I. Spousal Support In General
Spousal Support is a major issue in many divorces, especially if the parties were married for a significant period of time or when there is a great disparity in income. Often, one of the parties stayed home to raise the children or attend to the home. This traditional problem is compounded by Michigan's current economic reality: the highest unemployment rate in the nation. Many well qualified and highly educated individuals are out of work. This environment makes it even harder for individuals with little work experience to secure employment.
Recognizing this financial inequity that many spouses face, courts use awards of spousal support to balance "the incomes and needs of the parties in a way that will not impoverish either party." Moore v Moore, 242 Mich App 632, 654; 619 NW2d 64 (2003). Traditionally, courts look at as many as eleven factors when determining whether to award spousal support:
Past relations and conduct of the parties;
Length of the marriage;
Ability of the parties to work;
Source of and amount of property awarded to the parties;
Age of the parties;
Ability of a party to pay alimony;
Present situation of the parties;
Needs of the parties;
Health of the parties;
Prior standard of living of the parties and whether either is responsible of the support of others; and
General principles of equity.
Sparks v Sparks, 440 Mich 141; 485 NW2d 893 (1992).
Michigan Family Law Journal
Once a court has decided to award spousal support, the court has two options: periodic alimony and alimony in gross. Staple v Staple, 241 Mich App 562, 566; 616 NW2d 219 (2006). Alimony in gross is a fixed sum one party must pay the other. This sum is exempt from MCL § 552.28, and it is not modifiable. Id. However, a court also may award periodic alimony, typically fashioned as a fixed weekly or monthly amount. This award is subject to modification under MCL § 552.28, when a change of circumstances necessitates a support review. The court cannot award "non-modifiable" alimony. See Staple v Staple, 241 Mich App 562; 616 NW2d 219 (2006).
The party seeking modification of the spousal support amount bears the burden of proving to the court that there is a substantial change in circumstances warranting a change in the support obligation. It is easy to imagine circumstances under which modification of periodic alimony is warranted. Modification may be necessary if the payor changes jobs or retires, reducing his or her income. Modification may also be appropriate if the payor remarries or has additional children, increasing the number of people the payor is supporting with his or her income. Changes in a party's health may be a factor warranting a request for modification.
II. Traditional Factors Leading to the Termination of Spousal Support
In addition to modification of a spousal support award, periodic alimony may be terminated completely upon the occurrence of various factors. Traditionally, courts have terminated spousal support upon the death or remarriage of a spouse. Staple, 241 Mich App at 566. For spousal support to be deductible by the payor, Internal Revenue Code § 71 requires that the spousal support obligation not extend beyond the life of the recipient (terminates upon death of payee.) These events are firmly rooted in the purpose behind an award of spousal support. Spousal support is simply a method of assuring that both parties to the divorce will be able to provide for themselves after the divorce. If the recipient party later dies, they are no longer in need of the support. Similarly, if the recipient party later remarries, a new individual may be contributing to the support of the household and, therefore, the spousal support may not be necessary.
While courts generally terminate spousal support on death or remarriage, parties have begun to include cohabitation as an additional terminating event in the judgment of divorce. Parties often agree that in addition to death and remarriage, spousal support should terminate on the cohabitation of the spouse receiving support. If a spouse begins to live with another person not related to them, and that individual contributes to the household, spousal support may no longer be necessary. However, without cohabitation language in the original order of spousal support, a payee could reside with another individual, enjoying the benefit of shared expenses, without risking termination of spousal support so long as the party never remarries. This would likely frustrate the purpose of awarding spousal support—the payee would receive a windfall, and inequity would be the result.
III. Cohabitation Before Smith
While cohabitation was a traditional terminating factor under Michigan law, prior to the recent Smith v Smith decision, No. 98-004557, 2008 WL 724654 (Mich App, March 18, 2008), no test had been articulated by statute or case law directing a court on how to distinguish between a party cohabitating with another individual and simply a long-term dating relationship.
Crouse v Crouse and Kersten v Kersten, merely dealt with the standard a party must meet for modification of a spousal support award due to cohabitation. Crouse v Crouse, 140 Mich App 234; 363 NW2d 461 (1985), see Kersten v Kersten, 141 Mich App 182; 366 NW2d 92 (1985). The court, in both cases, did not consider cohabitation a terminating factor, nor did either court analyze whether the payee was engaged in a long-term dating relationship rather than a situation of cohabitation. Id.
