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NJ Family Legal Blog Pertinent Information As It Relates To New Jersey Family Laws

Appellate Court Rejects “Rule of Thumb” Formula to Calculate Alimony – Sort Of

Posted in Alimony, Modification

We have previously blogged on the "rule of thumb", a dirty little secret used by judges and lawyers in New Jersey to come up with a "ball park" as to what alimony should be.  This "rule of thumb" does not take into account all of the statutory factors.  Rather, the formula simply subtracts the lower income (real or imputed) from the and multiplies the difference by a percentage.  I have been told that that percentage is 30% or one-third in the northern part of the state and 25% in the southern part.  Of course, judges really cannot use this formula and must make findings considering the law and all of the statutory factors which are:

(1) The actual need and ability of the parties to pay;
(2) The duration of the marriage or civil union;
(3) The age, physical and emotional health of the parties;
(4) The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living;
(5) The earning capacities, educational levels, vocational skills, and employability
of the parties;
(6) The length of absence from the job market of the party seeking maintenance;
(7) The parental responsibilities for the children;
(8) The time and expense necessary to acquire sufficient education or training to
enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;
(9) The history of the financial or nonfinancial contributions to the marriage or
civil union by each party including contributions to the care and education of
the children and interruption of personal careers or educational opportunities;
(10) The equitable distribution of property ordered and any payouts on equitable
distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;
(11) The income available to either party through investment of any assets held by
that party;
(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment; and
(13) Any other factors which the court may deem relevant.

While these factors are supposed to be consider and the "rule of thumb" is not, we hear judge’s recommending settlements using this rule of thumb all of the time.

Just today, the Appellate Division reminded us that court’s cannot use these formulas, in the unreported (non-precedential) opinion in Crescenzo v. Crescenzo.  In this case, which involved the modification of alimony, the wife asserted and the husband did not really deny that this is what the trial court did.  The Appellate Division, stopping short of finding that this occurred, stated:

Wife argues, and husband appears to acknowledge, that the Family Part may have used an impermissible formula to determine the amount of alimony, rather than applying the factors required by N.J.S.A. 2A:34-23b to the facts shown by the evidence. Wife contends the court subtracted her imputed income from husband’s
income and then awarded her thirty percent of the resulting figure by each of the September 9 and December 23, 2009 orders. The resulting figures match such a formula. In September 2009, subtracting about $15,000 imputed to wife from $65,000 imputed to husband leaves a remainder of $50,000, and thirty percent of
that amount is the $15,000 per year alimony awarded at that time. In December 2009, subtracting $15,000 from the $95,000 actual new income of husband leaves a remainder of $80,000, and thirty percent of that amount is the $24,000 awarded.

We decline to conclude that the Family Part used such a formula. Nevertheless, we agree with wife that use of a percentage formula based only on earned or imputed income is not authorized by law. Such a formula does not weigh and balance
particular factors as listed in the statute and as might affect each individual case.

As a result, the matter was remanded back to the trial court to determine alimony, considering all of the factors.  This does not mean that the same result is not possible, but only, that for it to be sustained, the trial court must address the award fully considering all of the factors.

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Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric practices in Fox Rothschild’s Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.