What is a cost of living adjustment (COLA) clause?
A COLA clause in a child support order means that payments are to increase annually at a rate equal to the annual cost of living increase, as determined by an economic indicator (such as the Consumer Price Index). Some judges include COLAs in their orders when setting child support. This eliminates the need for any modification requests based solely on cost of living increases.
When there is a divorce is it common for the maintenance (spousal support, child support) agreement to contain a Cost of Living Adjustment (COLA) provision. A Cost of Living Adjustment is mandatory in some states, but not in all, and specific requirements for such a provision depend on the jurisdiction. However, in most jurisdictions, the clause must contain the date the adjustment will become effective and the COLA index that will be applied. Most jurisdictions also require the clause to consider the likelihood of income, increase or decrease, of the paying party. The party who is paying the increase will also have an opportunity to contest the adjustment (by a motion to the court) before a Cost of Living Adjustment is applied. The intent of a Cost of Living Adjustment clause is to increase support (spousal or child) as the costs of living rise, without having to make a motion to the court for future increases (post-divorce modification). Without such a clause, a party receiving maint
