In 2022, the Massachusetts Supreme Judicial Court (SJC) upended long-standing precedent with its decision in Cavanagh v. Cavanagh, fundamentally altering how courts calculate child support and alimony. Before Cavanagh, family law practitioners operated under a clear framework: the first $400,000 of combined income was reserved for child support calculations under the Massachusetts Child Support Guidelines, and only income above that threshold could be considered for alimony. The income used to determine child support could not be reused for alimony except in some limited circumstances.

The Cavanagh decision introduced a new, more complicated three-step framework for calculating support:

1. Calculate alimony first, adjust each party’s income accordingly (adding alimony to the recipient’s income and subtracting from the payor’s), then calculate child support;
2. Calculate child support first, then consider alimony;
3. Evaluate the after-tax consequences of both scenarios to determine whether the result is “equitable.”

In addition to changing the framework for calculating support, Cavanagh significantly broadened the definition of income for support purposes. Previously, non-cash employment benefit, such as employer contributions to retirement plans, health savings accounts, or life insurance premiums were generally excluded. Post-Cavanagh, these benefits are now fair game for inclusion in income calculations.

Following the 2022 ruling, the case was remanded to the trial court to issue new findings based on the clarified framework. That remand triggered a second appeal, resulting in a new SJC decision issued a ruling on July 9, 2025, that further complicates the guidelines for calculating support. 

Key Developments in the 2025 Cavanagh Decision

The latest SJC opinion addressed whether investment income from a 401(k) could be considered part of a party’s income for support purposes. The trial court had found that 50% of the husband’s 401(k) investment earnings should be counted toward his income—reasoning that since the retirement account had been divided during the divorce, only half of the earnings should be considered as income because assets divided in a divorce cannot be considered for the purposes of establishing any alimony award. 

The SJC disagreed, noting that the wife had only received 20% of the retirement assets. More importantly, the Court expressed concern over the trial court’s failure to fully account for the financial structure of the parties’ original divorce settlement. In that agreement, the wife retained a larger share of the home’s equity in exchange for the husband keeping more of the retirement assets—a tradeoff that was likely intended to accommodate practical realities, such as allowing the wife to remain in the home with the children.

Why This Matters

The ruling presents several concerns:

1. Use of Pre-Tax, Inaccessible Income
   Counting investment earnings from retirement accounts as income, especially when those funds are not currently accessible without penalty, creates an inequitable result. This penalizes both payors and recipients by factoring in income that is illiquid and volatile. Many individuals saw significant fluctuations in their retirement account performance in recent years, which only heightens the uncertainty.
2. Disincentivizing Creative Settlements
   This decision risks discouraging parties from negotiating flexible, tailored settlements. For example, parties who agree to unequal asset divisions for the sake of co-parenting stability (such as enabling one parent to remain in the marital home) may now find themselves penalized later if the retained assets generate income.
3. Increased Evidentiary Burdens
   The Court also made clear that the burden lies with the party seeking to exclude investment income from support calculations to prove what portion of the asset. and its growth, is marital versus post-marital. This will require more detailed financial analysis, expert testimony, and potentially expensive forensic accounting in support cases.

What’s Next?

The practical implications of this new Cavanagh ruling remain to be seen. Massachusetts Probate and Family Court judges must now grapple with these added complexities and determine how to apply them in a way that aligns with equitable principles.

What is clear is that this decision introduces a new level of unpredictability to child support and alimony litigation. Practitioners must now approach high-asset and post-divorce support cases with increased caution, especially when dealing with retirement assets or negotiated property divisions.

If you are navigating a divorce or post-judgment support issue in Massachusetts, it is more important than ever to work with experienced counsel who understands the evolving legal landscape.