Alimony in NJ: What You Should Know
A Guide to Alimony in NJ
Questions or concerns about alimony? Call NJ divorce lawyer Katherine K. Wagner at 908-526-0099 for a consultation.
What Is Alimony?
In its simplest form, alimony is money paid by one spouse to another after a divorce. It’s also commonly known as spousal support.
There are two main reasons people have to pay alimony:
Maintaining A Spouse’s Standard of Living
In the eyes of the law, both spouses have the right to reasonably maintain a standard of living after divorce that is similar to what they enjoyed while married. If the spouses have a meaningful difference in education or income, one may be required to help the other maintain a standard of living through monthly alimony payments.
Helping a Spouse Get Back On Their Feet
After a divorce, some spouses are completely unprepared for life on their own. If one spouse faces a struggle to become self sufficient without the other spouse’s support, alimony to specifically help with training or education expenses may be awarded until the spouse is ready for self-sufficiency.
Alimony is gender-neutral in New Jersey.
Media portrayals of divorce often show alimony as something a husband pays to his wife after divorce. Many people facing divorce assume that husband-pays-wife is just the way the law works. In New Jersey, this is not always true. There are actually 14 factors, set forth in the alimony statute that a court must consider in determining alimony, but the gender of either spouse is not one of them. A stay-at-home dad has the same right to request alimony as a stay-at-home mom.
The higher-income spouse pays alimony.
Alimony is first and foremost an economic protection for divorced spouses, not a punishment for fault in the marriage. If there is a wage gap, the higher income earning spouse may be required to pay alimony to the lower paid spouse. Career changes or layoffs may change this relationship after the initial alimony award, but the lower income spouse at the time of the divorce will most likely be the one to receive alimony. Alimony is not based on child custody.
Another assumption people often make about alimony is that the payment is connected to custody of the children. That’s not true. A parent’s financial duty to support their children will be decided as child support. Alimony is specifically payment to the spouse. They are separate payments and taxed differently as well.
Alimony is not always a check in the mail.
Alimony can be paid directly from one spouse to the other, generally on a weekly or bi-weekly scheduled determined by when the payor spouse gets paid by his or her employer. In some cases where there is some distrust that alimony will be promptly paid or that unnecessary or unexpected deductions may be made to the alimony amount, alimony can be paid through the Probation Department in the County of residence of the payor spouse via a wage garnishment effectuated by their employer. If a payor is self-employed, he or she can pay the money to Probation directly. To make sure your alimony is timely and consistently paid, you should discuss your options with your legal advisor.
If one spouse wants to avoid ongoing alimony payments to the other after divorce, he or she should consider an alimony buyout. This means they write a large check up front, and the other spouse accepts this one-time payment in lieu of ongoing alimony. If the other spouse is considering buying a new home after divorce, this might be an attractive option for both parties.
New Jersey requires an equitable distribution of marital property after divorce. It’s more important to the court that division be fair than equal. If property division has already been decided, one spouse might agree to surrender part of their allotted property in place of an alimony payment. For instance, a husband may agree to give the wife his share of their marital home if she agrees to waive her claim to future alimony.
A Caution About Lump-sum Alimony
Alimony terminates upon the remarriage of the payee spouse. If there is a possibility that the payee spouse may remarry, a lump-sum might not be advisable. For example, alimony is determined to be $500 per week ($26,000 per year) but the payor negotiates a buy-out of $100,000. If his or her spouse marries within 4 years, he or she may have overpaid. If the spouse does not remarry or remarries after 4 years, then he or she may have underpaid.
Governor Christie updated NJ alimony laws: these changes may affect your divorce.
The Myth About “Permanent” Alimony
Prior to the September 2014 amendment to the alimony statute, one form of alimony was called “permanent” alimony. But this was a misnomer because the alimony was only ever permanent until there was a change of circumstance, as per case law. Such a change of circumstance could have been a permanent reduction in income by the payor spouse or an increase in the income of the payee spouse. It could also terminate if the payor spouse retired from full-time employment but the burden of proof to determine if retirement was a change of circumstance rested upon the person trying to terminate alimony.
It is easier to reduce payments if you become unemployed or lose your job
Divorces entered into prior to the 2014 amendments made it more difficult for someone who became suddenly unemployed or who lost his/her job to modify the amount of alimony paid. . This often left a spouse facing the prospect of unemployment as well as crushing alimony payments that not even bankruptcy could erase. New guidelines mean that a spouse may ask for an alimony reduction after just three months of unemployment.
