Retirement

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In the wake of the September 10, 2014 amendments to N.J.S.A. 2A:34-23, the legislature clarified the circumstances under which an alimony payor’s obligation can be modified or terminated due to the obligor’s intended or actual retirement.  Under the statute as amended, when faced with an obligor’s application to modify or terminate alimony due to good faith retirement, the Court must consider the question of the alimony recipient’s ability to save for his or her own retirement.  As discussed In the new unpublished (non-precedential) Appellate Division decision Stansbury v. Stansbury, this question is given much greater weight in pre-Amendment cases (i.e. in cases that were decided or agreements that were entered into prior to September 10, 2014).

For post-Amendment cases, there is a rebuttable presumption that if a payor retires at “good faith retirement age” (defined as the age at which (s)he would be entitled to receive full Social Security Retirement benefits), then alimony shall terminate unless the recipient can show by a preponderance of the evidence and for good cause shown that alimony should continue (either in full or in a reduced amount).  In making that determination, the court must consider eleven (11) factors, one of which is the ability of the recipient to have saved adequately for retirement.  See N.J.S.A. 2A:34-23(j)(1).  This factor is listed along with the ten other factors, in no order of importance, with no emphasis whatsoever.

But for pre-Amendment alimony awards (like the Stansburys’), the statute does not just list the obligee’s ability to save for retirement as one of many on a list of factors to be balanced and considered.  Instead, it absolutely mandates and even elevates this criteria first and foremost among the others:

When a retirement application is filed in cases in which there is an existing final alimony order or enforceable written agreement established prior to the effective date of this act, the obligor’s reaching full retirement age as defined in this section shall be deemed a good faith retirement age.  Upon application by the obligor to terminate or modify alimony, both the obligor’s application to the court and the obligee’s response to the application shall be accompanied by current Case Information Statements or other relevant documents as required by the Rules of Court, as well as the Case Information Statements or other documents from the date of entry of the original alimony award and from the date of any subsequent modification.  In making its decision, the court shall consider the ability of the obligee to have saved adequately for retirement as well as the following factors in order to determine whether the obligor, by a preponderance of the evidence, has demonstrated that modification or termination of alimony is appropriate:

(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 at which 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 incentive 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; and

(f)  Any other relevant factors affecting the parties’ respective financial positions.

N.J.S.A. 2A:34-23(j)(3) (emphasis added).

In Stansbury, the Defendant had a permanent alimony obligation but, at the age of 72 (well past good faith retirement age), he was looking to retire and made the appropriate application, which the Plaintiff opposed.  Eliciting certain facts from the parties’ respective certifications that accompanied their motions (and, reasonably, hoping to avoid the time and expense of a trial for two litigants with modest means and of a senior age), the judge addressed each of the factors listed above, including the question of the Plaintiff’s ability to save for retirement.  She found that – based on what the Plaintiff certified about a recent health issue and about her income and budget set forth on her Case Information Statement – it was “unlikely” that the Plaintiff had been able to save for retirement.  Based on this assumption and on the remaining factors, the trial judge declined to terminate the Defendant’s obligation and instead reduced it.

The Defendant appealed, arguing that – having failed to conduct a hearing – the trial judge did not have sufficient evidence to make the assumption that the Plaintiff did not have the ability to save for retirement.  In fact, on the question of what had happened to the Plaintiff’s share of Defendant’s pension awarded to her in equitable distribution, the trial judge had essentially taken a guess that the Plaintiff had liquidated her share of that marital asset and spent it while she was not working due to her recent illness, or else re-invested it.  There was no testimony in the record from the Plaintiff herself as to what she had done with this money.  The Appellate Division found that the trial judge’s failure to make findings after a hearing as to the issue of the Plaintiff’s ability to save for retirement was an error, and remanded the matter to the trial court, instructing that:

The hearing should require plaintiff to come forward with evidence that she saved for retirement to the extent she was able to do so, and how plaintiff disposed of her share of defendant’s pension.

The case makes clear that for pre-Amendment alimony awards in particular, trial judges not only have to consider this factor, but must give it great weight.   Therefore, litigants opposing retirement applications in pre-Amendment cases should be prepared to address this in great detail.   Additionally, the Appellate Division’s instruction to the trial court quoted above in the Stansbury case certainly suggests that whether an obligee has actually saved for retirement is not the important thing that courts must consider in these applications, but rather whether the recipient COULD HAVE saved for retirement based on his/her income, assets inclusive of equitable distribution, and the alimony received.  In other words, fiscal irresponsibility on the part of the obligee shouldn’t bar the obligor from making a successful application.

headshot_diamond_jessicaJessica C. Diamond is an associate in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.

