I have seen evidence of parents doing this again and again in my practice. I have seen multiple cases where a parent pours lavish funds onto a college aged or young adult child and then pleaded poverty when it came to maintenance. The child sometimes goes along with the paying parent, perhaps due to the tremendous financial incentive. This is horrible but do not be blind to the risk. Try to contract against the possibility.
12. Gender Stereotypes
In 2014, I had more female clients paying maintenance than male clients. Many women think they are immune to paying maintenance due to their gender, only to find out they have the same obligations as men. On the other hand, I have seen men forego maintenance simply out of pride when they had every right to it. This is not a reason NOT to get or pay maintenance. It is another example of how this obligation is misunderstood. Bottom line, a good attorney can help you negotiate these risks for a better overall result.
If you are going through a divorce and want to be clear on your rights, while getting individualized, honest advice, contact Andersen Law PC today for a free consult. I’ll be happy to guide you through your divorce and maintenance challenges to you can feel more confident in your future. Call me at the office at 720-922-3880 or on my cell at 303-808-4794.