It is easier to lose alimony if you cohabitate after divorce
For divorces entered into prior to the 2014 amendments, , the paying spouse had the right to terminate alimony if the receiving spouse began living with someone who was not a family member. However, the law poorly defined cohabitation. , The new law has simplified the language and clarified, somewhat, the concept of cohabitation. However under both the old and new law, cohabitation must contain some financial element, such as the sharing of joint bank accounts and sharing of normal household expenses. Another element of proving cohabitation is that the alimony recipient and his or her new boyfriend or girlfriend are holding themselves out to the community as a couple.
Even permanent payments can end upon retirement
People paying permanent alimony under the old statute have always had the right to retire and petition the court to reduce and/or eliminate their alimony obligation. However, the burden was put upon the paying spouse to prove that his or her alimony payments were more of a burden to him or her than to the recipient spouse who would be losing the income. This lead to some people being required to continue paying alimony or, possibly a reduced amount of alimony, well after retirement and possibly until they died.
Under the new law, there is a presumption that alimony will terminate for anyone reaching his or her normal Social Security retirement age. But, the burden has now shifted to the receiving spouse to demonstrate via the various statutory factors that he or she cannot maintain their lifestyle without the alimony. Thus it is now easier for someone who is retiring at normal Social Security retirement age to terminate his or her alimony obligation.
New Jersey’s New Forms of Alimony Post-Amendments
Under the new statute, “permanent” alimony (which was never really permanent), was eliminated and the concept of ”open durational alimony” was put in its place.
Pendente Lite Alimony (literally “pending the litigation”)
This form of alimony has always been available and is sometimes ordered to be paid until the divorce has been finalized. If the parties can agree on maintaining the household costs and expenses while the divorce is being finalized, they may enter into a Consent Order or just a verbal agreement. But, if, for example, one of the parties leaves the marital residence and refuses to pay his or her share of the ongoing household and personal expenses a motion may be necessary and pendente lite alimony will be awarded.
Limited Durational Alimony
For marriages lasting less than 20-years where alimony is an issue, the court may award Limited Durational Alimony. The duration of the alimony may not to exceed the number of years of the marriage, and in some cases, it is quite a bit less. For example, a marriage of 18 years where one spouse has left the workforce for a long period of time to raise children may necessitate a full 18-years of alimony. On the other hand, a marriage of 7 or 8 years, where the non-working spouse has not lost as much ground in the workforce, may only necessitate alimony for 3 or 4 years. This means that couples who are divorcing now will have a specific end date for the payment and receipt of alimony.
Open Durational Alimony
For marriages lasting 20 years or more where alimony is an issue, the court may award Open Durational Alimony. This means that there is no exact ending point to the alimony but it can last up to the paying spouses actual retirement at his or her normal Social Security retirement age or possibly longer.
Of course, divorcing spouses can always negotiate for alimony to terminate at a specific time or that the issue of continued alimony can be reviewed at a certain age, such as the paying spouse reaching the age of 62 or 65 or any other agreed upon age.
Many marriages have some financial imbalance between the spouses. If one spouse chose to suspend his or her career to care for the marital home or children, that spouse may be in a situation where he or she simply cannot be self-sufficient at the time of divorce.
In cases like this, it may be possible to negotiate or be awarded Rehabilitative Alimony. This could be a temporarily higher award for a few years while the spouse sought education or re-training with the alimony decreasing or terminating at the end of a certain period of time. The main goal of this form of alimony is to get the dependent spouse back on his or her feet financially in the job market such that they are more able to be self-supporting and not reliant on the alimony.
Reimbursement Alimony is awarded under circumstances where one spouse may have financially supported the other while he or she earned an advanced educational degree. It is basically to reimburse the other for the amount of support provided under the assumption that they would both enjoy the financial benefits of the higher education and presumably higher earnings. It is generally a one-time payment that cannot be extended or modified.
New Jersey stipulates conditions under which alimony exceeding the length of marriage can be considered. Such extensions are exceptional in nature, and by no means guaranteed
The ages of the parties at the time of the marriage or civil union and at the time of the alimony award
The degree and duration of the dependency of one party on the other party during the marriage or civil union.
Whether a spouse or partner has a chronic illness or unusual health circumstance.