Last week, I blogged about whether you should settle your retirement alimony case and the ingredients that might go into that decision. To be honest, this “why you should or should not settle” question is only the beginning of what you might be facing when you decide it is time to retire and terminate your alimony obligations. There is, of course, also the “where/when/how” of all of it. And that’s quite a nebulous concept if you’re only now beginning to think about your “whys” and whether or not you should even broach the topic. Below, I’ll give you a run-down of the possible scenarios that will at least address the “wheres” and “whens” of your journey.

In my experience, there are several possible ways in which alimony cases resolve: (1) Immediate settlement; (2) settlement following a motion; and (3) a full Court hearing wherein a judge makes a decision as to your continued alimony obligation. Examining each scenario will allow you to put the concept of “settlement” into the context of your particular situation.

(1)         Immediate Settlement: This is the path of least conflict and resistance if your spouse accepts your offer with an eye toward a termination of support. This will, more often than not, begin with a “feeler” letter to your former spouse. The letter may indicate that you are retiring, the date of your proposed retirement, provide some detail as to your financial circumstances, and ask if a termination of alimony would even be considered. Sometimes, the former spouses may negotiate directly with one another, with guidance from an experienced matrimonial attorney throughout.

If successful, this is the most cost-effective and low conflict resolution. The specifics of any settlement would be memorialized in an Agreement and simply filed with the Court, at which point, it would become an enforceable document.

But don’t be mistaken. This path is not for everyone. If you went through a very high conflict divorce, or know you’re dealing with an unreasonable ex-spouse, you may want to skip this step entirely. In the alternative, you may write a letter and the concept of termination may be rejected immediately.

If settlement at this early stage is not successful for whatever reason, you may decide to pursue litigation. That would bring us to scenarios 2 & 3, described below.

(2)         Filing a Motion: To provide some background, when someone paying alimony experiences a change in circumstances (including retirement, other reduction in income, or they believe their spouse is cohabiting etc.), you file what is known as a “Motion”, which is a formal application to the Court. You would be required to submit your current Case Information Statement, Case Information Statement from the time of your divorce, tax returns and a narrative of events leading up to your motion and describing your circumstances along with the motion.

You further file a legal brief describing the case law, including Lepis v. Lepis, which is the seminal support modification case in the state of New Jersey. Under Lepis, an alimony payor is required to file a Motion and establish what is known as a prima facie change in circumstances. A prima facie showing is simply an initial showing (on its face) that demonstrates that circumstances have permanently and significantly changed such that alimony may ultimately be modified.

Several weeks later, you would proceed to Court. This is a formal court proceeding, with oral argument from counsel, but not testimony of the parties, no formal introduction of evidence, etc. In other words, it is not at the point where the Court would conduct a full trial yet based on what has been submitted.

The Court would then review everything and determine if you meet the burden of a prima facie showing. The Court will then move you past what we call “Lepis 1”, or the initial prima facie showing, and enter an order as to whether you should move to a “Lepis 2” analysis – i.e. whether the change is substantial, continuing and permanent. As part of this analysis, the Court may also consider whether there is sufficient reason to award counsel fees to either party in connection with the motion. Because a supported spouse’s financial circumstances may be more precarious than yours, the Court may be inclined to grant counsel fees to equalize the playing field or to provide her an advance for litigation.

During the discovery phase, you are permitted to do a full examination of the other party’s finances to try and substantiate your claim. This includes written discovery, depositions, subpoenas, etc.

Typically following or during discovery and related proceedings the matter may settle. The parties have exchanged the majority of their discovery and the payee spouse, at some point, realizes alimony will end and that some concessions will need to be made. At that point, the parties will come to the table, make a settlement offer which is negotiated or reach a resolution through mediation (sometimes the Court will order the parties to go to mediation).

(3)         Court Hearing:  The matter can sometimes move toward a more contentious conclusion via a court hearing. In that regard, if all possibilities for settlement are expended and the parties have passed the discovery phase, the matter proceeds to a hearing, and the Court will hear testimony, consider evidence and make a determination based on everything before it. It is akin to a trial.

Keep in mind that neither party is obligated to agree to an out of court settlement. But as you can see, settlement at the early stages of the games provides finality without having to subject yourself to the time and effort of full-blown litigation. You also would avoid the counsel fees that go in to the discovery and litigation phases. Of course, having counsel on your side with experience in retirement alimony case will help you reach a conclusion on your terms.

