Alimony Formula

Yesterday, I blogged on the proposed alimony reform legislation in New Jersey.  At the end of that post, I posited the following questions.  Is this really a radical change, or in many respects, does it simply codify what is often done in practice anyway? Will it really take away advocacy when circumstances so require?

Aside from removing the term "permanent alimony" and perhaps sickening reaction in causes in some people, does the proposed legislation really do more than codify the case law or what was done in practice, in many respects.  Remember, is "permanent alimony" really permanent now anyway?  Can’t people seek to retire already and isn’t retirement a change of circumstances?  Don’t people already negotiate, when appropriate, limited duration alimony when people are divorcing close to retirement age, as opposed to buying a second litigation to occur a few years later? 

The following are some other random thoughts, in no particular order and of no particular importance. 

1)  Is "indefinite alimony" a nicer term for "permanent alimony"

2)  While certainly possible and appropriate in many circumstances under existing law for marriages of less than 20 years, permanent alimony was infrequently given in marriages less than 20 years after the limited duration alimony statute was enacted. In fact, I heard someone on a panel at the State Bar Convention last year state that 20 years was sort of a magic number ensuring permanent alimony.

3)   The concept of imputing income to someone that is unemployed or underemployed essentially  already exists in the case law and child support guidelines, and thus, really is not new.…

Continue Reading Random Thoughts Regarding The Proposed Alimony Reform Statute

In August 2011, I posted an article on this blog entitled "Appellate Court Rejects ‘Rule of Thumb’ Formula to Calculate Alimony – Sort Of."  In that article, I noted that there was 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.

More importantly, I noted that judges really cannot use this formula and must make findings considering the law and all of the statutory factors.  This post was as a result of a case where the judge seemingly used the formula to determine alimony.  The Appellate Division remanded the matter to the trial court to determine alimony using the alimony factors.

So much to my surprise, a new case came out yesterday emanating from a legal malpractice case filed by a litigant against her divorce attorney.  Lo and behold, the Appellate Division notes that using this "rule of thumb is an appropriate way to calculate alimony. …

Continue Reading Appellate Court Approves the Use of "Rule of Thumb" Formula to Calculate Alimony – Sort Of

In determining a payor spouse’s gross income in analyzing an appropriate level of alimony or child support, one question that arises on occasion is whether to include so-called “mandatory” contributions to the total number.  For instance, if the payor spouse is required by his employer to contribute $30,000 per year towards his 401(k), should such money be included in that spouse’s income in determining support?  As to child support, the answer is a definitive “no.”

As to alimony, since such contributions are excluded from the child support equation and child support carries great weight as a matter of public policy – the New Jersey Child Support Guidelines posit that children should not be forced to live in poverty due to family disruption – it is only sensible and reasonable for such contributions to be similarly be excluded from the alimony calculation.  Simply put, since the Guidelines consider any and all sources of income to aid children, the fact that mandatory contributions are excluded demonstrates that it would be even more unfair and unreasonable to include such contributions in calculating alimony.

The Guidelines provide a definition for “gross income” and, in so doing, expressly exclude mandatory contributions.  Gross income is defined as “all earned and unearned income that is recurring or will increase the income available to the recipient over an extended period of time.  When determining whether an income source should be included in the child support guidelines calculation, the court should consider if it would have been available to pay expenses related to the child if the family would have remained intact or would have formed and how long that source would have been available to pay those expenses.”…

Continue Reading TO INCLUDE OR EXCLUDE MANDATORY CONTRIBUTIONS IN DETERMINING INCOME – A BASE-LEVEL ANALYSIS

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.…

Continue Reading Appellate Court Rejects "Rule of Thumb" Formula to Calculate Alimony – Sort Of