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“Savings” – A Budget Item with a Purpose


Charles F. Vuotto, Jr. Esq. *
Melinda Colon 




Matthew and Lisa have decided to get a divorce.  Assume that Lisa, a dependent spouse, received enough liquid assets during the equitable distribution phase of the divorce to generate a sufficient cash flow from income or principle to meet her reasonable needs based on her marital lifestyle with Matthew for her life span.  Indeed, Lisa will have no need to resort to employment or receipt of alimony.  Under these circumstances, should a court award or include a savings component in Lisa’s budget?  This article answers this question in the negative.

Undeniably, savings and investments are significant factors in a marriage, which must be considered when determining the marital lifestyle, the appropriate equitable distribution, and any alimony, maintenance, or support awards.  In re Marriage of Drapeau, 114 Cal. Rptr. 2d 6, 13-15 (Ct. App. 2001).  However, a savings component should not be included in a dependent spouse’s budget where the liquid assets received in equitable distribution will, in and of itself (without need for earned income or alimony), generate sufficient cash flow (from income and/or principle) to meet the reasonable needs based on the marital lifestyle, not including savings, for that person’s life span.  See Ruzic v. Ruzic, 281 N.W.2d 503, 505 (N.D. 1989).  Indeed, based upon a 50-state survey, at least ___ states allow the inclusion of a savings component in the alimony, maintenance, or support calculus.  However, savings components are limited to cases where justice, reason, and equity require inclusion to allow dependent spouses to maintain the reasonable lifestyle to which they grew accustomed.  See, e.g., In re Marriage of Weibel, 965 P.2d 126, 129-30 (Colo. Ct. App. 1998); Ianitelli v. Ianitelli, 502 N.W.2d 691, 692 (Mich. Ct. App. 1993); Ruzic, 281 N.W.2d at 505; Bridges v. McCracken, 724 So. 2d 1086, 1087-88 (Miss. Ct. App. 1998); Roen v. Roen, 438 N.W.2d 170, 172 (N.D. 1989).  But see Kuroda v. Kuroda, 958 P.2d 541, 551-52 (Haw. Ct. App. 1998) (“[A dependent spouse’s] ability to continue to save and build up one’s net worth is not a valid standard of living consideration justifying the award of increased alimony/spousal support.”).   Therefore, dependent spouses who receive sufficient liquid assets from the property settlement, allowing them to maintain their reasonable needs commensurate to the marital lifestyle (without a savings component) for the rest of their lives, do not need an additional savings component included in their budgets when calculating spousal support or maintenance.

Savings Component – When Justice and Equity Calls Across the Nation

The purpose of awarding a savings component in a spouse’s budget is to enable the payee “to accumulate reasonable savings to protect herself [or himself] against the day when alimony [or spousal support] payments may cease because of [the] husband’s [or wife’s] death or change of circumstances.”  Davis v. Davis, 446 A.2d 540, 544 (N.J. Super. Ct. App. Div. 1982) (quoting Khalaf v. Khalaf, 275 A.2d 132, 136 (N.J. 1971)).  While, the goal of alimony or maintenance awards is to assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed during marriage, this does not mean that spouses are always entitled to receive a savings component in their budget, even if the spouses regularly saved during the marriage.  Such a component may only be included when it is just, reasonable, and equitable.  As one court asserts, “[a]bsent special circumstances, an alimony award should not exceed a spouse’s need.” Rosecan v. Springer, 845 So. 2d 927, 929 (Fla. Dist. Ct. App. 2003).  Rather, “[t]he purpose of permanent periodic alimony [or spousal support] is not to divide future income to establish financial equality.  It is to provide for the needs and necessities of life for a former spouse as they were establishing during the marriage.” Id.  Likewise, another court contends that “[i]n a divorce it is often . . . impossible to maintain former standards of living, avoid reduction of assets that were intended for retirement[,] . . . and otherwise make the former common pool of income [equitably] spread to cover” both spouses’ needs.  Bridges, 724 So. 2d at 1088.  Nevertheless, former spouses’ customs of savings may be considered in determining budget awards; however, a savings component should only be included under equitable and reasonable circumstances.  Bryant v. Bryant, 139 N.C. App. 615, 617-19 (Ct. App. 2000).  Certainly, when spouses receive sufficient liquid assets in equitable distribution that allow them to reasonably maintain the marital lifestyle for their lifespan, an additional savings component is unwarranted.  These spouses will have sufficient funds to make their own investments and savings and to determine their own economic futures.