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Eliana T. Baer is a contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or etbaer@foxrothschild.com

There has been much ado about the new alimony statute. Obligors believe they are now in the driver’s seat when it comes to disposing of their alimony obligations. After all, the statute sends a message that alimony should at least be modified upon reaching full retirement age. Doesn’t it?

On the other hand, recipients believe that the nuances within the new statute provide them with a leg-up in terms of maintaining their alimony awards “as is”. After all, the statute provides that both parties should have been able to save for retirement in the years since the divorce. Doesn’t it?

The truth is, both the obligor and the recipient are correct. The new statute does not provide any bright line rule as to what a court must do when the obligor retires. It provides the Court, instead, with factors to consider and weigh when an obligor brings a retirement application.

It helps to think of your retirement case as if there is an imaginary chef baking a cake. The ingredients and proportions will inevitably change your end result. Likewise, every case has different ingredients and produces a different result. Of course, the chef, i.e. the judge, will also bring certain ideas into the case, that could change the result one way or another depending on the “ingredients” the litigants bring before the Court.

So that brings me to my question: should you settle your retirement case? In a word, maybe.

When I become involved in a retirement case, I tell obligors and recipients alike to think of their matter as a business transaction. Typically, most of the hurt that lingered post-divorce has dissipated. Maybe, the parties have moved on with their personal lives. Most people are ready to engage in a pure cost-benefit analysis to determine if settlement is right for them.

In order to do that in a retirement case, although a bit fatalistic, it’s important to consider the health and life-span of the obligor and recipient. For example, if a retirement application is brought when both parties are 80, a settlement would look quite different than an application brought at age 65.

It’s also important to consider the parties’ respective assets so that a lump-sum buyout can be considered and discussed.

Sometimes it bears repeating that it’s important to remember that it probably does not make sense to spend more money litigating a case in Court than you would have continuing to pay or receive alimony. Because, at that end of the day, even if you believe that you have the best ingredients and proportions, you don’t want to burn the house to the ground just to see if you can get the perfect cake in the end.

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Eliana T. Baer is a contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or etbaer@foxrothschild.com

Credibility is key when it comes to matrimonial litigation – from your initial filing through the last day of trial. In our practice, we can often make educated guesses of the range for equitable distribution and alimony from the initial consultation based upon the many statutory factors that a court has to consider and some rules of thumb in settlement negotiations. However, there are those cases that do not result in such a typical manner and the reasoning often comes down to presentation.

For a trial that I conducted in February 2016, the Appellate Division recently upheld the court’s decision awarding the plaintiff/wife 100% of the equity in one of the parties’ businesses with a value of $133,000 (where she primarily worked) and 40% of defendant/husband’s $214,000 interest in the other business (where he primarily worked), as well as determining that each party retain his/her individual retirement accounts following a long-term marriage of over 30 years.  Wife’s retirement accounts exceeded those which husband disclosed – being the key word. In addition to this equitable distribution award, the Appellate Division upheld the trial court’s 40% counsel and expert fee award for the wife, totaling $31,388.10.

Why did the wife prevail in this way? It’s pretty simple based upon a reading of the decision – her husband just could not help himself as a litigant or a witness.

As a litigant, he “stonewalled” discovery, failed to pay the support obligation order during the pre-trial phase of the litigation (a.k.a pendente lite support) that was initially agreed upon, and failed to file a complete Case Information Statement (the bible in family law cases that lists income, budget, assets and debts).

As a witness, he would not even give a straight answer for his address. While he may have thought he was being cute when he responded that the wife could have the value one of the companies, and do “whatever she wants to do with it”, the trial court and the Appellate Division used the husband’s own words against him to find that he abdicated any interest in the company.

The husband’s lack of credibility resulted in a unique comment of the Appellate Division when it stated that the trial court’s counsel fee opinion was upheld even though the trial court did not specify the factors considered under the applicable Court Rule, R. 5:3-5(c). The Appellate Division opined that “…the discussion throughout the opinion made clear he had those factors very factors in mind”. The Appellate Division again cited to the husband’s bad faith (without utilizing the term) by citing to the trial court’s findings that the requested fees were “’fair and reasonable’ and that much work was required due to the ‘recalcitrance of [the husband]’”, as well as that the wife “faced substantial difficulties” to enforce court orders and agreements, and ultimately prepare for trial.

