Articles Posted in Alimony

In a recently unreported case, Hersch v Hersch, the court once again was called upon to interpret New Jersey alimony laws. The parties had been married 15 years when they decided to divorce in 2010. They had two children of the marriage, who, at the time of this final decision, were teenagers. The husband enjoyed a high-power job as an executive compensation and benefits specialist in finance. The wife also enjoyed a fairly good job, earning over $80,000.00 as a product manager at the time the parties divorced. After lengthy negotiations, aided by legal counsel, the parties reached a marital settlement agreement, including 10 pages concerning child support and alimony alone. In the initial agreement, the parties determined that the husband owed $704 each month in child support, and that he would also pay eight percent of any bonuses or stocks that he received from his job as additional child support, whether or not it was cash. On top of this, it was agreed that Mr. Hersch would pay his wife a base alimony for two years and three months in bimonthly installments of $1,125.00. The agreement included the calculation for how the parties arrived at these figures, as well as language accounting for any additional bonuses, commissions or extra compensation the Mr. Hersch may earn during the period which he owed alimony.

In between signing the final decree and the present suit, Mr. Hersch was laid off, re-hired, laid off and hired multiple times, usually earning slightly more at each new job than the last. He also often received large severance packages for each time he was laid off. If the severance packages were considered compensation, then he would owe additional alimony under the agreement. The issue then is, under the New Jersey alimony laws, are these severance payments also considered compensation to be factored into alimony payments?

The court first started by confirming that marital settlement agreements were contracts under the law, and they should therefore be interpreted as such, using contractual principles. The court reasoned that, under the plain language of the settlement, severance pay would be income for purposes of alimony, because the language was broad and excluded only the issuance of signing bonuses. Additionally, under the rules of the I.R.S., the court noted that severance pay is intended to be replacement income, rather than defendant’s characterization of the payment as releasing a specific damage claim. The essence of the agreement was that Mr. Hersch’s obligations are based on what he is required to report as earned income in any given year. In light of this language, New Jersey alimony laws, and the requirements of the IRS, the court held that such severance pay would be absolutely reportable as income earned on his federal tax return. In fact, Mr. Hersch actually did report his severance payment on his IRS returns, including them under the “wages, salaries, tips, etc.” category. Continue reading

In 2014 the New Jersey legislature amended the statutes that relate to alimony. Prior to the amendments, a person paying alimony had to actually retire before he or she could ask the court to modify the alimony. That made it difficult for the person paying alimony to plan for his or her post-retirement finances. Under the amended law, the payor can seek an order modifying or terminating the alimony order based on a plan to retire before actually retiring–allowing the prospective retiree to better plan for the future.

The New Jersey Superior Court addressed the issue of when a motion to modify alimony is timely based on prospective retirement in the April 2016 case of Mueller v. Mueller. In Mueller, the parties were married for 20 years before they divorced in 2006. Thereafter, Gordon Mueller paid Rosemary Mueller $300 per week in alimony, the amount agreed upon in the parties matrimonial settlement agreement. Gordon sought a court order that says that his alimony obligation will terminate upon his retirement under the new law. Gordon was 57 at the time he sought the court order, and planned to retire in 5 years when he was 62 years old.

As a threshold matter, the court discussed that the agreement was entered into well before the amendment. The court found that this case fell under N.J.S.A. 2A:34-23(j)(3), which covers alimony agreements that were entered into before the effective date of the amended statute, which is September 10, 2014. The age at which Gordon planned to retire was 62, which is not  the “full retirement age” defined by the Social Security Act, so the case would be covered by the section of the statute that deals with early retirement. Once determining that the statute applied to this case, the court could consider the factors listed in the statute in order to determine if it would be equitable for the alimony to be modified or terminated. Continue reading

On September 10, 2014, the New Jersey alimony laws changed, making a serious change on the prior state of the law. One seemingly small part of the statute now creates a scenario whereby it is presumed that alimony will terminate upon retirement, unless the person receiving alimony proves that it should not be terminated. The new law has shifted what is called the “burden of proof.” The earlier statute put the burden on the person paying alimony to prove termination of alimony was the correct result, now, the burden is shifted to the one receiving the alimony to prove it should not end.

The changes discussed are those where full retirement age has been reached and not situations dealing with early retirement. A reduction of income based upon what is often referred to as “good faith retirement,” after age 65, has long been considered a change of circumstances that warrant Court review of the financial situation of the parties to determine whether modification of the alimony award is appropriate.

The New Jersey Appellate Division had the opportunity to explain when portions of the new statute, NJ 2A:34-23(j), must be applied. In the case of in the case of Landers v. Landers. The Court made clear that subsection (j)(3) sets the standard for to be applied to final alimony awards issued prior to the amendment, placing the burden of proof on the party receiving alimony to show the modification or termination should not be granted. Continue reading

New Jersey’s standard for modification of an alimony award is based upon a change of financial circumstances such that a modification of the award is warranted. More importantly, the financial change of circumstances cannot be of a temporary nature, but must be of a permanent nature. The permanent change standard is a very high hurdle, discussed and reiterated in the recent New Jersey Appellate Court’s decision of Grier v. Grier.

