Alimony – Retirement
A common basis for the termination of alimony is the payor’s retirement. Indeed, paying alimony after retirement can be a financial burden, and often requires alimony to be paid with retirement assets which were previously allocated as part of equitable distribution within the underlying divorce. To prepare for this scenario, it is important to know whether you could be entitled to a modification or termination of alimony upon your retirement. It is also important for the supported spouse to understand and plan for their ex-spouse’s retirement.
Historically, the Court analyzed the payor spouse’s retirement based on a “change in circumstances” standard and in cases of permanent alimony or limited duration alimony that extended beyond retirement, the case law set forth the standard to obtain relief. However, our reliance upon the evolving case law ceased when our Legislature recently enacted sweeping alimony reform which now provides concrete guidance regarding the impact of retirement on alimony. The statute differentiates alimony obligations created prior to September 10, 2014 and after, which is an important detail to note when you are considering whether alimony will be modified or terminated.
Alimony Obligations Established Prior to the Effective Date of the Statute Amendment
Specifically, the statute provides that when alimony was established prior to September 10, 2014, it will be considered a good faith retirement when the payor reaches full Social Security retirement age, enabling the payor to seek Court intervention to modify or terminate his/her alimony obligation. However, the payor must also address the supported spouses ability to have saved for retirement, as well as (8) factors, including but not limited to, the age and health of the parties, the field of employment, and the motive in retiring.
Alimony Obligations Established After the Effective Date of the Statute Amendment
In dealing with modification motions for alimony obligations established September 10, 2014 or later, the statute separates the analysis between whether the obligor has reached full retirement age or, is seeking to retire prior to full retirement age.
When the payor reaches full retirement age, there is a rebuttable presumption alimony shall terminate. In this scenario, the supported spouse then has the burden to rebut the presumption by addressing the (11) statutory factors. If a Court determines the supported spouse successfully rebutted the presumption, the analysis does not stop there. Next, the Court must apply the (14) alimony factors in our alimony statute to both parties current circumstances to determine whether a modification and/or termination of alimony is appropriate.
If the payor has not yet reached full retirement age, then the payor must prove that the retirement is reasonable and made in good faith by addressing a separate (8) factor test.
Importantly, the payor no longer needs to wait to file an application until after they have retired. Indeed, the payor has the ability to file the Court application based upon a prospective retirement, thereby eliminating the predicament where an obligor must retire, losing their employment and income without the security of knowing whether alimony will continue in the absence of their employment. Specifically, the Court now has the ability to pro-actively establish the modification and/or termination effective date, as well as establish conditions, such as requiring the payor to actually retire by a date certain and provide a detailed plan for the actual retirement.
Our partner, Stephanie Frangos Hagan, Esq. recently spoke on this topic at the New Jersey State Bar Association Family Law Summer Institute regarding the intricacies of the termination and/or modification of alimony based upon retirement. The attorneys at Donahue Hagan Klein & Weisberg have the necessary experience, knowledge and skill to help guide you through this important process.
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