One of the many questions that often come up in spousal support or alimony cases is whether the support payments continue after the ex-spouse making those payments retires. Alimony may be terminated or modified upon the prospective or actual retirement of the obligor.  An Act concerning alimony was passed in 2014 which applies to divorce occurring after that date, but with provisions concerning retirement for divorces prior to the Act where there was a written agreement or final alimony order.

1. There shall be a rebuttable presumption that alimony shall terminate upon the obligor spouse or partner attaining full retirement age, except that any arrearages that have accrued prior to the termination date shall not be vacated or annulled.  The Court may set a different alimony termination date for good cause shown based on specific written findings of fact and conclusions of law.  The attorney will gather the information necessary to prepare the documents in support of the client’s application if an agreement cannot be reached.  There must be good reasons to oppose termination of alimony upon reaching full retirement age.

The rebuttable presumption may be overcome if, upon consideration of the following factors and for good cause shown, the Court determines that alimony should continue:

a.  the ages of the parties at the time of the application for retirement;

b.  the ages of the parties at the time of the marriage or civil union and their ages at the time of entry of the alimony award;

c.  the degree and duration of the economic dependency of the recipient upon the payor during the marriage or civil union;

d.  whether the recipient has foregone or relinquished or otherwise sacrificed claims, rights or property in exchange for a more substantial or longer alimony award;

e.  the duration or amount of alimony already paid;

f.  the health of the parties at the time of the retirement application;

g.  assets of the parties at the time of the retirement application;

h.  whether the recipient has reached full retirement age as defined in this section;

i. sources of income, both earned and unearned, of the parties;

j.  the ability of the recipient to have saved adequately for retirement; and

k.  any other factors that the Court may deem relevant.

If the Court determines, for good cause shown based on specific written findings of fact and conclusions of law, that the presumption has been overcome, then the Court will apply the alimony factors that are relevant to the parties’ current circumstances to determine whether modification or termination of alimony is appropriate.  These factors may include as well as other factors:

a.  the actual need and ability of the parties to pay;

b.  the duration of the marriage;

c.  the age, physical and emotional health of the parties;

d.  the standard of living during the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living;

e.  the equitable distribution of property;

f.  the income available to either party through investments of any assets held by that party;

g.  the tax treatment of any alimony award.

If the obligor intends to retire, but has not yet retired, the Court shall establish the conditions under which the modification or termination of alimony will be effective.

2.  Where the obligor seeks to retire prior to attaining the full retirement age as defined in this section, the obligor shall have the burden of demonstrating by a preponderance of the evidence that the prospective or actual retirement is reasonable and made in good faith.  Both the obligor’s application to the Court for modification or termination of alimony and the obligee’s response to the application shall be accompanied by current Case Information Statements or other relevant documents as required by the Rules of Court, as well as the Case Information Statements or other documetns from the date of entry of the original alimony award and from the date of any subsequent modification.

In order to determine whether the obligor has met the burden of demonstrating that the obligor’s prospective or actual retirement is reasonable and made in good faith, the Court shall consider the following factors:

a.  the age and health of the parties at the time of the application;

b.  the obligor’s field of employment and the generally accepted age of retirement for those in that field;

c.  the age when the obligor becomes eligible for retirement at the obligor’s place of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;

d.  the obligor’s motives in retiring, including any pressures to retire applied by the obligor’s employer or incentive plans offered by the obligor’s employer;

e.  the reasonable  expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce or dissolution;

f.  the ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part-time or work reduced hours;

g.  the obligee’s level of financial independence and the financial impact of the obligor’s retirement upon the obligee; and

h.  any other relevant factors affecting the obligor’s decision to retire and the parties’ respective financial positions.

If the obligor intends to retire but has not yet retired, the Court shall establish the conditions under which the modification or termination of alimony will be effective.

3. When a retirement application is filed in cases in which there is an existing final alimony order or enforceable written agreement established prior to the effective date of this act, the obligor’s reaching full retirement age as defined in this section shall be deemed a good faith retirement age.  Upon application by the obligor to modify or terminate alimony, both the obligor’s application to the Court for modification or termination of alimony and the obligee’s response to the application shall be accompanied by current Case Information Statements or other relevant documents as required by the Rules of Court, as well as the Case Information Statements or other documents from the date of entry of the original alimony award and from the date of any subsequent modification.  In making its determination, the Court shall consider the ability of the obligee to have saved adequately for retirement as well as the following factors in order to determine whether the obligor, by a preponderance of the evidence, has demonstrated that modification or termination of alimony is appropriate:

a.  the age and health of the parties at the time of the application;

b.  the obligor’s field of employment and the generally accepted age of retirement for those in that field;

c.  the age when the obligor becomes eligible for retirement at the obligor’s place of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;

d.  the obligor’s motives in retiring, including any pressures to retire applied by the obligor’s employer or incentive plans offered by the obligor’s employer;

e.  the reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce or dissolution;

f.  the ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part-time or work reduced hours;

g.  the obligee’s level of financial independence and the financial impact of the obligor’s retirement upon the obligee; and

h.  any other relevant factors affecting the parties’ respective financial positions.

