What You Should Know When Negotiating Your Alimony In New Jersey

What You Should Know When Negotiating Your Alimony In New Jersey copy

One of the most common questions that potential clients have is “How much is alimony in NJ?” Whether they are the party who might be paying it or the person who will be receiving it, alimony seems to be a bit of a mystery to the average individual. While some states have a formula to determine alimony, commonly known as the 1/3 rule, New Jersey does not. There is no average alimony payment in New Jersey. Instead, New Jersey’s alimony statute contains a series of factors that the court must consider when determining an appropriate amount of alimony in a particular case. The overall theme of alimony, however, is the one party’s needs versus the other party’s ability to pay.

How to determine if alimony should be paid
Let’s first take a look at what the New Jersey courts consider when determining if alimony should be paid, and if so, how much it should be set at and for how long:

  • The need for alimony and the ability of the paying spouse to pay it
  • The length of the marriage or civil union
  • The age and physical and emotional health of the spouses
  • The standard of living that existed in the marriage or civil union and the likelihood of each spouse being able to have a comparable standard of living after the divorce
  • The earning ability, education, and skills of the spouses
  • How long the spouse seeking alimony has been out of the job market
  • The division of parental responsibilities
  • The length of time and the cost of obtaining education or training for the spouse seeking alimony to become employable and the availability of training and jobs, as well as the spouse’s resources
  • The non-financial contributions the spouse seeking alimony made to the marriage or civil union through childcare or homemaking and how this interrupted his or her education or employment
  • The property division in the divorce
  • The income available to either spouse through investment of his or her assets
  • The tax consequences of alimony
  • Any other relevant factors

Are you guaranteed alimony in New Jersey?
In New Jersey, there’s never a guarantee that one party will receive alimony in every divorce case. In cases in which the parties earn substantially the same income, there will likely not be an alimony award. Likewise, in cases in which the parties have been married for a short amount of time, alimony is also unlikely.

There are some situations, however, that make it more likely that you will receive an alimony award. For example, if you have been married for more than 20 years, your case is considered eligible for open-duration alimony, which means that the alimony term may be without limit and likely will not terminate until at least the retirement of the payor spouse. However, this is still dependent on the parties’ respective financial situations; it is not guaranteed simply because of the length of the parties’ marriage.

In cases in which you have been married for less than 20 years, you may be entitled to limited-duration alimony. Again, there must be a need and an ability to pay, but this type of alimony is for a defined period of time. In many cases, family-law attorneys may tell their clients to expect that the length of the alimony term will be approximately half of the length of the marriage, give or take a few years. The average alimony payment in NJ will be based on the need of the receiving party, and therefore will likely be similar to the alimony in an open-duration case.

There is also a form of alimony in NJ known as rehabilitative alimony. This is usually agreed upon when one party—in this example, the Wife—has been out of work for a period of time and needs training or education to re-enter the workforce. The rehabilitative alimony would be paid in order to assist Wife with her expenses and needs while attending school or training to re-enter the workforce. This is a less common form of alimony, but it’s a good tool for your attorney to utilize in structuring a creative settlement.

How to calculate alimony in NJ
Over all, there is no way to easily calculate alimony in New Jersey. Some attorneys in New Jersey may estimate a potential alimony award based on the parties’ incomes, but to properly analyze the parties’ situations, all of the alimony factors must be considered. Ultimately, if the parties are able to settle their matter, they are able to enter into an agreement that is much more creative than what a judge is able to award following a trial.

Fairly early on in your divorce process, your attorney will ask you to fill out a financial statement known as a Case Information Statement. This document is very important during the divorce process, as it sets forth your income, monthly expenses, and assets/liabilities of the marriage. This allows the attorneys, divorcing parties, and the court to easily analyze the financial circumstances of the parties. Clearly, if the parties both earn substantially the same income, it is difficult to make a claim that one needs alimony because the other will not have an ability to pay.

In many instances, it will be obvious—based on the difference in parties’ incomes—that the case is “an alimony case,” but it is often much less obvious exactly how much that alimony should be. Once your Case Information Statements have been completed and exchanged, your attorney should be able to give you a better idea of what your alimony might be. It should also be noted that, unlike alimony in New Jersey, child support is determined via a formula, and part of that formula is the amount of alimony that the parties each pay/receive. If you are the party that is paying alimony, your income for child support purposes will be reduced by the amount of alimony you pay, as that money is no longer available to put toward your child support. Likewise, the party who is receiving alimony will have that amount added to his or her income, as they have additional money to support the children.

