Alimony Reform and Retirement

By Peter Van Aulen, Esq.

Governor Christie on September 10, 2014 signed into law NJ alimony reform. The new alimony statute makes a number of declarations in regard to a payor’s ability to modify or terminate his or her alimony obligation due to retirement.

The statute states that there is a presumption that once the paying spouse reaches their full retirement age, any alimony they are paying shall end. This presumption is rebuttable. The amended statute defines “full retirement age” as the age at which a payor is eligible to receive full Social Security benefits. To overcome this presumption, a party must show one of the following factors and good cause, at which point, the court can award alimony to continue:

• How old each party was when they applied for retirement;
• How old each party was at the time of the marriage, and how old they were when the alimony was awarded;
• The extent to which the payee was financially dependent upon the payor spouse during the relationship;
• If there was an exchange of something of value by the recipient spouse in order to receive a larger or lengthier award of alimony;
• If any alimony had been paid before, the amount and length of said award;
• How healthy each party was at the time they applied for retirement;
• The assets each party owned upon retiring;
• If full retirement age has been reached by the recipient spouse;
• Each party’s source of income, whether earned or unearned;
• Whether the recipient spouse had the opportunity and ability to adequately save for retirement;
• Any other relevant factor as determined by the Court.

According to the statute, when the payor requests to retire before reaching the full retirement age, he or she will have the burden of showing by a preponderance of the evidence that said retirement is reasonable and made in good faith. The court will consider the following factors to determine if early retirement is reasonable and is made in good faith:

• How old each party is, and the state of their health at the time of the application;
• The paying spouse’s job or trade, and the common age workers retire in that industry;
• What the actual eligible retirement age is where the paying spouse works. The court can examine mandatory retirement dates, or dates where continuing to work would not increase the paying spouse’s benefits;
• What the paying spouse’s motivation is to retire, including pressure from his employer to retire or incentives;
• The reasonable expectations of each party during the relationship regarding retirement, as well as their expectations upon the final dissolution;
• The paying spouse’s ability to keep paying alimony once they actually retire including whether the obligor will work in any capacity, like part-time or with reduced hours;
• The extent to which the recipient spouse is financially independent, and the effect the obligor spouse’s retirement will have on the recipient spouse’s finances;
• Any other factor deemed relevant which could affect the paying spouse’s ability to retire, including the financial circumstances of each party.

When a payor files a retirement application in cases when the final alimony award was established before the effective date of the new alimony statute, when the payor hits full retirement age, then this is considered a good faith retirement age. Further, the court in determining whether the modification or termination of the payor’s alimony obligation is appropriate shall consider the payee’s ability to have saved adequately for the payor’s retirement and the factors stated under the immediate above section of this article entitled.

It is important to note that the amended statute states for all applications for retirement, the assets distributed among the parties by the divorce or dissolution judgment shall not be considered by the court for determining the payor’s capability to pay alimony post retirement.

If you have any questions in reference to NJ alimony reform and retirement, call Peter Van Aulen today at 201-845-7400 for a free initial consultation.