A few weeks ago, I authored a post on this blog entitled Debunking the Myth That the Percentage Used in the So-Called “Alimony Rule of Thumb” Should Go Down as the Payer’s Income Goes Up. That post reiterated that the Court’s cannot use formulas, but that they are often used and that people have
It has been said over and over again that there are no formula’s to determine alimony. As I have blogged in the past, other than one legal malpractice referencing the formula or “rule of thumb”, virtually every time the Appellate Division gets a case where a formula was used, the case is reversed…
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.
Alimony is supposed to be decided based upon the statutory factors, right? There really isn’t a formula to determine alimony, right? Even if there is this formula that is used to get a ball park figure for a range of alimony, judge’s can’t use it, right? So what happens when they do?
We have blogged…
This being a family law blog, we talk about alimony a lot. One reason is that, because there are no guidelines, only factors to consider, alimony is one of the more difficult issues to resolve. How many years should it be for? When is it permanent? What does permanent really mean? Is there a rule that you…
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.
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.”
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
(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.
In the piece, she posits that
The unpredictability of alimony rules imposes several costs. Negotiating a settlement deal is much harder when spouses have no idea what they’ll end up with if they take their chances in court. Litigation drags on and the bills pile up when lawyers and experts have to prove their clients deserve any alimony at all. All the while, the emotional costs mount as people awaiting divorce continue in unhappy marriages; some stay married indefinitely because they don’t know if divorce will leave them with enough money to make it on their own. That’s particularly troubling in cases of domestic violence: some wives endure years of abuse because they can’t be sure husbands who control the family finances will be required to give them the money they need to live if they leave. New York’s law minimizes these costs by establishing a mathematical formula to calculate temporary alimony, which one spouse pays the other while the divorce is pending; it also allows judges to adjust those awards up or down under special circumstances.
She also believes that guidelines would make the judges jobs easier and the divorce process fairer.
At first blush, this makes sense – but does it really? Since all alimony guidelines are income based (and as she points out, they are only for temporary support), they ignore parties’ individual circumstances that are not income related. In a way, guidelines presume that all peoples expenses are the same, that all people with similar income pay the same amount of taxes, that there are no special circumstances, that some families may be savers while others spend every penny earned (and then some), etc.
In NJ, to the extent possible, the goal of temporary support is to maintain the status quo. Sometimes it seems like or certainly could feel to the support payer to being unfair, especially where the other spouse is not working and the payor is paying for most direct expenses plus some amount for personal expenses on top of that. The risk with guidelines, however, is that certain bills could never get paid if the personal responsible is not given enough money to pay and the other party is not required to make direct payments.
On the other hand, does New Jersey have de facto guidelines anyway? More and more, you hear about the "rule of thumb" – i.e. a mathematical formula where the lower income (or what that person could earn if not employed or working to their capacity) is subtracted from the payor’s income and alimony is fixed at one-third of the difference. You see lawyers use this all of the time. You see judges do this, even when they know that they cant, in trying to settle cases or even in decisions after a trial. They don’t say that they are doing it but you can do the math and see that they are. The rule of thumb may be helpful to get a starting point for review, but if it is the absolute end point, ignoring all other factors, that could be a problem.
Earlier today, I blogged about a NY Times article published yesterday about proposed New York legislation to adopt no fault divorce. That articles also noted that there was legislation proposed to set up a standard formula that judges would need to use to determine alimony (known in New York as maintenance). The article noted that…