So, what’s the takeaway? What you say and how you act at each stage of the case is important… someone is always watching and, oftentimes, that someone is your spouse’s attorney who will jump at the opportunity to show the court how you have oppressed your spouse. Having handled this trial and appeal, I can confirm that cross examining the husband and finally having the opportunity to point out all of the misbehavior was fun, but not for him. You don’t want to end up in that seat! Mind your manners even in the heat of the moment and, as painstaking as it may be, always remember that it’s better to be the “bigger person” – the games will catch up to the other!

Lindsay A. Heller, Associate, Fox Rothschild LLPLindsay A. Heller is an associate in the firm’s Family Law practice, based in its Morristown, NJ office. You can reach Lindsay at 973.548.3318 or lheller@foxrothschild.com.

As avid readers of this blog know, New Jersey’s recently amended alimony statute has been the inspiration for many blogs posts as cases interpreting same are coming down the pike. Under the amended statute, a party may seek to terminate or modify his or her spousal support obligation based upon an actual or “prospective” retirement. While this was seemingly good news for those seeking to retire, the question many practitioners had was what does “prospective” actually mean?

In the case of Mueller v. Mueller, Judge Lawrence Jones provides some insight as to this very question. The facts in Mueller are simple. The parties were married for twenty (20) years, divorcing in 2006. Under the parties’ Marital Settlement Agreement, the obligor was to pay $300.00 per week in permanent alimony and their agreement did not expressly address retirement or its relationship to the alimony obligation.

The obligor filed a post-judgment motion, under New Jersey’s amended alimony law, seeking a determination that his alimony would end in five (5) years. At the time of the hearing, the obligor was 57 years old. In five years, he would be 62 and entitled to receive his full employment-related pension benefit. The obligor asserted that if his alimony does not end at that time, that he will be unable to retirement at that age.

Judge Jones provides a thorough analysis of the obligor’s claim, specifically discussing the distinction of a pre-September 2014 agreement modification/termination analysis (where the burden is on the obligor to demonstrate why alimony should terminate) vs. a post-September agreement modification/termination analysis (where there is a rebuttable presumption of termination with the burden on the recipient).

He also notes that the amended statute covers the situation where an obligor wishes to retire earlier than “full retirement age” as defined by the receipt of full social security benefits”, which in this particular case would be 66 years and 8 months for the obligor. The rationale behind this provision is to avoid the proverbial “Catch-22” financial situation.

Specifically, if an obligor is considering the possibility of retirement in the near future, he or she logically benefits from knowing in advance, before making the decision to actually leave the workforce, whether the existing alimony obligation will or will not change following retirement. Otherwise, if the obligor first retires and unilaterally terminates his or her primary significant stream of income before knowing whether the alimony obligation will end or change, then the obligor may find him/herself in a precarious financial position following such voluntary departure from employment if the court does not terminate or significantly reduce the existing alimony obligation.

When applying the new law to the facts of the Mueller case, Judge Jones held:
• The spirit of the statute inherently contemplates that the prospective retirement will take effect within reasonable proximity to the application itself, rather than several years in advance.
o Thus, in this specific case, the request for an order prospectively terminating alimony five (5) years in advance does not lend itself to the Court being able to reasonably analyze and consider all relevant information. The Court warns about how an application too far in advance of prospective retirement could in essence be nothing more than an attempt to summarily change the terms of an alimony settlement agreement.

• An order for prospective termination or modification of alimony based upon reaching a certain retirement age inherently contemplates that the obligor not only reaches retirement age, but actually retires at that point. If the obligor reaches the age, but does not actually retire, the “retirement age” provisions do not trigger until such time as the obligor actually retires or submits an application regarding a prospective retirement in the future.

o Here, the obligor did not provide a specific plan but merely stated a desire to potentially retire in five (5) years, without anything more. While this case does not create a bright-line for when such applications should be brought, Judge Jones notes that a prospective retirement application brought, 12-18 months before prospective retirement, may be more appropriate.

The takeaway from this case is that while the amended alimony statute permits a degree of reasonable prospective adjudication by the court for a prospective rather than actual retirement, an attempt to engage in the necessary statutory analysis several years in advance of such retirement would likely be replete with long-term guesswork. Any such effort would essentially ignore the practical reality that the parties’ economic situations, health and other relevant factors may radically change over such a lengthy period of time, before an actual retirement ever takes place. If you are paying alimony and are within 12-18 months of retirement, you should think about consulting with an experienced professional to discuss your options regarding the termination or modification of your alimony obligation.