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.
Court Defines “Prospective Retirement” Under Amended Alimony Law
The amended alimony law that went into effect in late 2014 raised many questions as to the meaning of its terms and how such terms will be applied, especially as to how a payor’s retirement impacts upon an existing alimony obligation. As we have previously discussed, the law provides that a payor former spouse may
APPELLATE DIVISION ADDRESSES RETIREMENT APPLICATION UNDER AMENDED ALIMONY LAW
Litigants and family lawyers have eagerly awaited each decision from the Appellate Division that could shed some light on the numerous provisions in the amended alimony law that became effective on September 10, 2014. On November 6, 2015, the Court released an unpublished (not precedential) decision in Court v. Court, wherein the trial court’s
Reflections On The Alimony Statute One Year Later
Today marks the first anniversary of new alimony law. One year ago today, September 10, 2014, Governor Christie signed into law Bill A-845 which substantially amended the provisions of the New Jersey alimony statute – N.J.S.A. 2A:34-23.
The major changes to the law are succinctly delineated in the following alert by Eric Solotoff and
THE PERILS OF NEGOTIATING THE EQUITABLE DISTRIBUTION OF A PENSION
As matrimonial lawyers, we often come across cases involving a pension that is subject to equitable distribution. While New Jersey’s equitable distribution statute involves several factors for consideration in dividing assets, the most common way by which a pension is divided is, in legal speak, “50/50 of the marital portion.” On its face, that seems
NEW JERSEY ALIMONY REFORM IS HERE – WHAT DOES IT ALL MEAN?
Change is finally here – On September 10, 2014, Governor Chris Christie signed into law substantial and significant amendments to New Jersey’s alimony law. The law took immediate effect on that date. I previously blogged about the now effective changes after the legislature passed the bill during the Summer, and we have prepared an Alert
Divorce in Your Sixties – Is Permanent Alimony the Right Result?
Wikipedia defines grey divorce as a "term referring to the demographic trend of an increasing divorce rate for older ("grey-haired") couples in long-lasting marriages." Now while "grey divorces" of a short or mid length marriage provide challenges for a divorce attorney, many believe that divorces of long term marriages are easy. Just whack up the assets 50-50, agree to permanent alimony and call it a day, right? That is not an uncommon result, but does it really make sense to do so and not consider real life anticipated events such as retirement and the receipt of Social Security, to name just two.
Typically, when marriages are longer than 20 years, the concept of permanent alimony seems like a no brainer. When the parties are in their sixties (or maybe even late fifties) does this make sense? What if the parties always discussed and agreed that at age 65, the husband was going to retire and planned and lived their life accordingly? Now, at age 61, either party seeks a divorce (I was going to say the wife – but it really doesn’t matter). Should this be a permanent alimony case? The default answer is yes but should there be more critical analysis to this?
In this case, we can assume that all of the assets will be divided 50-50, except perhaps a business asset. Even then, while business assets are usually disproportionately divided, for longer marriages, the non-titled spouse gets more than they would have in a shorter marriage (the fairness of this may be the subject of another post.) In addition, it is likely that the amount of alimony afforded will not allow the payor to save substantially before the divorce and a normal retirement age in a few years hence.
If the agreement does not account for retirement, aren’t the parties just buying themselves more litigation in a few years? Should consideration be given to allowing for retirement and the termination of alimony any time after retirement age without the need to litigate? If that is the case and someone still works full time after the agreed upon retirement age, should alimony continue?
Can a payor retire to get out of his limited duration alimony obligation?
As we know, limited duration alimony ("LDA") is alimony for a definite period of time. Unlike rehabilitative alimony where there is a goal in mind to be reached by the end of the rehabilitation period and which can possibly be extended of the goal has not been reached, per the statute, the term of LDA is not supposed to be able to be modified except for "unusual circumstances." Of course, even limited duration alimony is subject to modification based upon "changed circumstances." Of note, however, is that retirement has been recognized as a possible change of circumstances sufficient to seek a modification.
The issue of whether early retirement could be used by an alimony payor in order to terminate his LDA obligation was recently addressed in the case of Hendrickson v. Hendrickson, an unreported (non-precedential) opinion released on November 5, 2012. In that case, the parties agreed to an 8 year term of LDA at the time of the divorce in 2006, in the amount of $265 per week, that actually was reduced to $145 per week to take into account that the wife’s child support obligation because the husband had custody of the children.
The husband had been working at Fort Monmouth for more than 30 years when it closed in 2011. The husband asserted that though he had been offered a position in Aberdeen, Maryland, the net effect of the transfer would have resulted in a reduction of income and increased expenses. Moreover, he was able to retire for health reasons and collect his retirement benefits. As a result of a claimed inability to pay, the husband filed a motion to terminate his LDA obligation.
The trial court denied the request finding that the early retirement was not a change of circumstances. An unsuccessful motion for reconsideration was denied, as well. The Appellate Division affirmed the decision, but for different reasons.
Estate Can Attempt To Recover Funds Against Designated Beneficiary Due To Waiver In Divorce
As part of the give-and-take negotiation process involved with Marital Settlement Agreements, oftentimes one party will waive his or her right to the proceeds of the other party’s retirement plan assets. What happens, however, when the spouse retaining those assets dies before changing the former spouse as the retirement plan’s designated beneficiary?
While one might think that the assets then pass to the Estate of the deceased spouse, the answer is actually more complicated. In 2009, the Supreme Court of the United States in a case known as Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009), definitively held that the retirement plan administrator must, in accordance with the detailed statutory provisions of the Employee Retirement Income Security Act (“ERISA”) pay the asset proceeds to the designated beneficiary – in accordance with the plan documents. Thus, even if the former spouse waived her rights to the retirement assets as part of the divorce decree, she could still stand to receive those benefits should she remain the designated beneficiary in the plan documents. The Supreme Court even characterized the plan administrator as having done “its statutory ERISA duty by paying the benefits to [the ex-wife] in conformity with the plan documents.”
In such a situation what is the estate to do? Is it without remedy, no matter how unfair the outcome may seem? Actually, the Supreme Court left the question open as to an Estate’s avenue of remedy and, thankfully, the Third Circuit Court of Appeals recently addressed this issue of first impression in the precedential decision of Estate of William E. Kensinger, Jr. v. URL Pharma, Inc.; Adele Kensinger.
Retirement Plan Assets To Fund Post-Divorce Obligations: Strategies To Avoid Early Withdrawal Penalties
Fox Rothschild’s New Jersey Family Law Legal Blog welcomes Noah B. Rosenfarb, CPA, an Accountant and Holistic Wealth Advisor with Freedom Divorce Advisors, a financial advising company designed to aid women in securing their financial future post-divorce, as a guest blogger.
Noah’s articles and insights are particularly relevant with the message and content of our firm’s blog, and, having worked with him on several occasions, we know that he will provide invaluable insights to our readers. With that being said, I provide below the text of an article Noah recently wrote about using retirement assets to satisfy financial obligations resulting from divorce, and tips to avoid early withdrawal penalties associated with doing so.