Alimony

Child support is a topic that divorcing partners face. The rules for child support were recently modified and simplified. Partner alimony is still a topic of discussion in politics, but for now the legal term of 12 years applies. In the case of a short childless marriage, the maximum alimony term is equal to the duration of the marriage.

Duty of care

Married and registered partners have entered into a legal duty of care with each other. This duty of care does not end with divorce. To ensure that both partners can continue the standard of living they had before the divorce as much as possible, spousal support may be due.

Calculating alimony is a complicated process. How the alimony obligation is determined can have a significant impact on your finances. It is important to hire an attorney who can help you calculate alimony. Professional legal advice is also important when requesting an extension, reduction or termination of alimony.

Calculating net disposable income partner and child support

Net disposable income (NBI) is the basis for calculating both spousal and child support. Thus, the NBI during the marriage determines the level of need. The NBI after divorce, forms the basis for calculating supportability.

NBI is not equal to the net monthly salary

The net disposable income is not equal to the salary credited to your bank account each month. Vacation allowance, bonuses, pensions and the like must be taken into account. In case law, the NBI is defined as follows:

The NBI is the sum of gross income, including vacation allowance and actual income from assets, less the taxes and contributions owed by the maintenance creditor thereon, also taking into account the relevant tax credits. Reasonable (deductible) pension costs and disability insurance premiums are also taken into account, whether arising from a collective contract or an individual pension plan. No account is taken of the tax consequences of being the owner of a home (flat-rate home ownership, tax deduction of mortgage interest, insurance premiums and repayments required to finance the home) and the additional taxable benefit due to a company car.

The family lawyer can easily calculate the NBI of the parties using special alimony calculation programs, based on pay slips and annual statement.

Wage employment

The aforementioned method of calculating net disposable income applies only to employed people. For entrepreneurs, a paycheck cannot simply be adhered to. Determining the NBI then requires more customization (see above NBI & entrepreneur and NBI & sole proprietorship).

Net disposable income calculation?

Would you like to have the NBI calculated by a lawyer or do you have questions about this? Please let us know.

Alimony & the sole proprietorship

Calculating alimony is always customized. If the obligor for alimony runs a sole proprietorship, however, calculating support is more complex than usual. The question that needs to be asked is: What income are we starting from? A sole proprietorship does not involve separate assets like a limited liability company. The entrepreneur is therefore jointly and severally liable for the debts of the "enterprise."

Annual profit?

Until now, when calculating the entrepreneur's ability to pay, the annual profit of the sole proprietorship was always taken into account and then discounted to a monthly income from which expenses were deducted. However, this annual profit is never a reflection of what the entrepreneur has in his/her wallet and thus what he/she can actually pay as alimony.

Cash flow statement

In order to paint a realistic picture of what the alimony obligor can pay, cash flows must be calculated. Cash flows represent what actually goes in and out of the business. In other words, what does the entrepreneur have in his/her wallet ?

By definition, cash flows are not equal to the profit achieved. This is because profit takes into account depreciation, accounts receivable not yet collected and accounts receivable not yet paid. However, cash flows take into account funds that have come in and funds that have been spent. If an investment has been made in an asset, this is taken into account in its entirety in a cash flow statement. If debtors have not yet been paid, then the value represented by these debtors will not be taken into account. A cash flow statement therefore shows at an exact moment what is available to the maintenance recipient at that moment.

Who prepares the cash flow statement?

Cash flow statements can be prepared by the accountant or bookkeeper. Often they are also included in financial statements, however, in a divorce situation, it is important to know what is available at that time; a cash flow statement is a snapshot.

Other circumstances

Of course, positive cash flow does not necessarily mean carrying capacity. The situation in which the business finds itself is always important. Do investments need to be made in the short term? Should reserves be built up to meet financial obligations in the future? It is important for the lawyer/mediator to have a complete picture of the business and how it is doing, what the future plans are and what has happened in the past. The combination of this information will ultimately lead to a proper child support calculation based on the true state of the sole proprietorship.

Spousal support

Duty of care

Married and registered partners have entered into a legal duty of care with each other. This duty of care does not end with divorce. To ensure that both partners can continue the standard of living they had before the divorce as much as possible, spousal support may be due.

Legal standards

If there are significant differences in income between the spouses during the marriage, the least-earning partner may have insufficient income to support himself or herself after the divorce; this is called need. We then look at the extent to which the partner with the highest income can pay partner alimony; this is called ability to pay. The spousal support can never exceed the need and can never exceed the financial capability.

Need

The need of the partner entitled to alimony should be determined based on the level of wealth during the marriage. In order to properly assess this need, a needs list can be filled out. Of course, the expenses on this list should be realistic and, where necessary, substantiated with supporting documents.

In determining spousal support, for many years the so-called Hof norm has been used. This standard assumes that two one-person households cost more than one two-person household. The need in this context is therefore equated to 60% of the parties' aggregate income. This method of calculating need is now outdated and is often no longer accepted in proceedings. To be able to claim spousal support, an accurate calculation and substantiation of the need is required.

Supportability

Supportability is calculated on the basis of the report Alimentation Standards (TREMA standards), which report is also used by the court. In short, spousal support is calculated by determining the net disposable income of the obligated party and deducting certain expenses. The amount a person needs at least to live on is called the disposable income. Of the amount that remains (known as the disposable income), 60% is available for spousal support.

Needs

The person entitled to alimony cannot simply claim spousal support. It has to be proven that the earning capacity is insufficient to support him or herself; this is called neediness. The judiciary increasingly expects the lack of earning capacity to be demonstrated and substantiated. It can be expected that more hours will be worked or that a suitable job will be sought to generate own income. If this fails, letters of application, for example, must be submitted to show that the obligation to make an effort has been met.

Maintenance period

Although a change in the law on spousal support has been talked about for years, it has not yet been implemented. The legal term for spousal support is twelve years. This term can be deviated from by mutual agreement or by court order. For childless marriages up to five years, the alimony term is maximum equal to the length of the marriage.

Customized

The calculation of spousal support is customized. Moreover, partners can deviate from the legal standards by mutual agreement or even choose to buy out spousal support. The way in which the alimony obligation is determined also has tax consequences. It is important to get advice on this in order to avoid unexpected assessments in the future.

Our lawyers are located in The Hague

Are you looking for a family law attorney? You are welcome to visit our office in The Hague. Our family law attorneys possess the right knowledge and expertise to assist you. Although our office is located in The Hague, we operate throughout the Netherlands.

Need legal support?

For more information, please contact Petra Beishuizen or someone else from our family law team. They will be happy to assist you.