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by Charles F. Vuotto Jr.
A historic event occurred on Wednesday, Sept. 10, 2014, with regard to the law of alimony in the state of New Jersey. On that day, Governor Chris Christie signed Assembly bill A-845, A-971 and A-1649, which make substantial changes to the alimony law.These changes in the law did not come about quickly or easily.Numerous family law attorneys in various groups had a hand in shaping the new law.Most notably are the contributions by the Executive Committee of the Family Law Section of the New Jersey State Bar Association.The enormous energy and commitment of the officers of the Family Law Section cannot be understated.From the beginning, the officers met with legislators, staffers, editorial boards and special interest groups in an effort to educate them on the issue of alimony.Quite often, they were given less than 24 hours to rearrange their schedules in order to once again trek to Trenton or anywhere else throughout the state to meet with anyone who could help the cause—and even those who wouldn’t help.They wrote op-ed pieces and appeared on television and radio, all in an effort to influence the legislators and the public at large.I cannot imagine the countless hours each of them put into this effort.For this, I am grateful—we all should be.
The following is an overview of the major changes to the alimony statute, along with some observations of issues, potential conflicts or problems that may arise in the future.
Permanent Alimony Eliminated
First and foremost, the designation of permanent alimony has been eliminated from our statutory framework.The Legislature has replaced the phrase “permanent alimony” with “open durational alimony.”
It would appear that the phrase “open durational” implies that there should be an end to the alimony obligation.Clearly, there is some duration contemplated.The word “open” suggests that the duration would end based on some consideration other than death, remarriage, cohabitation or a substantial change in circumstances; most likely under the terms of the recent amendment, a planned good faith retirement.
Equal Right to Lifestyle
Also of significant importance is the fact that the Legislature has now emphasized that neither party has a greater entitlement to the standard of living enjoyed during the marriage.Is this equal entitlement to the marital standard of living a legal standard that is factually impossible?Every dollar that is earned or received by the parties during the marriage is consumed in some fashion, whether it is to pay household bills or it is saved.Was the Legislature’s intent that both parties are equally entitled to ‘life entitlements’?If so, does this change the dynamic with regard to savings as a component of marital lifestyle?Furthermore, does equal entitlement mean equal dollars?
Pendente Lite Support is a Factor
When determining whether to award alimony,as well as the amount and duration thereof, the court must now consider the “nature, amount, and length of pendente lite support paid, if any.”The obligation to consider the pendente lite support in the final alimony award should always have been the rule.Practical experience, however, illustrates that was often not the case, and now there exists a specific directive to the court.As a practice point, however, does this revision to the statute now require the payor to obtain an order to receive this consideration by the court at the time a final alimony award is made?In the absence of an order, if support is being paid voluntarily will credit be obtained?
Priority of Factors
Also of substantial significance is an express statutory requirement that no statutory factors shall be elevated in importance over any other factor unless the court finds otherwise, in which case the court shall make specific written findings of fact and conclusions of law in that regard.Included within this section is the following text: “If the courtdetermines that certain factors are more or less relevant than others, the court shall make specific written findings of fact and conclusions of law on the reasons why the court reached that conclusion.”What is meant by more or less relevant?Did the Legislature intend to mean a factor that has more impact on the specific factual matrix of that case?
No Presumption in Favor of Any Form of Alimony
Also of substantial significance is the eradication of what some perceived as a presumption in favor of permanent alimony.Now, in any occasion in which there is a request for an award of alimony, the court shall consider and make specific findings on the evidence about all of the statutory factors set forth in the statute.The court no longer must determine that an award of permanent alimony is not warranted before being permitted to consider whether other forms of alimony could be awarded, such as limited duration, rehabilitative or reimbursement.Further, the restriction that the court not be permitted to award limited duration alimony as a substitute for permanent alimony in those cases where permanent alimony would otherwise be awarded has been eliminated.
Duration of Alimony
Also of substantial importance is the fact that there is greater guidance regarding the duration of alimony.Although the new statute does not impose traditional guidelines regarding the amount or duration of alimony, the new statute states that “for any marriage or civil union less than 20 years in duration, the total duration of alimony shall not, except in exceptional circumstances, exceed the length of the marriage or civil union.”Subject to this provision, the statute does expressly state that determination of the length and amount of alimony shall be made by the court pursuant to consideration of all of the statutory factors set forth within the statute.In addition to those factors, the court shall also consider the practical impact of the parties’ need for a separate residence and the attendant increase in living expenses on the ability of both parties to maintain a standard of living reasonably comparable to the standard of living established in the marriage or civil union, to which both parties are entitled, with neither party having a greater entitlement thereto.
The statute goes on to list specific examples of “exceptional circumstances,” which may allow the court to deviate from the presumption that in any marriage less than 20 years in duration, the amount of alimony should not exceed the length of the marriage.These exceptions are rather broadand in practice may eclipse the enumerated factors.They include the age of the parties, the degree and duration of dependency of one party on the other, whether a spouse or partner has a chronic illness or unusual health circumstance, whether a spouse or partner has given up a career or career opportunities, whether a spouse or partner has received a disproportionate share of the assets,1 the impact of the marriage or civil union on either party’s ability to become self-supporting (including responsibilities as primary caretaker of a child), tax consequences or any other factor or circumstance the court deems equitable, relevant and material.
In light of the foregoing, it may be that payors will be more inclined to initiate the divorce action quickly if no agreement can be reached, so the length of the marriage stops accruing.Consider whether it is malpractice to delay filing the complaint for divorce after the 20th wedding anniversary?
