Alimony And Retirement

On Behalf of | Sep 11, 2018 | Alimony |

It is not unusual when faced with the reality of having to pay alimony to a former spouse, that one of your first questions will be “when does this alimony obligation end?” If the alimony obligation is a “permanent alimony” arrangement or an “open durational alimony,” arrangement, will you have to pay forever? Unless the alimony is for a defined term of years, this is a question that is difficult, if not impossible, for a practitioner to answer for a client.

Prior to 2014, if a party was in a long term marriage, the alimony obligation was likely to have been “permanent.” The alimony statute, N.J.S.A. 2A:34-23,( was amended in September 2014 and omitted permanent alimony, deferring to the newly created open durational alimony, and refining and clarifying how retirement of an obligor will impact the payment of alimony. This timing distinction becomes important because the existing Agreement or Order regarding alimony will be assessed based upon a different standard.

N.J.S.A. 2A:34-23(j) discusses retirement and its effect on alimony, and can apply prospectively or upon the actual retirement of the payor. Section (j)(1)(a) dictates that there is a rebuttable presumption that, “Alimony may be terminated upon the obligor spouse or partner attaining full retirement age…” Full retirement age is determined by year of birth and can be confirmed with the Social Security Administration. There is a presumption that alimony shall terminate when a payor reaches full retirement age. However, that presumption can be overcome after consideration of the following factors:

(a) The ages of the parties at the time of the application for retirement;

(b) The ages of the parties at the time of the marriage or civil union and their ages at the time of entry of the alimony award;

(c) The degree and duration of the economic dependency of the recipient upon the payor during the marriage or civil union;

(d) Whether the recipient has foregone or relinquished or otherwise sacrificed claims, rights or property in exchange for a more substantial or longer alimony award;

(e) The duration or amount of alimony already paid;

(f) The health of the parties at the time of the retirement application;

(g) Assets of the parties at the time of the retirement application;

(h) Whether the recipient has reached full retirement age as defined in this section;

(i) Sources of income, both earned and unearned, of the parties;

(j) The ability of the recipient to have saved adequately for retirement; and

(k) Any other factors that the court may deem relevant.

There are many issues that a recipient can raise to try to overcome this burden, including the payor’s continued ability to pay from the accumulation of post-divorce assets. This is case specific, and will be reviewed by the Court on a case by case basis if a motion to the Court is made.

N.J.S.A. 2A:34-23(j)(2) indicates the methodology when an obligor seeks to retire earlier than their federal retirement age. “The obligor shall have burden of demonstrating by a preponderance of the evidence that the prospective or actual retirement is reasonable and made in good faith.”

In making such a determination, the Court will consider the following factors:

(a) The age and health of the parties at the time of the application;

(b) The obligor’s field of employment and the generally accepted age of retirement for those in that field;

(c) The age when the obligor becomes eligible for retirement at the obligor’s place of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;

(d) The obligor’s motives in retiring, including any pressures to retire applied by the obligor’s employer or inventive plans offered by the obligor’s employer;

(e) The reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce or dissolution;

(f) The ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part-time or work reduced hours;

(g) The obligee’s level of financial independence and the financial impact of the obligor’s retirement upon the obligee;

(h) Any relevant factors affecting the obligor’s decision to retire and the parties’ respective financial positions.

This may occur in a field such as law enforcement, where an employee may retire based upon number of years of service and is receiving a pension. Another likely scenario is an aging employee who receives a severance package as incentive to retire early.

There are different factors that a Court will consider when deciding whether to modify or terminate alimony based upon whether the alimony obligation was established prior to the alimony statute being amended in September 2014. Be aware of the date when your alimony obligation was established because this is an issue that must be considered by the Court. Also, an updated Case Information Statement must be filed with any application for a retirement, as well as a copy of the prior Case Information Statement or other relevant documents from the date of the original alimony award and any subsequent modifications thereof.

If you are presently getting divorced, there are some things to keep in mind. It is helpful if there is a defined term of alimony that will be paid as part of your agreement. If the end date can be tied to the payor’s retirement age, this could have advantages to both parties. This may help to avoid future litigation based upon retirement. Also, you can include language in your divorce agreement that an alimony obligation will be automatically reviewed at the payor’s good faith retirement age, and you can include language stating what that age is. If you are already divorced with an agreement that pre-dates the statute, make sure you plan accordingly. The new statute permits a motion to be filed prospectively, before the retirement actually occurs. This can be a great benefit, because financially a payor will know if their alimony will be modified or terminated and can decide upon a retirement plan accordingly.

If you have an existing alimony obligation, it can be a helpful practice tip to reach out to the other party before filing an application with the Court, to determine if an agreement can be reached prior to filing an application with the Court, perhaps through mediation.

The attorneys at Weinberg & Cooper can assist if you are considering a retirement and are concerned as to how it will impact your alimony obligations, or if your former spouse is retiring, and you are concerned how it will impact your receipt of alimony.