One of the biggest considerations during divorce proceedings is the matter of spousal support. Spousal support is an amount of money paid by one spouse to the more financially dependent spouse. An award of spousal support can typically be modified if a spouse can show a material change in circumstances justifying a modification of the award. Courts can increase or decrease the support award or duration or terminate support altogether. In a recent case, Nielsen v. Nielsen
In Nielsen v. Nielsen, Jacqueline Nielsen (“Wife”) and Alan Nielsen (“Husband”) were married in 1987 and signed a separation agreement in 2016. The 2017 divorce decree awarded Wife $10,000 per month in spousal support until November 1, 2027, consistent with the separation agreement. At the time of the divorce decree, Husband worked for AOL, earning $712,000 in 2016 and $364,000 in 2017. AOL was purchased by Verizon and in 2018, Husband became an employee of Verizon, with his new position having less responsibilities. Husband believed that his position was being eliminated, so he accepted a voluntary separation package and his employment with Verizon ended in December 2018. Husband worked for CPG in short-term consulting roles until he accepted a full-time position with CPG effective 2020, with a $250,000 salary and potential $50,000 bonus. Husband filed a motion to modify spousal support in December 2019, while still looking for full-time employment.
The Virginia Code allows a court to modify an award of spousal support if a party can prove both a material change in circumstances and that this change warrants a modification of support. Significant changes in income often constitute “a material change in circumstances.” The court has broad discretion in deciding whether the spousal support award should be modified and by how much.
When a court considers a spousal support award, it considers multiple factors set out in Virginia Code § 20-107.1(E), including the needs and financial resources of the parties; the property interests of the parties; the earning capacity and the present employment opportunities for persons possessing such earning capacity; and other factors as are necessary to consider the equities between the parties. Code § 20-109(G) additionally directs that the “court shall further consider the assets or property interests of each of the parties from the date of the support order and up to the time of the hearing on modification or termination, and any income generated from the asset or property interest.”
Here, Wife argued that Husband’s acceptance of a “voluntary separation package” required the court to find his departure was voluntary and also required the court to leave Wife’s spousal support award intact. However, the court found a material change of circumstances based on the evidence that Husband’s income changed substantially, for the worse, since the divorce. Husband earned a total of $712,000 from AOL in 2016. At the time of the modification hearing in September 2020, Husband was employed by CPG at a salary of $250,000 with a potential $50,000 bonus. Thus, the court found that his actual income was much lower in 2020 than at the time of the initial award in 2016.
When a party alleges voluntary underemployment, which Wife argued here, the court evaluates whether the spouse is currently voluntarily underemployed, based on the position he holds, his current income level, the reasonableness of his efforts to find employment, and the availability of other positions at higher income levels, given his education and experience. The court determined that Husband’s departure from Verizon was not voluntary, since Husband had no control over becoming a Verizon employee when Verizon bought AOL, and he experienced significant changes in his position and reduction in responsibilities that were outside his control. Due to these changes, the court found that Husband was impelled by the changes in circumstances that were beyond his control to accept the separation package and leave, making his separation from Verizon involuntary.
The court also noted that it is not “bound by the labels given by employers” in reference to the husband’s “voluntary separation agreement.” The terms “voluntary unemployment” and “voluntary underemployment” have become somewhat “terms of art,” and the legal definition of “voluntary” does not always align with the common usage of the term. Moreover, the court also clarified that the finding of “voluntary” underemployment does not, as Wife argued, require the court to leave a prior support award intact.
The court concluded here that Husband’s current employment was commensurate with his current earning capacity. The court also determined that after expenses, Husband had about $4,000 left over each month, as well as “substantial liquid assets” from which he could pay spousal support, if necessary. The court likewise considered Wife’s expenses and earning capacity and found that her financial resources and property interests had changed since the last award. The court included in Wife’s monthly income calculation $2,250 in rental income, $2,000 that Wife received from her live-in companion, and $150 in investment income. Her monthly income was $4,400 higher and her need had decreased by $4,000 per month.
Based on the court’s findings of the parties’ income and expenses, it decreased the spousal support amount by $4,000, from $10,000 to $6,000 per month. The court found that this award fully met Wife’s demonstrated needs and also required Husband to use his assets to pay the spousal support, since the award was higher than Husband’s income after expenses.
Courts have broad discretion when determining whether or not to modify an award of spousal support and by how much. These matters will typically be decided on a case-by-case basis after evaluating all relevant circumstances. This case highlights the idea that a change in job, with a resulting significant change in salary, may be considered a material change in circumstances, sufficient to allow a court to modify a court award. Additionally, not only did the court here consider the changes to Husband’s finances, but also to the changes in Wife’s finances, which further supported decreasing the spousal support award. Another important takeaway from this case is that a spouse accepting a “voluntary separation,” which results in a new position with a lower salary, will not always prohibit a request for support modification. The court here determined that, based on the circumstances, Husband’s end in employment wasn’t actually voluntary, but even if it had been, would not necessarily be a bar to modification of the award. While not all cases will be decided similarly, it can offer helpful guidance to spouses in similar situations.
Family law attorneys at General Counsel, P.C. are experienced representing payor and payees in divorce and support proceedings and can help you navigate the process. Contact us today at 703-991-7973 and see how we can help you.