Does it matter if a party’s income increases between the cut off date (usually the date of Complaint) and the time of the divorce? What about the argument that this income does not reflect the marital lifestyle so it should be ignored? These questions were answered by Ocean County Family Part Judge Lawrence Jones, who, in his brief time on the bench, has become a prolific writer contributing a number of reported decisions.
Judge Jones addressed these issues in the reported case of Dudas v. Dudas released on November 1, 2011. While trial court opinions do not have to be followed by other trial courts or the Appellate Division, Judge Jones’ analysis of the issue was interesting.
In this case, the wife was primarily a stay at home parent. During the marriage, the husband’s income grew to the mid-$40,000 range, with a one year high of $59,000 by the end of the marriage. After the Complaint, the husband’s "… W-2 income … sharply jumped to a personal high of $64,000 in 2009, and then ballooned again to $76,000 in 2010. In 2011, defendant is on pace to earn $68,000."
Not surprisingly, the wife sought alimony based upon this higher income. The husband argued, "… that his post-complaint earnings are irrelevant because, (a) alimony should be based upon the parties’ marital standard of living, and (b) that standard of living was never based on the heightened level of earnings he presently enjoys." Judge Jones disagreed with the husband.
To support his decision, the judge pointed to the alimony statute, particularly factors (1) actual need and ability of a party to pay; (4) standard of living established in the marriage; (5) earning capacities of the parties; and (13) any other factors which the court may deem relevant. The court discussed two of these "other factors" which included marginal cost estimation and marital momentum.
Marginal cost estimation relates to the notion that it is more expensive to live as two households as it is to live in one. To this point, the judge noted:
In this case, plaintiff and defendant resided in one single, intact household for over a quarter of a century. During most of that time, the parties primarily funded their joint budget via defendant’s W-2 income in auto part sales. Living together, the parties shared common household expenses. The evidence reflects that the parties lived a modest, conservative, but relatively comfortable middle class lifestyle. Prior to separation, the parties had a reasonably estimated combined monthly marital budget of approximately $4000 a month while living in a single intact household. This amount did not include additional child-related expenses which traditionally had been part of the parties’ budget in raising their sons.
Once defendant moved out, the parties established separate households under separate roofs. However, this division did not mathematically mean that the parties’ monthly budgets were neatly cut in half so that each party now only needed fifty percent of the prior monthly budget (i.e, $2000 per month rather than $4000 per month), to separately afford the former marital lifestyle. When one household divides into two, the economies of pooled or shared expenses largely evaporate. Each party has his/her own separate roof expense (mortgage or
rent), utilities, costs, food/household supplies, etc. Conversely, the cost of maintaining a single person household may not be as radically different from a dual person household as one might initially think.
Financial experts have long recognized the concept of “marginal cost estimation”, which focuses on the extra cost of supporting an additional person in a family unit. In the context of child support analysis, this principle is expressly adopted into the New Jersey Child Support Guidelines. … (Emphasis added).
The court noted that after the divorce, the additional funds that the husband had could help both parties live closer to the marital lifestyle.
As to the marital momentum issue, Judge Jones noted that:
“Momentum of the marriage” recognizes the reality that in many instances, one’s
occupational efforts often start off by yielding small and modest level earnings. However, these efforts may serve as a strong springboard into higher future earnings. Through continuing education, experience, and perseverance, it is fairly common for the fruits of one’s occupational labors to ripen well after the seeds are planted.
A payee spouse may be entitled to enjoy the benefit of an increase in the payor spouse’s financial picture to the extent it was the “momentum of the marriage” which brought about the increase. …
In this case, the judge found that However, the evidence suggested ta ht the husband developed his education and experience in his chosen field throughout the course of the parties’ extensive marriage and that using his current income fairly allowed the wife to share the fruits of the marital efforts.
The judge further noted that not every post-complaint increase in income relates to marital momentum. He held:
For certain, not every post-complaint increase in income is directly attributable to
“marital momentum”. For example, if following separation defendant had gone into an entirely new field and found instant success, or if he won the lottery, or if he made shrewd postcomplaint investments having nothing to do with prior marital efforts, such events would not necessarily have their roots in marital momentum. Further, if a very substantial period of time had passed between the end of the marriage and defendant’s spike in income, and if there were significant intervening and independent events during that time which directly increased defendant’s earning potential (such as defendant returning to college and obtaining an advanced
degree), it might be less appropriate to consider such an income increase as traceable to the “momentum of the marriage.”
Unanswered by this decision is how much alimony was reasonable. Further, the question arises as to whether the alimony should be greater than the marital lifestyle if the ability to pay exists. Also, if a large part of lifestyle was savings, should the support recipient be entitled to save at the same level during the marriage, and if not, then at what level. We will await future cases which will hopefully give further guidance on these issues.
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 is resident in Fox Rothschild’s Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501 or firstname.lastname@example.org.