## Facts

- A couple divorced after a 30-year marriage; there were no children.
- The dissolution judgment incorporated a settlement requiring husband to pay spousal support ($3,500/month for two years, then $3,200/month indefinitely) and to maintain $500,000 life insurance for wife while support was owed.
- At dissolution, husband was a psychiatrist earning about $9,162/month; wife was not employed outside the home, and the settlement anticipated she could earn $2,000/month within two years.
- Post-dissolution, wife worked half time teaching art on annual contracts and earned about $2,236/month in 2006; she also maintained an art practice that produced no income.
- Husband’s earnings increased after dissolution; he later reduced his work schedule and decided to retire effective June 2008.
- Husband remarried; his current spouse earned about $3,650/month in 2007.
- After retirement, husband received multiple income streams (PERS, civil service retirement, Social Security, and investment income) and claimed total post-retirement income of about $5,719/month, with household expenses about $4,100/month including increased health insurance and expenses benefiting his current spouse.
- Husband elected survivorship options that reduced his retirement payments to provide benefits to his current spouse.
- Husband moved to modify the judgment to terminate spousal support and the life-insurance obligation; the trial court terminated both, and wife appealed.

## Issues

1. Whether husband’s retirement and reduced earnings were a substantial, unanticipated change in circumstances allowing modification of indefinite spousal support.
2. Whether the change warranted termination of support or only a reduction consistent with what is just and equitable.
3. Whether the court could consider husband’s elective reductions in retirement income and the household financial picture, including the current spouse’s income, when assessing ability to pay.
4. Whether the life-insurance obligation should continue when spousal support continues.

## Decision

- The court held that retirement and the resulting income reduction constituted a substantial, unanticipated change in circumstances permitting modification.
- The court modified the supplemental judgment to reduce (not terminate) support, setting ongoing spousal support at $1,400 per month.
- The court reinstated a life-insurance obligation for wife’s benefit because support continued and the original judgment linked insurance to the support obligation.

## Legal Principles

- Spousal support may be modified upon a substantial, unanticipated change in circumstances, but the remedy must still be just and equitable.
- A substantial change does not compel termination; courts weigh the parties’ current incomes, expenses, and resources, the length of the marriage, and expectations reflected in the original judgment.
- A payor’s voluntary financial choices that reduce available income (including elective retirement benefit options) may be considered in evaluating ability to pay and do not automatically justify eliminating support.
- A new spouse’s income is not a direct support source, but it may be relevant to the payor’s actual household expense burden when the payor relies on household expenses to claim inability to pay.
- Prospective or contingent future benefits to the recipient are not treated as present income when determining current need.
- When an insurance requirement is tied to the existence of a support obligation, continued support may require continued insurance protection.

## Conclusion

The appellate court concluded that husband’s retirement justified modifying indefinite spousal support, but equity required continued support at a reduced level and corresponding life-insurance protection while the support obligation remained in effect.


In re Marriage of Reaves, 236 Or. App. 313, 236 P.3d 803 (2010)