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Factoring High Inflation Rates into a Spousal Support Agreement

It’s common for divorcing couples to draft spousal support agreements. One person might depend on the other for their daily expenses. They can’t afford rent, bills, and other necessities. Sometimes, one spouse becomes accustomed to their standard of living and pursues spousal support to maintain their lifestyle.

Virginia law sets guidelines judges must use to determine the spousal support one party must provide to the other. If the petitioning spouse is eligible for payments, the judge will need to decide how much those payments should be and the duration they should last. Typically, the court will award spousal support when one person is financially dependent on the other.

However, inflation can significantly affect the amount of spousal support you receive or pay. When the cost of living increases, payments should cover necessary expenses. This could work for you or against you depending on whether you’re the supporting spouse.

How Is Spousal Support Determined in Virginia?

Either spouse can request spousal support from the other during divorce proceedings. Sometimes, couples reach an agreement regarding the payment amount and duration. However, there are other times when disputes arise, and one person might not agree with the other’s need for financial assistance. When that happens, they must go to court for a judge to review the case and determine whether the petitioning party is eligible for payments.

According to Virginia Code § 20-107.1 (E), the court will consider any factors contributing to the end of the marriage, including adultery and other grounds for divorce, when determining whether to award spousal support. The court will also review the circumstances below to determine the nature, amount, and duration of payments:

  • Each person’s needs, obligations, and financial resources, including income from retirement plans, pensions, or profit-sharing
  • Length of the marriage
  • The extent either person contributed to the other’s attainment of career position, education, profession, or training
  • Each party’s age, physical and mental condition, and special family circumstances, if any
  • The extent of physical or mental condition, age, or special circumstances of a child, making it appropriate for one person not to work outside the home
  • The monetary and nonmonetary contributions each person makes for the family’s well-being
  • Standard of living established while married
  • Each spouse’s property interests, including real and personal and tangible and intangible
  • The couple’s decisions regarding economics, parenting arrangement, employment, education, and career while married and the effect of those decisions on present and future earning potential, including the duration of one or both person’s absence from the workforce
  • Provisions associated with marital property according to Virginia code § 20-107.3
  • Each person’s earning capacity, including education, skills, and training, and current employment opportunities
  • The ability of, time and costs involved, and opportunity for one spouse to seek the employment, education, and training necessary to obtain skills to increase earning abilities
  • Other relevant factors, including each person’s tax consequences and factors and circumstances contributing to the dissolution of the marriage, specifically any grounds for divorce

How Inflation Affects the Cost of Living

A person’s standard of living is typically due to two main factors – expenses and income. Daily living expenses increase during inflation. If your expenses are higher than the money you earn or receive from an ex, you can no longer afford to pay all of your bills.

Many people take on debt when inflation occurs. They suddenly face a higher cost of living despite their income remaining the same. Most debt incurs interest, further ruining a person’s finances. If you pay or collect spousal support from your ex, you could pursue a modification to change the amount of the payments based on inflation rates.

The Importance of a COLA Clause

Including a Cost of Living Adjustment (COLA) clause in your spousal support agreement can be valuable to your financial future. The clause allows an increase in the amount of support paid when the cost of living increases. If you’re receiving payments from your spouse, you won’t have to petition the court for a higher amount during inflation.

Even if your spousal support agreement contains a COLA provision, the court might not approve it. A judge has the discretion to review the clause and determine whether it should apply to marital dissolution. For example, the court could deny this part of the agreement if another clause already allows incremental increases in payments. 

How We Can Help

Call Mike Deering Law today if you want to discuss the available options to adjust your spousal support for inflation. We can review the agreement and determine whether you’re eligible for an increase or decrease in the payment amount and advise you about the procedure for pursuing a modification.

Call us for a case evaluation with a trusted and experienced lawyer in Virginia Beach, VA, at 757-383-6848 today.

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