Though you don’t see them much anymore, some times Marital Settlement Agreement contained escalator clauses which, in effect, provided for automatic increases in alimony or child support. Some times they were a fixed percentage per year. Other times they were tied to the cost of living/Consumer Price Index.
In the unreported (non-precedential) case of Burroughs v. Burroughs released on August 9, 2010, the effects of a 5% annual increase on alimony escalator clause was at issue. In this case, the agreed upon alimony was $200 per week and based upon the husband’s income of $60,000 at the time (1994). The husband had comparable income until the year 2000 when he could no longer find same and went to work at Home Depot earning about half of what he made in the past. In 2006, the alimony was increased to $337 per week, not due to a change of circumstances, but rather, by implementation of the escalator clause. As an example why not to use such an escalator clause this reflects a 68.5% increase in support in about 10 years.
The husband’s income continued at the less than time of the divorce levels until about 2007, when he established a business with a friend to try to increase his income from what he was earning at Home Depot. This was not a success. He ultimately filed a motion to terminate or reduce his alimony. The motion was denied.
The Appellate Division reversed holding that the husband had made a showing of a change of circumstances by virtue of his Social Security statement showing far lower wages post-2000 than his alimony was based upon. The effect of the escalator clause was also impacted on the showing of a change of circumstances (though this is curious because it certainly is a foreseeable event.)
The matter was remanded for discovery and a plenary hearing.