Retirement
Substantial language has been added to the alimony statute providing for modification or termination upon the prospective or actual retirement of an obligor.There is now a rebuttable presumption that alimony shall terminate upon the obligor spouse or partner attaining full retirement age.2The rebuttable presumption may be overcome if, upon consideration of various factors (listed in detail within the new statute) and for good cause shown, the court determines alimony should continue.If the presumption is overcome, the court is then instructed by the new statute to apply the alimony factors set forth initially in the statute to the parties’ current circumstances in order to determine whether modification or termination of alimony is appropriate.If the obligor intends to retire but has not yet retired, the court shall establish the conditions under which the modification or termination of alimony will be effective.
It would appear that if a payor makes an application to retire and is not successful, the court must then re-examine alimony.It appears to trigger an automatic review, denovo, of alimony.Further, both the obligor’s application to the court and the obligee’s response to the application shall be accompanied by a current case information statement (CIS) 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.As such, an obligor who may have experienced a change of circumstances but is uncertain about whether they would meet their initial burden, and who is in a position to file a prospective application for termination based on retirement, can obtain the obligee’s CIS when he or she may not have been otherwise able to do so.There is also a new provision addressing an obligor who seeks to retire prior to attaining full retirement age.Determination of the reasonableness of prospective or actual retirement is to be made based upon a list of new factors added to the statutory scheme.
Modification by Non-Self Employed/Self-Employed Obligor
Regarding modifications of alimony awards, significant text has been added to the statutory scheme listing separate sets of factors for “non-self-employed” parties and “self-employed” parties.With regard to applications by non-self-employed parties, the court is now permitted to make a determination on whether a temporary remedy should be fashioned to provide adjustment of the support award from which modification is sought, and the terms of any such adjustment, pending continuing employment investigation by the unemployed spouse or partner.More importantly, in cases where the changed circumstances arise from the loss of employment,3 the length of time a party has been involuntarily unemployed or has an involuntary reduction in income shall not be the only factor considered by the court when an application is filed by a non-self-employed party to reduce alimony because of involuntarily loss of employment.The court shall determine the application based upon all of the enumerated factors; however, no application shall be filed until a party has been unemployed or has not been able to return to or attain employment at prior income levels, or both, for a period of 90 days.4Nevertheless, the court shall have discretion to make any relief granted retroactive to the date of the loss of employment or reduction of income.
Does this provision modify the statute barring retroactive modification of child support?Consider whether it’s appropriate for the court to require an obligor who may have legitimately experienced a substantial change in circumstances to continue to pay support from assets.Also, does the language allowing the court to enter any other order it finds appropriate to assure fairness and equity to both parties permit previously disallowed approaches such as escalator clauses? These new statutory provisions essentially reverse existing case law that suggests no relief may be granted to an alimony obligor unless he or she has been out of work for about 20 months.
When a self-employed party seeks modification of alimony because of an involuntary reduction in income since the date of the order from which modification is sought, that party’s application for relief must include analysis that sets forth the economic and non-economic benefits the party receives from the business, and which compares these economic and non-economic benefits to those that were in existence at the time of the entry of the order.
Further, when assessing a temporary remedy the court may temporarily suspend support, or reduce support on terms; direct that support be paid in some amount from assets pending further proceedings; direct a periodic review; or enter any other order the court finds appropriate to assure fairness and equity to both parties.
Cohabitation
The alimony statute has been further revised to change the impact of cohabitation upon alimony obligations.Specifically, the statute now provides that alimony may be suspended or terminated if the payee cohabits with another person.Cohabitation is now defined in the statute to involve “a mutually supportive, intimate5 personal relations in which a couple has undertaken duties and privileges that are commonly associated with marriage or civil union but does not necessarily maintain a single common household.” (emphasis added) When assessing whether cohabitation is occurring, the court shall consider six specific factors delineated within the statute plus aseventh catchall regarding “all other relevant evidence.”The fifth factor is “sharing household chores.”Does that mean if you don’t take out the garbage you’re not cohabiting?
Of great importance is the concluding paragraph in the cohabitation section of the new statute, which states, “in evaluating whether cohabitation is occurring and whether alimony should be suspended or terminated, the court shall also consider the length of the relationship.The court may not find an absence of cohabitation solely on grounds that the couple does not live together on a full-time basis.” (Emphasis added)Should the word “may” in this last sentence be “shall”?Does this mean a court may find no cohabitation if they aren’t living together?
Effective Date of New Law
At the very end of the statute, it states that the act shall take effect immediately and shall not be construed either to modify the duration of alimony ordered or agreed upon or other specifically bargained for contractual provisions that have been incorporated into: (a) a final judgment of divorce or dissolution; (b) a final order that has concluded post-judgment litigation; or (c) any enforceable written agreement between the parties.Paragraph 2 of the statute regarding its effective date presents interesting questions.For instance, if the parties’ Marital Settlement Agreement (“MSA”)has dealt with issues of cohabitation and retirement to some degree, can they take advantage of the new language in the statute?What controls—the MSA or statute? Will this determination depend upon how much detail is contained in a party’s MSA? The author expects significant litigation over these issues.
The author thanks Mark H. Sobel, managing partner of Greenbaum, Rowe, Smith & Davis, LLP, for his insightful observations and contributions to this column.
Endnotes
[1]. At the end of the statute, it now defines “full retirement age” to mean the age at which a person is eligible to receive full retirement benefits under Section 216 of the federal Social Security Act (42 U.S.C. s.416).
5. Consider the kind of inquiries that must be made in order to determine whether a relationship is “intimate.”