Whether a spouse or partner has given up a career or a career opportunity or otherwise supported the career of the other spouse or partner.
Whether a spouse or partner has received a disproportionate share of equitable distribution.
The impact of the marriage or civil union on either party’s ability to become self-supporting, including but not limited to either party’s responsibility as primary caretaker of a child.
Tax considerations of either party
Any other factors or circumstances that the court deems equitable, relevant and material.
Who Decides Alimony Payments
Most divorces aren’t as fiercely contested as the Hollywood-worthy spectacles that make the evening news. If two spouses are still in divorce mediation, they can reach a mutual agreement on the alimony payment before setting foot in a courtroom.
A Family Court Judge
If a divorce negotiation does break down and spouses can’t reach an agreement on their own, the case will end up before a New Jersey Family Court. In this case the judge will decide who gets what, and there is no guarantee it will be a result either party is happy with.
How Are Alimony Payments Calculated in New Jersey
There is No Alimony Calculator in NJ
Many people are looking for a simple formula that will give them a ballpark estimate of what they owe their spouse in alimony. There is simply no such formula. Each alimony settlement is based on the specific facts of a divorce and the spouse’s finances. If an agreement can’t be reached outside of court, a Family Court Judge will use an extensive set of guidelines to decide what’s fair.
The need and ability of each party to pay alimony is the guiding principle of the process.
How long the spouses were married is one of the most important factors..
The age and health of both parties matters, especially for recalculations.
The standard of living the parties maintained as a couple is a key factor.
Educational, financial, and employment histories of both parties are considered.
If one partner was a homemaker, how long that party has been off the job market will be factored in.
Parental responsibilities can play a big role in a judge’s decision over alimony..
For the lower income spouse, how much it would cost and how long it would take to complete a degree or training program may be considered if alimony is supposed to help them resume their career.
Exceptional marital contributions, like leaving a career to raise children or supporting the other spouse through graduate school, may impact alimony decisions.
How property has or will be distributed by the divorce decree, and whether it appears fair and equitable, will influence alimony decisions..
The income both received from investments will be used towards determining income disparity.
How the alimony award would change the parties’ tax obligations may be considered.
The value of any voluntary payments or temporary alimony already paid during the divorce can be counted for or against alimony..
Any other facts or circumstances the court may deem relevant to the alimony decision can also be considered..
Alimony is not used as a punishment for affairs
An extramarital affair is a very common reason for divorce. And many spouses want to use that as a factor when determining alimony, to either get more or argue for paying less. Unfortunately, New Jersey doesn’t care. Unless one spouse stole from marital savings to buy luxuries for their lover, a simple affair won’t change alimony payments in any way.
If the paying spouse becomes disabled and cannot reasonably pay their alimony, the courts will consider reducing or ending alimony payments.
Changes to New Jersey law mean that former spouses can request their alimony be reduced or eliminated when they reach the Social Security retirement age..
Alimony ends in New Jersey when the recipient remarries or files for civil union. This is permanent, and alimony will not be reinstated if they seperate from their new partner.
When an alimony recipient cohabitates with a new partner, they risk losing alimony. This is not automatic like with remarriage, but recent changes to New Jersey law make it easy for alimony to be terminated in these cases and cut loopholes to maintain alimony while in a new relationship.
How Alimony Affects Taxable Income
For decades, the IRS has treated alimony as a deductible expense for the payer and as a reportable income source for the person who receives it. This has been an incentive for many spouses to agree to alimony during divorce mediation, since even a higher payment could be used as a tax write-off. As taxable income, alimony has to be calculated separate from any child support, which goes unreported and untaxed by IRS regulations.
Changes Under President Trump’s Tax Plan
President Trump’s 2017 tax plan eliminates most traditional personal deductions, including alimony. Effective as of the 2019 tax year, alimony will no longer be allowed as a personal deduction on Federal tax returns
Why you need a lawyer when settling alimony
Dealing with a divorce is both emotional and overwhelming. That’s not the place you want to work from when negotiating alimony. The alimony payments you agree to could solidify your financial situation after the divorce – or shatter it. Beyond that, alimony can have a major impact or the lifestyle you and your children lead after divorce. With so much at stake, you need an experienced lawyer who will protect your rights.
If you need representation to help you through the alimony process, Katherine K. Wagner can provide the compassionate legal support you and your family deserve in this difficult time. Call (908-526-0099 to schedule a consultation.