- August 31, 2021
File Under: Alimony
Spousal Support: Including Savings in the Picture
When a New Jersey couple decides to divorce, alimony can be an important factor in the final settlement of the case. This is especially true when there is a large disparity in incomes between the parties or when one party has been a long-term stay-at-home parent. There are several factors that courts take into account when determining an alimony award, including the marital lifestyle established by the couple.
How New Jersey Courts Determine Alimony
Alimony is a separate matter from property division, although the distribution of marital property, including savings accounts and retirement funds, may provide more information to the court when determining whether to order alimony, how long the payments will persist and the amount of these payments. In general, alimony may be awarded on a short-term basis to enable the other spouse to enhance their earning ability. However, this is not always the case, especially when very long marriages or very steep income disparities are involved. A divorce attorney can provide a detailed analysis of how your marriage’s financial circumstances may affect an award.
There are four types of alimony considered under New Jersey law, and your family law lawyer might advocate for one or more of the following:
- Open durational alimony, which may continue on a permanent basis but multiple changes in circumstances can occur allowing it to end
- Limited duration alimony, which persists for a specific limited period of time following the divorce
- Rehabilitative alimony, support which is provided to allow the receiving spouse to become financially self-sufficient in accord with a specific and detailed plan
- Reimbursement alimony, a form of repayment of expenses when one spouse supported the other to receive an advanced education and anticipated they would share in the benefits of that education
There are several guidelines that govern alimony decisions, but the state does not lay out formulas for a simple calculation. However, in the case of marriages lasting fewer than 20 years, in general, alimony may not exceed the length of the marriage, outside exceptional circumstances such as unusual health circumstances or extreme levels of dependency by one party on another.
Alimony Factors in New Jersey
In addition, the courts must consider 14 factors when determining the type, amount and duration of an alimony award. All the factors must be considered in the court’s decision, although there is no specific balance between them and the court may also consider other matters. In addition, if both parties with the help of their respective family law attorneys come to an agreement about alimony, the court only needs to affirm their settlement and does not need to conduct a full analysis of its own.
The 14 factors include the following:
- The need of one individual, the payee, for support and the ability of the other spouse, the payor, to pay
- The length of the marriage or civil union being dissolved
- The respective age and health of both parties
- The marital lifestyle or standard of living established during the relationship and the possibility for each party to maintain a comparable lifestyle, with neither party being more entitled to it than the other
- The education, employability and earning capacity of each spouse
- The length of unemployment, if any, for the spouse seeking support
- Any parental responsibilities of both spouses
- Time, availability and expenses needed for further training or education to boost employment, income and financial self-sufficiency, and the opportunities of each party for future income growth and capital acquisition
- The history of contributions to the marriage or civil union, including financial contributions, interruption of career growth, child care or education of children, and sacrifice of educational opportunities
- The equitable distribution of the spouses’ property in the divorce settlement and payouts from current income
- Income available to both parties from investments held as assets by that party
- The tax treatment of the payments for both parties
- The amount, nature and length of support paid pendente lite, or during the litigation
- Any other factors considered relevant by the court
The court must then issue written findings of fact and legal conclusions about which factors are controlling, which are not persuasive and how they are balanced in their analysis. Both parties and their divorce attorneys will submit arguments and evidence, including forensic accounting evidence in some cases, related to these factors.
Determining the Marital Lifestyle
Determining the standard of living of the couple or the marital lifestyle should be the first issue considered by the court when assessing alimony. Neither party, regardless of their individual income, is inherently more entitled to continue that lifestyle. Instead, the court would aim for a solution that allows both parties to continue the lifestyle or standard of living they enjoyed and established while married.
While some couples may have more than enough money, including retirement funds and savings held in both parties’ names or separate high incomes and investment flows, to cover both parties at the same lifestyle prior to the divorce, the court may also take adjustments into account. It can be more expensive to fund two single lives rather than one joint household, and the court would consider that both parties would be responsible for any downsizing necessary. Financial arguments of this type may be detailed and complex, and a divorce lawyer might work with accountants and other professionals to present a detailed narrative.
The marital standard of living comes into play in the initial award of alimony as well as any later modifications that may be sought by either party and their family lawyer. The goal is for both spouses to enjoy a reasonably comparable lifestyle, reflecting the way the couple lived and how they used their income, whether that involved large purchases or a heavy focus on savings. There is no mandate or goal to equalize both spouses’ income, and the courts recognize that each spouse may have individual expenses that are not fully shared.
Savings and the Marital Standard of Living
Before 2016, the relationship of savings to the marital lifestyle was in dispute in New Jersey. Savings could be considered part of an alimony award, especially to serve as a form of insurance against the end of the spousal support period. Several published decisions have provided more information on how savings and frugality relate to an alimony award. It must be noted that many spousal support agreements are concluded by the spouses and their divorce attorneys without a thorough court analysis, and most cases that proceed to litigation involve substantial assets and high incomes.
In the 2016 Lombardi v. Lombardi case, both parties routinely saved the majority of the husband’s high salary and practiced high levels of frugality with the hope of enjoying a comfortable retirement and providing fully for their children’s education. However, the spouses and their family lawyers disputed how those savings should be accounted for in an alimony award. In an appellate court ruling, the court affirmed that savings, just like other marital uses of money, should be considered in spousal support and not only in property division of existing assets. In short, marital lifestyle includes not only how money is spent but also how it is allocated, including to savings accounts.
This issue came back to the Appellate Division in 2021 in the unpublished case of A.J.V. v. M.M.V. Here, a savings component as specified in Lombardi was already included in the limited duration alimony award. The court also awarded a retroactive payment of 52 months of savings, totaling $260,000. On appeal, the trial court’s award was upheld, given the emphasis both parties placed on savings during their marriage, as was the retroactive award of pendente lite spousal support.
Many couples dedicate their income to savings, a factor that can come into play when determining alimony. If you are considering how an award may affect your life, a divorce lawyer can help you advocate for a fair outcome. Contact the Red Bank and Watchung, New Jersey, offices of Lawrence Law at 908-645-1000 or use our easy online form to request an initial consultation with Jeralyn Lawrence.