ALIMONY: IS IT MODIFIABLE OR IN GROSS?
by Raymond Pater

The question as to whether alimony is modifiable turns on whether the court determines it is alimony in gross or periodic alimony. Periodic alimony is subject to modification on a showing of a change in circumstances, while alimony in gross is normally not modifiable. Bonfiglio v Pring, 202 Mich App 61 (1993). Periodic alimony is also tax deductible to the payer and taxable to payee.

The 1994 case of Pinka v Pinka, 206 Mich App 101 (1994) demonstrates the Courts' difficulty in interpreting a past judgment to determine whether alimony was intended to be periodic or in gross, and thus non-modifiable. The court admonished the bar to prevent confusion by clearly expressing the parties' intent regarding the nature of the alimony. As you know, the quandary is that making the alimony in gross and therefore non-modifiable, also prevents the payer of the alimony from considering it as deductible for tax purposes. (Some attorneys try to skirt the issue by clearly making the alimony periodic, but adding language to the effect that it is non-modifiable and that a change in circumstances will not be grounds for modification).

As the Bonfiglio Court stated, the Circuit Court has the authority to modify an alimony award upon a showing of a change in circumstances, but not when the alimony is alimony in gross, absent a showing of fraud. "Alimony in gross is a sum certain and is payable either in one lump sum or in periodic payments of a definite amount over a specific period of time." The Bonfiglio Court refused to adopt the bright line test of earlier cases that stated that if there were any contingencies in the alimony provision that it was automatically modifiable. The Court endorsed an approach that focuses on the intent behind the alimony provision, regardless of a remarriage or a survivorship contingency (citing several cases). The Court held that the "inclusion of a survival or a remarriage contingency in an alimony provision does not automatically or conclusively create modifiable periodic alimony rather than non-modifiable alimony in gross. Instead, when called upon to distinguish between modifiable and non-modifiable alimony, courts should focus on the intentions of the parties in negotiating a settlement agreement, or of the trial court in fashioning an alimony award, and give effect to that intent."

In the Bonfiglio case, the specificity of the varying amounts to be paid per month and per year supported a finding of non-modifiable alimony in gross. The payee of the alimony conceded that the purpose of the award was to provide for her support until she found gainful employment. The court found that such a purpose was consistent with an intent to provide alimony in gross. Finally, the alimony award did not provide for alimony until further order of the Court. "Instead, the express terms of the alimony provision make it apparent that, even if the parties intended periodic modifiable alimony, they intended defendant's obligation to pay such alimony to exist for a limited time and to be absolutely extinguished at the end of the 1990 calendar year. Under those circumstances, we conclude that the trial court properly declined to award plaintiff further alimony." The last paragraph is interesting in that the Court stated that although the parties may have intended periodic modifiable alimony, it was for a limited time and thus would not be modified.

Pinka v Pinka, supra, cited with approval the opinion of Turner v Turner, 180 Mich App 170, 174 (1989) which held that the parties' intention was the overriding concern, "while the number and type of contingencies should be considered only as factors in determining intent." Thus the Turner Court held that the contingencies of death and remarriage did not show an intent to create periodic alimony in that case (citing several other cases). The Pinka Court interpreted Bonfiglio as concerning "an alimony order very much like the one in this case - a series of payments over a set period of time, subject to early termination upon the death or remarriage of the recipient. The Court found the following factors determinative of the parties' intent to create alimony in gross: the specificity of the amount to be paid each month; the fact the purpose of the alimony was to provide the recipient support until she found gainful employment; and the fact that the alimony award was not subject to further order of the court...."

The case of Wiley v. Wiley, 214 Mich App 614, (1995) involved an appeal from the terms of a divorce judgment wherein the Court of Appeals held that the trial court clearly erred in failing to designate its alimony award as periodic alimony subject to modification on a showing of changed circumstances. MCL 552.28; MSA. 25.106. The Court stated that there was no record in support for interpreting the award as alimony in gross. Had the trial court intended to so limit the award, it would have been simple to do so. "The trial court also did not declare the award nontaxable, final, or non-modifiable. Cf. Bonfiglio v. Pring, 202 Mich App 61 (1993), and Pinka v. Pinka, 206 Mich App 101 (1994). The Wiley Court went on to say:

"The trial court probably intended that the award could be modified if defendant were unable to obtain full-time employment and support herself. During the thirty-year marriage, defendant had a history of part-time employment, and although the trial court certainly intended to encourage her to work full-time that objective is not always attainable for people in their fifties, male or female. Whether the trial court would have designated the alimony as subject to its further order is not known. Application was apparently not made to the trial court for modification. We do not believe that the language in the judgment to the effect that alimony is "not permanent" forecloses a construction that alimony is periodic. There is ample support in the record for permitting defendant to apply for modification upon a change of circumstances, particularly in view of the plaintiff's far superior earnings and the defendant's emotional and physical health problems. Had the trial court refused to award any alimony we would reverse on reasoning similar to that announced in Hanaway v. Hanaway, 208 Mich App 278 (1995)."

"[O]ur courts and our Legislature have long recognized that the general rule of finality is not always suitable in the realm of matrimonial law. In many situations, judgments of divorce must anticipate that circumstances will change for both the spouses who require support and the spouses who must provide that support. Accordingly, flexibility in the form of modifiable arrangements may be more important than finality of judgments in certain cases. Consequently, our Legislature long ago provided that courts may modify judgments for alimony upon the petition of either party. MCL 552.28; MSA 25.106." Staple vs. Staple, 241 Mich App 562 (2000). That is not true if the alimony is non-modifiable alimony in gross.

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