4. The assets distributed between the parties at the time of the entry of a final order of divorce or dissolution of a civil union shall not be considered by the Court for purposes of determining the obligor’s ability to pay alimony following retirement.

COURT CASES

The Court pointed out in a case that the standard is a little different for alimony awards that were issued before that law took effect in 2014.

Husband and Wife divorced in 1991, following 22 years of marriage. As part of the split, Husband was ordered to pay Wife spousal support on a schedule that declined over time. Husband made the support payments for 24 years before he asked a court to terminate his obligation. He was 66 years old at the time, and he said he’d recently retired because of a number of medical conditions. Husband was living off of Social Security benefits and his half of a pension that was divided with Wife as their shared marital property.

Wife responded by asking the trial court to keep the alimony obligation in place. She said she also suffered from a number of health conditions, and her income came from her share of the pension and Social Security benefits, as well as about $2,500 from working as a consultant. She also argued that the alimony award could not be modified, pursuant to the law on the books at the time of the divorce. The trial judge disagreed, explaining that state law presumes that alimony obligations terminate when the person making the payments retires.

The Court overturned the decision on appeal, however. It noted that the state law in place at the time of the divorce required a person seeking to modify or terminate an alimony award to show that the circumstances had changed in a way justifying the modification or termination. “More specifically, the party moving for modification must demonstrate that changed circumstances have substantially impaired the ability to support himself or herself”.

In a recent post-judgment matrimonial case, the Court denied a Motion to Terminate the Permanent Alimony obligation the husband agreed to as part of the 2006 divorce judgment.  The panel found that after comparing the parties’ respective fixed incomes and expenses, the Judge reasonably concluded that Plaintiff had not shown a sufficient change in circumstances, as required by law, and that Defendant’s support level should not be reduced.  It noted that both parties were retired and disabled at the time of their divorce.  They remained disabled and were unable to enhance their income through gainful employment.  The Trial Court had previously been attentive to the parties’ respective situations by reducing Plaintiff’s monthly payment once Defendant became eligible for Medicare.  Plaintiff failed to demonstrate that Defendant was eligible for any greater benefits from Social Security than she was already receiving.  The panel also found that the Judge had properly determined that the 2014 amendments to the alimony statute regarding retirement were not retroactively applicable to Plaintiff’s obligation.

Although the law was later amended in 2014, the Court said those changes only applied to alimony awards issued after the new changes went into effect.

The Court further explained that retirement after reaching the age of 65 is generally considered a change in circumstances based on which alimony may be terminated. The new law specifically identifies a number of factors that courts should consider to determine the impact of the retirement on the alimony arrangement. For alimony awards issued before the law went into effect, it provides that a court must focus largely on whether the person receiving the payments had an adequate opportunity to save for retirement. Since the trial court didn’t make that determination, the Appellate Court said it would remand the case back for further proceedings.

SETTLEMENT AGREEMENTS

A Property Settlement Agreement should indicate the income of the parties that it is based upon.  In the State of New Jersey, the parties to a divorce must file a Case Information Statement which will list the income and expenses of the parties.  If there are changes during the divorce process, the Case Information Statement should be changed accordingly.

This is important because later when a change of circumstances occurs, the agreement and Case Information Statement are evidence of what the agreement was based on.

At some point, retirement will occur and if alimony is being paid, it is likely that a reduction will be needed.

Helfand & Associates can provide the factual analysis of the client’s circumstances with the appropriate data to argue before the Court that a change of circumstances requires a modification or termination of support.  A significant change of circumstances with a careful review of the divorce agreement may be the basis for a change from a previous agreement.  Helfand & Associates has extensive experience in handling these past-judgment matters.

It is vital that a person considering a divorce or grappling with alimony and related legal issues seek the counsel and advice of a seasoned family law attorney. The New Jersey divorce lawyers at Helfand & Associates have more than 100 years of combined experience representing clients in a wide range of divorce, child custody, and support cases. Our lawyers work diligently to ease the stress on clients in what can be a trying process by building the strongest possible cases for the people whom we represent.

Our offices are conveniently located in Whippany and New York City. We are happy to offer clients a consultation in family law and other cases. Contact us online, call our New Jersey office at 973-539-1000, or call our New York City office at (646) 213-9053 to set up an appointment with one of our attorneys.