The Grier case, in relevant part, deals with what the Court determines to be a financial change of circumstances that is of a more temporary nature, so modification warranted, the matter not even requiring a hearing in the lower court. A hearing is only required when the plaintiff demonstrates a prima facie case in his pleadings. This means that Mr. Grier had to provide enough information, sufficient allegations, to support his claim to modify support based on a permanent change of circumstances. The lower court found he provided inadequate support of his claim, as did the Appellate Court, because the change of circumstances he pled was temporary.

In short, Mr. Grier’s claimed that he had a reduction of income since entry of the order for alimony because he lost a client, and wanted the court to reduce his alimony obligation based upon that financial change. The lower court as well as the Appellate Court simply did not see the loss of one client as a permanent event, assessing that his income could increase again at any time, thereby making the income reduction temporary. In addition, Mr. Grier had filed bankruptcy in 2014, greatly reducing his debt, which the court stated he “admitted.”    Continue reading

The calculation of alimony payments upon divorce can be a tricky undertaking. In New Jersey, a family court judge will look at the financial lives of both spouses, and then apply an appropriate set of factors to determine an appropriate payment amount. Of course, the judge must have access to the most accurate information in order for the calculated amount to be fair and reasonable. What happens if one of the parties under reports his or her income? What if one of the parties quits his or her job, or takes a lower paying job for the purposes of avoiding the payment of alimony? Unfortunately those situations happen in some divorce cases. State law and case law provide us with guidance on how New Jersey family court judges should handle these cases.

Elrom v. Elrom

In the case of Elrom v. Elrom, the court decided a case that involved a spouse’s underreporting of income. In that case, the Defendant reported his income from work as a software engineer and technical writer as $120,000 per year, and the Plaintiff reported $80,640 in previous income per year for her work as an attorney. The parties each alleged that the other party either did earn, or could have earned more than the reported income.

The Plaintiff’s reported income of $80,640 was the salary she made at a New Jersey law firm working as an associate. Prior to having children, the Plaintiff had made substantially more, $175,000 per year, working at a New York City law firm. After having children, the Plaintiff left work for a time to take care of her children, and then worked part-time (approximately 26 hours per week) for $67.50 per hour. Then, she took on a full-time job at the New Jersey law firm making $80,640 per year. She was unemployed at the time of the trial. Continue reading

You’re facing divorce. Your soon-to-be ex earns a pretty good living. You, not so much. You want alimony. You’ll get it, right? Possibly, but not forever.

The New Jersey legislature significantly overhauled the state’s alimony laws in September 2014, tightening up on the old concept of permanent alimony after long-term marriages. In days gone by, permanent alimony aimed to achieve a standard of living for both spouses comparable to what they enjoyed while married. After long-term marriages, this status quo might continue indefinitely. That’s changed, and permanent alimony is now called “open durational” alimony. Open durational alimony cannot be awarded unless spouses were married for at least 20 years, except under compelling circumstances. The divorce judgment does not include a cutoff date, but alimony typically ends when the paying spouse retires.

In addition to the duration of the marriage, courts are obligated to weigh other factors when ordering open durational alimony. The New Jersey Supreme Court recently decided that all these factors must be considered, including but not limited to:

  • The financial dependence of one spouse on the other while they were married.
  • Whether physical or mental health issues exist that prevent one spouse from being self-sufficient.
  • The impact of the marriage on career opportunities, such as if one spouse didn’t work for years while maintaining the home.
  • The extent of marital property received by both spouses in the divorce judgment.

Continue reading

How is cohabitation defined under the amended alimony statute in NJ?

The amended alimony statute which was signed into law on September 10, 2015 defines cohabitation as a “mutually supportive intimate personal relationship” whereas the parties have taken on “duties and privileges that are commonly associated with marriage.”

Does a person have to maintain a single household with their paramour in order for a court to find cohabitation in NJ?

The amended alimony statute states that two people do not have to maintain a single common household in order for a court to find cohabitation.

What happens if a court finds cohabitation in New Jersey?

The amended statute states that alimony may be “suspended or terminated” if a court finds cohabitation. Previously, case law in New Jersey stated that a court had the option to modify as well as terminate alimony upon cohabitation. However, under the amended statute it seems a court in New Jersey only has two options if it finds cohabitation, which are to suspend or terminate alimony. Modification of alimony seems to no longer be an option. Continue reading

What are the different types of alimony in NJ?

There is Open Durational Alimony (replaced permanent alimony in the amended statute and applies to marriages twenty years or more), Rehabilitative Alimony (granted to a litigant for a short term to assist them to become financially self-sufficient through education and training), Limited Duration Alimony (granted to a litigant for a period of time in which it would practically take them to improve their earning ability to a point where Limited Duration Alimony is no longer appropriate), Reimbursement Alimony (granted to a litigant who supported the other litigant achieve his or her education and they expected to benefit from the earning ability produced by that education) and Pendente Lite Alimony (temporary support paid during the of the divorce litigation). Continue reading

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