Unintended Consequences: Alimony Reform and Lifestyle Equalization
Recent amendments to New Jersey's alimony statute are generally viewed as favorable to the supporting spouse. Their effect, however, may be just the opposite.
November 01, 2018 at 12:00 PM
9 minute read
Recent amendments to New Jersey's alimony statute are generally viewed as favorable to the supporting spouse. Their effect, however, may be just the opposite. Statutory language adopted in September 2014 requires consideration of 14 factors when establishing the amount and duration of alimony.
Under factor (4), the court must take into account “[t]he standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living, with neither party having a greater entitlement to that standard of living than the other[.]” N.J.S.A. 2A:34-23(b)(4) (emphasis added). Further, the statute requires the court to consider “the practical impact of the parties' need for separate residences 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.” N.J.S.A. 2A:34-23(c) (emphasis added). As noted by Frank A. Louis, Esq., in his article “Comparability of the Standard of Living,” which was disseminated at the 2018 Family Law Symposium, placing the second directive in the postscript to the statutory factors rather than merely within them likely elevates its importance. See Landers v. Landers, 444 N.J. Super. 315, 324 (App. Div. 2016) (setting a consideration apart from the statutory factors and requiring its explicit analysis “elevates” its importance).
These statutory provisions make clear that both spouses share an equal right to the marital standard of living. They were designed to address injustice resulting from case law that seemed to focus unduly on the supported spouse's standard of living. For example, in Crews v. Crews, our Supreme Court held that “the goal of a proper alimony award is to assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed while living with the supporting spouse during the marriage.” 164 N.J. 11, 16 (2000). But what of the supporting spouse? Does he or she not share that same right? Thus, disaffected supporting spouses, some charged with permanent alimony obligations, pressed for reform with the intent to ease their financial burdens. In September 2014, they succeeded. Debatably, those changes were a long time coming. The economic landscape for families has undoubtedly changed. Although the gender pay gap remains a significant and persistent problem, income and employability are no longer as gendered as they once were.
In my experience, there is indeed a substantial disparity in access to the marital lifestyle both pendente lite and post-judgment. That disparity, however, shifts over time. When the court establishes its support order pendente lite, it often must deal with the practical realities of newly separated households. During divorce litigation, many spouses continue to reside under one roof through the entry of final judgment. Others, however, do not. In N.B. v. T.B., the court recognized that “parties in the midst of a tumultuous matrimonial dispute should ordinarily not reside under the same roof” and reaffirmed the “equitable power to remove a spouse from a marital home on a proper showing even if the home is owned by both as tenants by the entirety.” 297 N.J. Super. 35, 42 (App. Div. 1997) (citations omitted).
Because the parties' financial assets and obligations post-judgment have not yet been determined, any second residence is likely to be temporary (e.g., an apartment or other rental property), and it will almost never be equal or even roughly equivalent to the first. As acknowledged by the statutory amendments discussed herein, most families cannot maintain two equal households on the same income and assets that previously maintained just one. Moreover, a supported spouse who continues to reside in the marital home may feel emboldened by pendente lite orders that imply, or explicitly state, that he or she is entitled to maintain the marital status quo. For example, in Rose v. Csapo, the court held that “[t]he general purpose of pendente lite support is to maintain the parties in the same or similar situation they were in prior to the inception of the litigation; 'to preserve the status quo through the device of awarding temporary financial support pending a full investigation of the case.'” 359 N.J. Super. 53, 58 (Ch. Div. 2002) (quoting Mallamo v. Mallamo, 280 N.J. Super. 8, 11-12 (App. Div. 1995)).
Under such circumstances, statutory language requiring the court to recognize that neither spouse has a greater entitlement to the marital standard of living appears to further the alimony reformers' goal. Generally, the amendments have been viewed that way. In the recently published article “The Marital Lifestyle, Post-Complaint Earnings and Their Effect on Alimony,” the authors concluded in part that the amendments discussed herein “must be looked upon as favoring the primary income-earning spouse.” Even Frank A. Louis, in his article cited above, wrote that “the new statute certainly favors the supporting as opposed to the supported spouse….” Louis recognized, however, that “the careful lawyer can construct an argument, relying on the same statutory provisions, to enhance—not reduce—an Alimony claim.”
In my opinion, that latter argument is the easier of the two. In the long-term, permitting both parties equal access to the marital lifestyle frustrates the goals of the alimony reformers. While pendente lite financial arrangements may favor the supported spouse, the tables are turned post-judgment. It has long been recognized that supported spouses fare much worse economically upon entry of a Judgment of divorce. Indeed, in Crews v. Crews, 164 N.J. 11, 32 (2000), our Supreme Court was concerned about social science supporting that conclusion:
Some studies have concluded that the standard of living for a woman decreases 30 percent after a divorce, while men enjoy a 10 percent increase in living standards on average. See Peterson, A Revolution of the Economic Consequences of Divorce 61 Am. Soc. Rev. 528 (1996); Duncan & Hoffman, A Reconsideration of the Economic Consequences of Divorce, 22 Demography 485 (1985); Weiss, The Impact of Marital Dissolution on Income and Consumption in Single-Parent Households, 46 J. Marriage & Family 115 (1984). