Do You Need to Prepare an Expense Analysis for Your Divorce?

In May 2024 Andrew Hatherley published an article for Kiplinger’s Magazine discussing the process of preparing an expense statement in connection with claims for support and alimony. Hatherley is in the business of providing assistance to clients in preparing these documents. The article is worth a read but the question going in is: is this all necessary?

This is a question you need to pose to your attorney because the result varies from county to county in Pennsylvania. But some general rules can be laid out.

In the world of child support if you and the other parent have combined net income exceeding $30,000 a month ($360K a year after taxes), you each must file a statement using a form available on line. Pa.R.C.P. 1910.27. To distill the jargon, if your net income is $5,000 a month and the other parent nets $25,000 a month you have to submit expenses and the law requires there be an analysis of those expenses. If you have primary or share physical custody the expense analysis needs to parse expenses for kids from those of the adult. Not easy. Take monthly auto expense: $650 for the car; $150 for insurance; $125 for maintenance sum to $925. If you have primary custody of 2 children, your inclination (and your lawyer’s) would be $308 is for me and $616 for the kids. But then there will be cross examination where you are asked whether or not two-thirds of your mileage is commuting to work and don’t the kids usually take the bus to school. Clients get frustrated. “What do you want me to do, meter my car like a cab?”

Even judges grow frustrated because no one has a meter on their car or a device to measure who’s swimming in the pool? It can get ridiculous, but an expense analysis and related testimony is required. Candidly, it’s also a useful exercise. Most Americans have no clue how they spend their money beyond their mortgage and car payment. And the more money they make, the more challenging expense tracking becomes. The check register is a good start (if you know what those are) but your check to Mastercard or American Express last month probably incorporates food, clothing, gifts and travel. So you need to pull your credit card, Venmo and Paypal data as well.

One other minor point; if your income together with your former mate’s is less than $30,000 a month, the guidelines more or less rule the amount of support you will receive. But, if you have special needs, such as those related to a child with a disability or your own medical issues and there are recurring expenses that are part of everyday life, those expenses should be compiled and presented to the court with a request to deviate from the guidelines to address this specific problem.

That’s for child support. The same topic comes up again when claims for alimony are in play. In Pennsylvania alimony is a secondary remedy, typically invoked when the asset distribution and earning capacities of the parties don’t make for a sound economic plan going forward. When interest rates plummeted after 2008, alimony rose in importance because a distribution of $500,000 in cash would barely yield $1,200 a month. Today that same allocation yields closer to $1,670 a month. To secure an alimony award, expenses need to be found reasonable and not covered by income reasonably attributable to the assets distributed.

Clients understand alimony about as well as they track their expenses. People likely to be assessed to pay alimony like to tell lawyers that alimony is not allowed in Pennsylvania. False: for the past 44 years. People seeking alimony like to tell their lawyers that they are entitled to alimony to sustain the lifestyle to which they are “accustomed.” Ah, if only that were true. When couples part ways, all the shared expenses become unshared often putting pressure on both spouses to make ends meet. Courts are supposed to evaluate what expenses are reasonable and clients are often unhappy with how their longtime hobbies and habits get short shrift. Even in cases with seven figure incomes, most hearing officers and judges really don’t want to hear about husband’s stadium licenses and season tickets for the “Birds” any more than they have sympathy for wife’s 15 year old Arabian that medaled at the Devon Horse Show in 2017. The larger the equitable distribution pool, the more imperiled the alimony claim becomes. Clients are expected to take their distributions of assets and “figure out” how to fund their monthly needs.  You don’t need a farm to maintain a horse. Horses can be boarded. And no, it is not necessary to attend every Eagles game including the one in Sao Paulo. Go twice and watch the rest on cable with the proletariat. Ironically, if this is a child support case, courts seem far more receptive to consider contributions to equestrian activities or ice hockey despite the often crazy costs. But even then, we see cases where the combined household income (both parents in separate homes) is $7,000 a month yet one parent is advocating for travel hockey or equestrian competitions at $1,800 a month. Those cases don’t go well even when the heft expense is “for the child.”

Outside help from consultants like Mr. Hatherley would be nice and can be almost mandatory in interim support cases where there’s a house in Villanova, a place in Aruba and summers are in Bar Harbor. But even consultants need to spend time figuring all of this out and to trace expenses to “needs” (Was that the propane for the pool in Pa. or the one in Maine?). The smart client takes a first pass him or herself and then starts to put together the Rule 1910.27 budget. The next step is to run it by your attorney…but not the night before it is due. Then decide if outside help would be productive to the mission. Realize as well that outcomes can vary widely from county to county and judge to judge. While the rules say there should be a complete expenses analysis; in many counties and courtrooms, judges will discretely shed the “analysis” and deploy a formula (e.g., 20% of the difference in income for 1/3 of the marriage). That’s why it is important for your lawyer to understand how the county where you are litigating approaches these kinds of claims.

The Kiplinger article is here. What Is a Lifestyle Analysis in Divorce? | Kiplinger