Ultimately, a court’s main goal is to divide marital property and subsequent awards in a reasonable and equitable manner.  Langley v. Langley, 895 So. 2d 971, 973 (Ala. Civ. App. 2003) (“A division of marital property in a divorce case does not have to be equal, only equitable, and a determination of what is equitable rests within the sound discretion of the trial court.”);  see also Maake v. Maake, 503 N.W.2d 664, 667 (Mich. Ct. App. 1992); In re Marriage of Hubert, 465 N.W.2d 252, 259 (Wis. Ct. App. 1990).  In making an equitable distribution or spousal support award, courts will consider many various factors, including the duration of the marriage, marital lifestyle, sources of income, health, future acquisition of assets, and other factors deemed relevant.  See, e.g., Berry v. Berry, FV960071815, 2004 Conn. Super. LEXIS 1020, at *12 (Super. Ct. April 19, 2004).  For instance, in Berry, the court refused to increase a former wife’s alimony because her health concerns, severance payments, social security disability payments, ability to return to work, and other savings and retirement accounts did not mandate an increase.  Id. at *3-4.  The court acknowledged that the wife had “ample resources to support herself in the style to which she became accustomed during the marriage without supplementation from” her former husband.  Id. at *11.  Likewise, in Alzos v. Alzos,  although the court considered the parties’ saving habits, the court refused to include a savings component in its calculation. No. 92-11028, 1994 WL 814248, at *10 (Del. Fam. Ct. Feb. 18, 1994).  “[I]t is inappropriate in considering an alimony [o]rder to include an amount for savings, as alimony is for the purposes of meeting one’s essential needs.”  Id.

Accordingly, Lisa should not be awarded a savings component in her spousal budget because she will have plentiful resources to fulfill her essential needs and allow her to reasonably maintain her marital lifestyle.  Even considering Lisa’s potential health problems, inability to work, or dependency on her support payments, her property settlement permits a life comparable to her marital lifestyle.  Lisa is not entitled to a savings component when considering the factors used to determine spousal support awards.

Furthermore, in determining whether “fundamental fairness” requires a savings component, courts must consider any divorce orders promulgated, including equitable distribution and child support or other support awards, to assess all relevant factors.  Hensarling v. Hensarling, 824 So. 2d 583, 591 (Miss. 2002).  Consequently, when one award expands, another must recede.  Id.  “Any accumulation of marital assets occasioned by the frugality of the parties during the marriage” must be considered in the equitable distribution phase.  Mallard v. Mallard, 771 So. 2d 1138, 1140-41 (Fla. 2000).  Thus, it is improper to include a savings component in the spouse’s budget.  Id.   In In re Marriage of Liddle, a former spouse requested a maintenance award to permit savings in accordance with her marital lifestyle.  140 Wis. 2d 132, 152 (Ct. App. 1987).  The court denied the award reasoning that the property settlement sufficiently allowed her to invest and save.  Id. at 152-53.  Accordingly, when the equitable distribution is determined by factor-based considerations, as mandated by most courts, the resulting settlement includes consideration of the spouses’ saving habits.  An additional savings component will lead to inequitable results.

Notably, equitable distribution often accounts for retirement benefits and savings, both of which incorporate a savings component element.  See Hurte v. Hurte, 842 N.E.2d 1058, 1062-63 (Ohio Ct. App. 2005).  Consequently, there is no need to include a savings component in spousal budgets when they have been awarded marital property which includes retirement or savings benefits.  See Kobylack v. Kobylack, 111 A.D.2d 221, 224-25 (N.Y. App. Div. 1985) (finding that a former husband’s savings plan was marital property subject to equitable distribution).  Such double-counting is unconscionable, as it will lead to the unjust enrichment of the receiving spouse.  See In re Marriage of Hubert, 465 N.W.2d 252, 259-60 (Wis. Ct. App. 1990).  Indeed, supporting spouses may need to dip into their own savings to supply their former spouse with an additional savings component.  This result runs contrary to principles of justice, fairness, and equity.

All across the nation courts are determining whether to include a savings component in a dependent spouse’s budget, based upon principles of justice, fairness, and equity, by assessing the marital lifestyle and the spouse’s reasonable needs.  Indeed, when applying the “tests” and factors to Lisa, in our hypothetical, she should not, and must not, receive a savings component in her budget.  She can sufficiently maintain her marital lifestyle through use of the assets awarded in the property settlement.  Any other result does injustice to Matthew, who should not be double-charged by the use of a savings component.

Savings – A New Jersey State of Mind

Exactly half a century ago, the New Jersey Supreme Court embraced the theory that spouses’ reasonable savings needs for the future may be considered when determining property settlements, alimony awards, or other support orders.  Martindell v. Martindell, 122 A.2d 352, 358-59 (N.J. 1956).   The concept of a savings component has been implemented in subsequent New Jersey cases.  See Khalaf v. Khalaf, 275 A.2d 132, 136 (N.J. 1971) (using a savings component permitting a former wife “to accumulate reasonable savings” as future security); Capadanno v. Capadanno, 275 A.2d 441, 444-45 (N.J. 1971) (same); see also Jacobitti v. Jacobitti, 641 A.2d 535, 539-40 (N.J. 1994); Lefkon v. Lefkon, No. FM-14-616-03, 2006 WL 3663714, at *4-5 (N.J. App. Div. Jan. 17, 2006).