IV. Smith v Smith: the New Test for Cohabitation
In Smith v Smith, a Michigan court finally articulated a test for when cohabitation rises to a level that terminating spousal support is warranted. Smith v Smith, No. 98-004557, 2008 WL 724654 (Mich App, March 18, 2008). In Smith, the parties were divorced in 1999 in Kent County Circuit Court (Grand Rapids) after seventeen years of marriage. Id. at 1. They had five children during the course of the marriage. Id. The court held that under the circumstances spousal support was warranted. Id. The plaintiff was ordered to pay the defendant $3,500 per month in spousal support. The Judgment of Divorce included a provision terminating spousal support "upon such time as the Defendant cohabitates with a non-related male." Id.
In January 2005, the plaintiff husband filed a motion with the court seeking to terminate spousal support. The plaintiff argued that his former wife was cohabitating with her boyfriend, Philip J. Walsh, II. Id. The defendant and Mr. Walsh first met in 2002 and were involved in a monogamous romantic relationship since 2004. Id. at 3. Defendant lived in Grand Rapids, Michigan, but Mr. Walsh moved to Georgia in October 2003. Id.
The parties' Judgment of Divorce did not define cohabitation. Furthermore, the court noted that there was no Michigan case law determining what constituted "cohabitation" for purposes of terminating spousal support. Rather the court began its analysis by turning to the dictionary definition of cohabitation. Id. at 2. Black's Law Dictionary defines "cohabitation" as "[t]he fact or state of living together, esp. as partners in life, usu. With the suggestion of sexual relations." Id., quoting Black's Law Dictionary (8th ed.) The court also referenced a recent Ohio Court of Appeals decision which set out a three-factor test for deciding when two individuals are cohabitating. Birthelmer v Birthelmer, unpublished decision of the Court of appeals of Ohio for the Sixth District, Docket No. L-83-046, July 15, 1983. For cohabitation to exist, the Birthelmer court dictated that the parties must actually be living together, the living situation must be for a long duration, and the parties must share living expenses. Id. at 2.
The Smith court used the Birthelmer test as an outline for its own multifactor test for determining cohabitation. Smith, slip op. at 2. The court will review the totality of the circumstances (emphasis added) to determine if cohabitation exists and spousal support should be terminated. First, the court will look at the parties living arrangements. The court will consider whether the parties actually live together, how long this arrangement has been in place, if they keep personal items and other property in the residence, if they both have access to the home, and if the parties use the same mailing address. Second, the court will consider the parties’ personal relationship. In particular, the court will look at whether the parties are involved in a sexual relationship, whether that relationship is monogamous, and whether marriage is contemplated. Third, the court will analyze the parties’ financial situation. The court will inquire whether the parties share expenses, have joint accounts, share joint personal and real property, and if they otherwise support each other. Id.
In Smith, both the trial court and the Court of Appeals concluded that the totality of the circumstances showed that although Ms. Smith and Mr. Walsh were involved in a long term dating relationship, they were not cohabiting. Id. at 3. Therefore, termination of spousal support was not warranted. Id. at 3. Under the first prong of the test, the court found that the parties were not living together. Ms. Smith was a resident of Grand Rapids, Michigan while Mr. Walsh lived in Georgia. Mr. Walsh traveled extensively for work and was only able to visit Grand Rapids a few times a month. While Mr. Walsh stayed with Ms. Smith on his visits, he kept no personal items in the home and did not receive his mail at that address. Id. at 3-4.
Regarding the second prong of the test, the court held that while Mr. Walsh asked Ms. Smith to move in with him several times and proposed marriage four or five times, Ms. Smith declined his requests each time. The couple was involved in a monogamous relationship, but they had no immediate marriage plans. Id. at 3-4.
Finally, the parties also failed to meet the third prong of the test for cohabitation. The parties did not share joint bank accounts and did not split bills. The only time the couple shared expenses was when they took joint vacations. Id. at 4. Ms. Smith was not receiving support from Mr. Walsh. In reality, Ms. Smith was in the same financial situation as she was in 1999, when the divorce was granted. In short, they did not support one another—and therefore termination of spousal support was not warranted.
V. Thoughts Looking Forward
Overall, the Smith opinion goes a long way towards more clearly defining this area of the law. There is now a test specifically crafted to help the court determine whether a payee is cohabitating or is simply involved in a long-term dating relationship. However, the court's job is far from over. This is the first Michigan court to publish an opinion analyzing cohabitation under this test. Only after courts begin to utilize this test will practitioners get a better feel for how each court will weigh the different factors. Moreover, no Michigan court has ruled on whether, absent explicit language in the judgment, cohabitation should terminate spousal support. While the cohabitation of the payee may constitute a substantial change of circumstances allowing the court to modify spousal support, there is no opinion specifying cohabitation as a per se terminating event.
In the mean time, practitioners are left to continue to help their clients navigate the murky waters of spousal support, waters which have, nonetheless, become a little bit clearer after Smith v Smith.