Colorado’s second-highest court clarified last week that federal law does not prohibit a person’s Social Security benefits from being diverted to pay for their ex-spouse’s alimony.
Although other states’ courts had addressed the issue, the Court of Appeals never previously evaluated the meaning of two provisions of federal law as applied to divorced couples. First, a person’s Social Security benefits “shall not be transferable or assignable.” However, those payments “shall be subject” to alimony, which Colorado refers to as “spousal maintenance.”
The upshot, wrote Judge David H. Yun for a three-judge panel of the Court of Appeals, is that judges may “consider social security retirement benefits, as well as other non-assignable federal benefits, in awarding maintenance or child support, even in circumstances where the order effectively results in an indirect assignment of those benefits.”
Spousal maintenance is intended to correct wide income disparities between divorcing spouses, allowing the higher-earning partner to pay the lower-earning person to prevent a dramatic drop-off in their standard of living post-divorce.
Following his 2004 divorce, Riley McClure paid his ex-wife $2,500 in spousal maintenance each month. When he reached retirement age and began receiving Social Security, he petitioned in El Paso County District Court to reduce his financial obligation. A judge agreed there had been a change in circumstances and reduced the spousal maintenance to $700.
Because McClure only earned approximately $300 per month from non-Social Security sources, the new obligation would require him to use his benefits for the maintenance payments.
After the judge’s decision, McClure asserted for the first time that such an arrangement violated federal law. The Court of Appeals looked to courts elsewhere around the country to determine whether the general prohibition against reassigning Social Security benefits applied, or the narrow exemption for alimony.
A 1979 U.S. Supreme Court decision supported the idea that Congress did not intend for Social Security benefits to be off-limits for spousal maintenance.
“Concerned about recipients who were evading support obligations and thereby throwing children and divorced spouses on the public dole, Congress amended the Social Security Act by adding a new provision,” wrote Justice Harry A. Blackmun, “to the effect that, notwithstanding any contrary law, federal benefits may be reached to satisfy a legal obligation for child support or alimony.”
Various state appellate courts similarly concluded the broader prohibition was meant to protect beneficiaries from creditors, but “where a wife seeks her husband’s Social Security benefits in the form of alimony, she is not a creditor,” concluded the North Carolina Court of Appeals in 1993.
Colorado’s appellate panel agreed federal law permits judges to consider a person’s Social Security income when calculating one spouse’s obligation to pay maintenance to the other.
The case is In the Marriage of McClure.