One of the most important aspects of a divorce is determining alimony. Not every divorce case includes an alimony component. If there is a significant difference in the parties’ earnings during the marriage then alimony will typically be awarded. Alimony is specifically for the benefit of the spouse. It is separate from child support. Pursuant to N.J. Stat. § 2A:34-23, the statutory factors for determining alimony are as follows:
(1) The actual need and ability of the parties to pay;
(2) The duration of the marriage or civil union;
(3) The age, physical and emotional health of the parties;
(4) The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living, with neither party having a greater entitlement to that standard of living than the other;
(5) The earning capacities, educational levels, vocational skills, and employability of the parties;
(6) The length of absence from the job market of the party seeking maintenance;
(7) The parental responsibilities for the children;
(8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;
(9) The history of the financial or non-financial contributions to the marriage or civil union by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities;
(10) The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;
(11) The income available to either party through investment of any assets held by that party;
(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment;
(13) The nature, amount, and length of pendente lite support paid, if any; and
(14) Any other factors which the court may deem relevant.
It is critical that an attorney prepares a case with the correct information to understand a client’s exposure to payment. In most cases a set amount is agreed to or awarded monthly from the payor to the payee for a period of time. The amount paid is based on the alimony factors set forth above. It is not a formula. The court considers historic earnings, averages imputed income and many other factors. Typically both sides like a level of finality and control – which often means the same amount of support consistently. Sometimes, however, people have income that fluctuates considerably i.e., base plus bonus or RSU’s and stock options. Can you or should you use a flat number or a percentage to follow the variations in the number each year? In cases where there are significant fluctuations or levels of income it is often prudent to have an agreement with a formula to allow the payor a level of flexibility in the event of a year with low earnings. There may be annual “true ups” – but this may be far better than agreeing to a payment that one can’t afford. We at Helfand & Associates frequently craft deals to allow such flexibility in high income cases. If an alimony amount is fixed and there is a significant change in circumstances, one has the burden of proving that it is permanent, not temporary, and that it is significant enough to merit a modification of support. Truth is that you have signed a contract to pay a set amount and therefore you will be held accountable to continue paying it. If you want or need to change it, you will have to make an application to court unless it can be negotiated voluntarily outside of court. This situation happens far too often. It is particularly an important issue in today’s business environment due to Covid. People’s businesses and jobs have changed considerably.
In a recent unpublished Appellate Division decision, P.J.W. v. E.B.W., N.J. Super. App. Div., the court dealt with a plaintiff who was earning over $900,000 at the time of divorce and had agreed to pay defendant 25% of his earnings each month as alimony. Years after the divorce, the plaintiff lost his job and found new employment where he earned $200,000 plus bonuses. The court found that the alimony payment of 25% of income was intended to apply to any income amount earned. Thus, the plaintiff properly protected himself.
There is not always one right answer when it comes to alimony. The court is very limited in how it awards support. Typically it is a fixed amount for a duration. Outside of court, people can enter into more customized agreements. Such as a formula, a step down, or a lump sum payment – if it makes sense. This agreement/contract will then be upheld by the court, if it was entered into freely and voluntarily. At Helfand & Associates we strongly believe in customizing agreements, if possible, to make resolution effective both now and considering parties future concerns if this is possible. Our goal at Helfand & Associates is to work out the best deal for our client considering all of the factors now and in the future. Please call Helfand & Associates for a free ½ hour consultation.