In the recent matter of Perreault v. Perreault, P.P. and R.P. were divorced in 1996, after 22 years of marriage. Following a hearing, the Court ordered R.P. to pay permanent alimony in the amount of $500.00 per week. Neither the April 29, 1996 Final Judgment of Divorce, nor the August 7, 1996 Order provided that alimony would beof limited duration or would terminate upon R.P.’s retirement. P.P. also received $28,239.48 or 50% of the marital share of R.P.’s federal pension.
At the time of the divorce, R.P. was employed by the Veterans Administration Hospital and earned approximately $118,000.00 per year. At the age of 55, he retired from this job and began collecting his federal pension. After R.P.’s retirement, he continued working for other companies and in 2007 he began a consulting business with his current wife. In November 2013, he retired at the age of 65.
In April 2014, R.P. filed a motion to terminate his alimony obligation to P.P. based upon his retirement, or in the alternative, to reduce his alimony obligation. R.P. certified that he had gross income in 2013 of $96,985 derived solely from his pension, and from that amount, $28,239.48 was paid to P.P. pursuant to the Court’s August 7, 1996 Order. R.P. argued that only $25,000.00 of the remaining amount, $68,745.52 ($96,985.00-$28,239.48 = $68,745.52), could be considered for alimony purposes, and this amount was insufficient to justify an alimony award. Additionally, R.P.’s Case Information Statement showed that he had no debt, $9,891 in monthly expenses (although slightly reduced by the trial Court) and $823,000 in assets.
The trial Court determined that R.P.’s income had decreased, but that he had accumulated substantial post-judgment assets separate from his current wife from which he could pay alimony. Of the $823,000 in assets listed on R.P.’s Case Information Statement, the trial Court reduced this number by more than one-half to account for joint ownership with his current wife. The trial Court also recognized that with regard to R.P.’s pension, $40,505.04 was representative of the non-marital portion, not $25,000.00 as set forth by R.P. Additionally, the trial Court noted that R.P.’s future social security payments and his current wife’s income would assist him in paying his expenses, thereby increasing his ability to pay alimony. In contrast, P.P. would be in “dire straits” without alimony. In conclusion, the trial Court reduced R.P.’s alimony from $500.00 per week to $375.00 per week. Both R.P. and P.P. appealed.
R.P. asserted that the trial Court erred by ordering alimony in the amount of $375.00 per week because the non-marital portion of his pension, which he argues is $25,000.00, does not justify an alimony obligation and the Court erred by including his assets in determining his ability to pay alimony.
With regard to R.P.’s pension, “when a share of a retirement benefit is treated as an asset for purposes of equitable distribution, the trial court shall not consider income generated thereafter by that share for purposes of determining alimony.” Innes v. Innes, 117 N.J. 496, 505 (1990) (emphasis added). “Conversely, the rule does not bar counting as income for determining alimony, that portion of the former spouses’ pension attributable to post-divorce employment, and therefore not subject to division as marital property at the time of divorce.” Steneken v. Steneken, 367 N.J. Super. 427, 437-38 (App. Div. 2004)(emphasis added).
What does this mean? It means that retirement assets that were equitably divided in a divorce (and other assets for that matter), cannot later be considered available for purposes of alimony post-judgment. In this case, since R.P.’s pension was equitably divided in 1996 when the parties divorced, the share that was equitably divided is not available for to consider his present alimony obligation.
However, any money contributed to his pension after the parties divorced, can be considered for purposes of alimony to the extent the post-divorce earnings enhance the value of the asset.
In order to determine the non-marital portion of the pension, the trial Court added P.P.’s 50% share to R.P.’s share of the same amount to determine that the martial portion was $56,478.96. The Court then subtracted this amount from the present value of $96,984.00 to calculate a non-marital portion of $40,505.04. The Appellate Division affirmed this calculation.
In addition, the non-marital portion of R.P.’s pension, the Court must then consider whether R.P. had other sources of income that justified the reduced alimony amount. To do this, a Court may consider the income generated by supporting spouse’s assets, but not the total value of the asset itself, when determining the supporting spouses ability to pay alimony. See Miller v. Miller, 160 N.J. 408 (1999). Here, the trial court erred by considering the total value of R.P.’s assets, and the matter was remanded for further proceedings.
Although not discussed in Perreault, a litigant who wants to terminate or modify their alimony obligation based upon retirement must begin their analysis with N.J.S.A. 2A:34-23(j), one of the recent amendments to the alimony statute, which discusses how alimony may be modified or terminated upon the prospective or actual retirement of the obligor.