Respected Counselors, Litigators and Mediators

Alimony Reform

There has been a great deal of support for alimony reform in New Jersey over the past several years. The aspect of alimony that has come under fire the most is "permanent alimony." People paying permanent alimony have felt that it is a "death sentence" as it compels them to pay support with no guaranteed termination date (except for death). Even though the existing alimony statute permitted modifications to permanent alimony under certain circumstances, critics of permanent alimony say that the statute does not provide enough relief to payors who cannot pay alimony due to legitimate reasons such as retirement or loss of employment.

A new bill containing alimony reform has recently been signed into law. The new alimony law eliminates the terms "permanent alimony," limits the duration of an alimony award, and codifies the circumstances under which a person can seek a modification of their alimony obligations via: (1) retirement; (2) loss of employment; and (3) cohabitation of the payee.

The new law eliminates the word "permanent alimony" from the alimony statute and replaces it with the phrase "open durational" alimony. The elimination of the word "permanent" in favor of the phrase "open durational" may appear to be a cosmetic change, but it eliminates the word that was treated with so much hatred by critics of the existing statute and it will hopefully change the perspective of unlimited duration alimony as a "death sentence" due to the clarity in which the bill defines what qualifies as a change of circumstances.

The new law also includes precise limitations as to the duration of alimony awards. 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. While the court will still determine an alimony award using the same factors it previously considered under the older alimony law, the ultimate duration of the alimony award will be limited to the length of the marriage. For instance, in a marriage lasting five years, a potential payor of alimony would not have to pay support for a period longer than five years. In those marriages that lasted longer than 20 years, the payor would have to pay for a period of "open duration" until a change of circumstances occurs.

Regarding changes of circumstances, the new law identifies the three most common examples of such changes (i.e., retirement, loss of employment and cohabitation of payee) and establishes a criteria for how an individual may go about seeking relief from his/her alimony obligation if one of these changes occurs to them. According to the new law, there is now a presumption that alimony shall terminate upon the payor attaining "full retirement age." Full retirement age is defined as the age a person is eligible to receive full retirement for full retirement benefits under section 216 of the federal Social Security Act (42 U.S.C. s. 416). The presumption that alimony should be terminated can be overcome if the court determines that alimony should continue for certain reasons, including but not limited to the age of the parties at the time of the application for retirement, the degree and duration of the economic dependency of the payee upon the payor during the marriage, the duration or amount of alimony already paid and the health of the parties at the time of the retirement application. If the court determines that the presumption has been overcome, then the court shall apply the same alimony factors that were considered when the payor's original alimony obligation was established in order to arrive at an appropriate alimony amount.

When a payor seeks retirement before reaching full retirement age, the payor must show that the retirement is reasonable and made in good faith. In order to determine whether a payor has met his/her burden of demonstrating a "good faith" retirement, the court will consider several factors including but not limited to the age and health of the parties, the payor's field of employment, the generally accepted age of retirement for an individual in that field, and the age when the payor becomes eligible for retirement benefits at the payor's place of employment. If the court determines that the payor has met his/her burden, then the court shall apply the same alimony factors that were considered when the payor's original alimony obligation was established. After a review of the factors, a payor's obligation may be terminated, or, if not terminated, modified to an appropriate amount.

If a payor loses his/her job, the new law details the circumstances by which that payor can seek relief. The new law prohibits anyone from seeking a modification to his/her alimony modification due to loss of employment unless they have been unemployed for a period of 90 days. While a 90 day wait period appears to be a long time to wait before one can seek a modification, a payor now would typically have to be unemployed for a significantly longer period before the court will consideration his/her application. The court also has the power to make any relief granted retroactive to the date of the loss of employment. After the 90 day period has expired, the court will review several factors before giving that payor relief including but not limited to the reasons for the loss of employment (the payor cannot voluntarily leave his/her job and expect relief), the payor's demonstrated efforts to obtain employment, and any severance compensation given to the payor in connection with the loss of employment. It should be noted here that there are different, more complex rules for when a self-employed party seeks a modification of alimony because of a reduction in income.

The last change of circumstances handled by the new law is the cohabitation of the payor. According to the new law, if a payee cohabits with another person, the payor's alimony obligation may be suspended or terminated. When assessing whether cohabitation is occurring, the court will consider several factors including intertwined finances (e.g., bank accounts, credit cards), living together, length of relationship, and recognition of the relationship in the couple's social and family circle. The new law is also clear that the payee need not physically live with another person for the payor to get relief.