Alimony Ain’t Easy!

{8:18 minutes to read} As a divorce mediator and family law attorney, I am often asked, “What’s the formula to calculate alimony?” In New Jersey, there is none. We do have a new alimony reform law adopted in September 2014, about which there has been (and continues to be) a lot of confusion. This blog post looks at the current factors used to determine alimony.

Under the new law, there are 14 factors that go into deciding alimony. There is still no formula, but rather an analysis of the factors, which follow:

1. The actual need of the party who will be the recipient and the ability of the paying party to pay

2. The duration of the marriage or the civil union

Generally, with a long marriage of 20 years or more, we see “open durational alimony” (which used to be called “permanent alimony”).

3. The age and the physical and emotional health of the parties

Emotional health is a factor that clients tend to weigh more seriously than the courts. Suffering from anxiety or depression merely puts you in good company in New Jersey rather than signifying a greater entitlement to receive alimony or forgive an obligation to pay it. A mental health condition would need to be documented and affect the party’s ability to work and their finances for it to be considered. On the other hand, certain physical health conditions, usually amounting to disabilities that prohibit or limit work, tend to be weighed more heavily.

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

For example, during the marriage, you established a comfortable standard of living: two luxury cars, a large home, accumulated savings. Post-divorce, you are supposedly entitled to continue in a similar manner, although typically unequal to what was financially possible in the marriage, given that the economics are stretched across two households. It doesn’t matter who’s asking for the divorce or if either party can be shown to be at greater fault.

The new law explicitly states that neither party has a greater entitlement to that standard of living than the other.

5. The earning capacity, the educational level, the vocational skills, and the employability of the parties

Each of these points is complicated and requires evaluation. For example, one of the spouses may have trained as a doctor but never worked during the course of the marriage. Clearly, she holds a higher degree but hasn’t worked in her profession. The facts need to be examined, and possibly an expert opinion—such as an employability evaluation—may be useful.

6. The length of absence from the job market by the party seeking maintenance

This factor accounts for instances where the seeker of support has been out of the job market, volitionally or otherwise (often home, raising children).

7. The parental responsibilities for the children

This considers if one of the parents is still going to be primarily responsible for day-to-day parenting, particularly for younger children. While parenting responsibilities do not excuse a party from earning, significant obligations are factored in.

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 acquisition of capital assets and income

Again, this factor further evaluates each party’s position to be financially solvent and autonomous. From the example in #5 above, what is needed for the wife, who earned her MD but never got licensed or practiced medicine, to be meaningfully employed? Possibly she needs a year to study for her boards and interview for positions. Possibly she’ll need two subsequent years to complete residency and further training. It might be reasonable to not expect actual earnings for several years after the divorce.

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

Someone may not be financially contributing to the marriage, but they are making a substantial non-financial contribution, like raising the children, keeping the house, and so forth. Oftentimes, those contributions are viewed as equal and quite significant because they enabled the earning spouse to earn. But if you have a spouse who really never contributed to the marriage in any way, that is a factor too.

10. The equitable distribution of property

For example, if one party receives $750,000 out of a million-dollar marital estate, that distribution might offset the alimony payment because they’re taking such a large share of the marital assets, it will affect how much spousal support they’d be entitled to.

11. Non-income or unearned income such as income available to either party through investments

It’s not just earned income, but income from all [non-excluded] sources that is considered. (An excluded source could be a judgment from a personal injury case.)

12. Tax consequences and tax treatment of both parties

Alimony is taxable to the recipient and tax deductible to the payor, so this and other tax ramifications are also considered.

13. The nature and length of pendente lite support paid

This is also a new addition. “Pendente lite” means the action is pending, i.e., pending trial. Suppose the parties have separated and filed for divorce but spend 3 years negotiating the resolution of their case, during which time one spouse is paying support. That is going to be a factor.

Generally, payments made during the pendency period would be used to offset the term and amount of the alimony awarded.

14. Any other factor which the court may deem relevant

Anything else not covered in the other factors can be addressed here, particularly something that speaks to what is equitable and fair in the particular circumstances of the case. The court has the discretion to consider it.

So this is what goes into an alimony “calculation.” In mediation, we look at their current and post-divorce budgets, and what each party needs in order to maintain a reasonably comparable standard of living. We’re really doing our best to look at multiple items in order to come up with a figure that both parties can live with and that strikes both parties as reasonable and fair.

In mediation, we aim to utilize the wisdom developed by the law, as well as the specific needs and choices of the parties themselves. Alimony isn’t easy. In fact, it is often the most challenging part of a divorce.

In the words of Billy Joel, perverted for our purposes: “Hot funk, cool punk, even if it’s old junk, it’s still al-i-mo-ny!”