Carl M. Palatnik is the founding president and executive vice president of the Association of Divorce Financial Planners. His office is in Melville.
The State Senate approved a package of bills last week designed to "bring divorce law in New York State into the 21st century." If approved by the Assembly and signed into law by Gov. David Paterson, New York will become the 50th and final no-fault divorce state.
While no-fault divorce is long overdue here, a bill in the package that establishes a formula for calculating the "post-marital income obligation" has been overshadowed by the marquee component of this legislation. But the Assembly is taking notice, and that's good. It deserves more scrutiny: If passed into law, PMI would replace maintenance, the New York equivalent of alimony, with far-reaching unintended consequences.
Take what it would mean for one of my clients. Based on current law, she's only a borderline candidate for receiving maintenance - she has a small inheritance from her mother and she's embarked on a potentially lucrative career.
She recently submitted a settlement proposal to her husband that included a request for a modest amount of maintenance over a short period of time. She'd like to become financially independent of him, and her proposal would quickly allow her to become self-supporting. Her husband has rejected her proposal outright, so you can imagine how he would react to the PMI calculation.
Applying the formula in the new bill, my client would be entitled to approximately three times as much money as she requested in her proposal - but it would be spread over a period of 22 years. This is vastly different from the range of likely outcomes under the current law, and it's also inconsistent with her goals and short-term needs.
According to the current statute, maintenance should be based on the pre-divorce standard of living of the parties and how this relates to their post-divorce support needs and paying abilities. The statute lists 12 relevant factors.
But the proposed formula uses just two of these factors (the ones that are easiest to measure): the respective incomes of the parties and the duration of the marriage.
The rationale is that using these parameters is simpler and yields more consistent results. But the formula ignores many issues, such as whether a spouse has an inheritance, or what effects decisions about how property will be divided might have on post-divorce support needs and paying abilities. It elevates the importance of the duration of the marriage from one of several factors related to pre-divorce standard of living to "I lived with that jerk for 25 years and am therefore entitled to lifetime support!"
Can parties to a divorce opt out of the post-marital income guidelines? Yes and no. Any deviations from the formula require justification in the divorce decree. If history is any precedent, the PMI guidelines will be relied upon heavily by the courts. Simply put, regardless of whether applying the guidelines produces optimal results, it will be the quickest and easiest way to make determinations.
Because current maintenance determinations and the proposed PMI guidelines would in many cases yield vastly different results, the lawyer representing one spouse will probably want to use the guidelines, while the other spouse's lawyer won't. The likely result? Costly litigation - the exact opposite of the intent of the bill. Conversely, if the court relies heavily on the guidelines and the cost of litigating an uphill battle using the factors is great, one of the parties may be discouraged from pursuing an outcome that might actually be more workable.
The bottom line is that simpler and more consistent does not necessarily mean better. PMI doesn't take into account the unique aspects of each case and doesn't lead to more equitable outcomes - just different ones. It is an unnecessary workaround that simply substitutes one set of problems for another. The Assembly should pass no-fault divorce, yes, but retain the current law for calculating support - and then send that back to the Senate for passage.