When you initially file a complaint for divorce or an answer and counterclaim, you should request spousal support if you believe you may have a claim for same. It’s easier to drop the claim at a later time than it is to seek if after the fact if it was not initially requested. Your attorney will be able to guide your decision in that regard.

You can be more creative in the way you handle alimony if you reach a settlement rather than proceed to trial
The judges in New Jersey will be the first to tell you that a settlement is often the best option in a divorce matter because you as the divorcing parties have a much greater ability to be creative in your settlement. When the issue is brought to trial, judges have no option but to decide an amount and length of time for the payment of alimony in NJ. However, if you were to resolve your matter via settlement, there are other options. Some of these options include a lump-sum payment of alimony or a step-down of alimony as the term goes on.

When you decide on a lump sum, you generally agree to an amount of alimony, as well as the number of years that alimony would be paid if it were being done in a traditional manner. With the assistance of your attorneys, you would tax effect and present value that total amount to reach an amount representing the lump-sum buyout. This type of alimony is often paid from an asset, such as the payor’s share of the proceeds from the sale of the marital residence.

Another creative way to establish alimony is to do a step-down. In this scenario, the parties may agree that one spouse who has been out of the job market for a period of time may need more support up front, but as the term goes on, that amount can be decreased. For example, the parties could agree that Wife can earn $20,000 per year at the time of the divorce and needs an additional $30,000 per year in alimony. However, Wife is training to re-enter the workforce and it’s anticipated that in Year 3 of the alimony term, she will be able to earn $30,000 and will only need $20,000 in alimony. Their settlement agreement will provide for this step-down of alimony to alleviate the need to re-negotiate alimony in the future. Again, these options are not available to a judge and can only be utilized in cases that are settled.

How the new tax law impacts alimony in divorces that are entered after December 31, 2018
Under the new tax law that was passed in 2017, alimony can no longer be tax-deductible to the party who pays the alimony obligation, and it is also no longer required to be claimed as income to the party that is receiving the support. This change will impact all divorce agreements and/or trial decisions that are entered after December 31, 2018.

The true impact of this change remains to be seen. It is anticipated that attorneys and parties will discuss alimony in terms of net incomes, as opposed to the traditional use of gross incomes, and that alimony numbers will be tax effected with the assistance of accountants prior to the agreement. This will essentially put the parties in the same position that they would have been prior to the implementation of the new tax law.

When alimony may be terminated or modified
Regardless of the type of alimony, there are some instances in which alimony may be terminated or modified. Following the 2014 amendment of the alimony statute, parties who were divorced after the amendment are permitted to file for the termination or modification of their alimony obligations upon obtaining their good-faith retirement age and actually retiring. Once they have established these facts, the burden shifts to the person receiving the alimony to prove that alimony needs to continue. For people who were divorced prior to September 2014, the previous law remains in effect. In that situation, the party can make the application upon reaching their good-faith retirement age, but they are subject to a different set of factors and the burden continues to remain on the moving party.

If you have questions about NJ alimony statutes and how they will affect your divorce, contact the attorneys of DeTorres & DeGeorge to schedule a consultation in your case.

Financial Divorce Guide
About DeTorres and DeGeorge Family Law

DeTorres and DeGeorge Family Law is a New Jersey based family law firm that has been helping New Jersey residents achieve the best possible results in their divorce for nearly 30 years. The DeTorres and DeGeorge Family Law team is always ready to fight for their clients’ rights – determined to help New Jersey families overcome legal challenges from start to finish. Our legal team, with over 65 years of combined experience, provides expert guidance on all family law and divorce-related matters, including custody and parenting time, alimony and child support, equitable distribution of assets, premarital agreements, post-divorce issues, executive compensation distribution, divorces for business owners, and divorce mediation. The firm has been recognized for its dedication and expertise in the industry by multiple local and national organizations, including Super Lawyers, Law Firm 500, and the American Institute of Family Law Attorneys. Rosanne DeTorres, Managing Partner, is one of 150 lawyers certified as a matrimonial law attorney.

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