Can investment income from property settlements justify alimony modification? MacDonald v. MacDonald Explained

The Utah Court of Appeals in MacDonald v. MacDonald clarified the standard for evaluating alimony modification petitions, emphasizing that courts must apply a foreseeability standard rather than requiring actual contemplation of changed circumstances.

Background and Facts: Following their divorce, the parties’ settlement agreement awarded Fahey three pieces of real property. When a buyer offered $1,425,000 for one property—approximately twice its anticipated value—the parties agreed to sell. Fahey invested the $1,240,000 in proceeds along with other settlement funds, creating a trust account worth $1,740,000 that generated $45,000 annually. MacDonald subsequently petitioned to modify his alimony obligation, arguing this income stream constituted a substantial material change in circumstances.

Key Legal Issues: The central question was whether Fahey’s investment income from property sale proceeds constituted an unforeseeable change in circumstances warranting alimony modification under Utah Code section 30-3-5(8)(i)(i).

Court’s Analysis and Holding: The Court of Appeals affirmed the trial court’s denial, establishing that the statute requires changes to be “not foreseeable” rather than “not foreseen.” The court distinguished between actual contemplation and reasonable anticipation, defining foreseeable as “being such as may reasonably be anticipated.” Under this standard, Fahey’s decision to invest property proceeds was entirely foreseeable—prudent individuals typically invest substantial funds rather than dissipate them. The court noted that the divorce agreement itself anticipated property sales by addressing expense obligations, making subsequent investment of proceeds readily foreseeable.

Practice Implications: This decision clarifies that Utah courts apply an objective foreseeability standard for alimony modifications, rejecting the narrower “actually foreseen” test from Bolliger v. Bolliger. Practitioners should recognize that typical financial behaviors—such as investing property settlement proceeds—will likely be deemed foreseeable. When drafting settlement agreements, attorneys should explicitly address how parties may utilize property distributions to minimize future modification disputes and provide clear guidance on anticipated post-divorce financial planning.