Alimony Formula

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

On July 3, 2011, there was on op-ed in the New York Times by Alexandra Harwin entitled Ending the Alimony Guessing Game.

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.

Continue Reading A Case Made For Alimony Guidelines – Not in NJ but do we want them?