When determining equitable distribution or other spousal support awards, judges must consider relevant facts and circumstances. Most importantly, when deciding whether to include a savings component, judges should consider:

(4)   The standard of living established in the marriage and the likelihood that each party can maintain a reasonably comparable standard of living;

. . . .

(13)     Any other factors which the court may deem relevant.


N.J.S.A. 2A:34-23(b) (2006).   Thus, when assessing former spouses’ standards of living, it is vital that courts assess “the way the couple actually lived, whether they resorted to borrowing . . . or if they limited themselves to their earned income.”  Hughes v. Hughes, 709 A.2d 261, 270 (N.J. Super. Ct.  App. Div. 1998).

The use of discretion in determining whether to refuse or grant spousal support and whether equitable distribution of the marital property will be “fit, reasonable and just” is equally important.  See N.J.S.A. § 2A:34-23 (2006); see also Glass v. Glass, 841 A.2d 451, 453 (N.J. Super. Ct. App. Div. 2004).  Courts have discretion in drafting and issuing final orders.  Crews v. Crews, 751 A.2d 524, 537-38 (N.J. 2000).  For instance, in Davis v. Davis, the court affirmed the inclusion of a life insurance or trust fund policy in a former wife’s budget for her security in the event that her former husband predeceased her.  446 A.2d 540, 545 (N.J. Super. Ct. App. Div. 1982).  The court rationalized that because she was legally blind, unable to work, only had a small amount of investment income, and “did not receive a distributive share of marital assets in the original divorce,” equity mandated the award.  Id.  The former spouse would not have been able to otherwise sustain herself at the standard of living to which she was accustomed during the marriage without the inclusion of a savings component.  See id.

Accordingly, in our hypothetical, in deeming what is “fit, reasonable and just,” a court should not award the former dependent spouse a savings component within her budget.  Lisa’s award will provide her with a reasonable lifestyle comparable to her marital lifestyle for her entire life span.  Nothing in our hypothetical suggests that Lisa’s situation requires a savings component in her budget.  To include a savings component in Lisa’s budget would unjustly enrich Lisa at the expense of her former husband who, consequently, may need to use his own savings to satisfy the unfair component.

Where a dependent spouse receives sufficient funds to fully support her marital standard of living through the assets received from the property settlement, it is unjust to include a savings component award based upon the former spouse’s retirement.  See Cunningham v. Cunningham, No. FM-11-560-01B, 2005 WL 2512633, at *2 (N.J. Super. App. Div. Oct. 11, 2005).

Alimony is neither a punishment for the payer nor a reward for the payee.  Rather, it is an economic right that arises out of the marital relationship and provides the dependent spouse with a level of support and standard of living generally commensurate with the quality of economic life that existed during the marriage.


Mani v. Mani, 869 A.2d 904, 910 (N.J. 2005).  Although it is true that former dependent spouses should not necessarily have to dip into their savings until after their former spouse retires, savings components are unnecessary when awards sufficiently provide for the spouse’s reasonable needs.  See Cunningham, 2005 WL 25122633, at *7.

Under New Jersey law, Lisa is not entitled to receive a savings component within her spousal budget because the property settlement supplied her with enough liquid assets to generate a sufficient cash flow to meet her reasonable needs based on her marital lifestyle.  A court is only required to place Lisa in a position reasonably comparable to her marital lifestyle, which it has done through the property settlement.  Lisa may use any amount she wishes toward savings, investment, and retirement.  The court reached a fair and equitable result.  Inclusion of a savings component runs contrary to the legislative intent of New Jersey’s divorce laws.


Pursuant to principles of justice, fairness, and equity, inclusion of a savings component in a dependent spouse’s budget has one purpose – to allow that spouse to reasonably maintain the marital lifestyle.  In revisiting our initial hypothetical, Lisa has no need for a savings component in her budget because her property settlement adequately and reasonably sustains her marital lifestyle for her entire life span.  Indeed, Lisa will be able to create her own investments and savings with the cash flow and liquid assets received from the property settlement.  Undeniably, a savings component should not be included in a dependent spouse’s budget where the liquid assets received in equitable distribution will, in and of itself (without need for earned income or alimony) generate sufficient cash flow (from income and/or principle) to meet that person’s reasonable needs based on the marital lifestyle, not including savings, for that person’s life span.


*               Mr. Charles F. Vuotto . . .

**             Melinda Colon is a J.D. Candidate, Class of 2007, at Rutgers School of Law – Newark.  She has worked as a Summer Associate at Wilentz, Goldman & Spitzer P.A. for the Summers of 2005 and 2006.

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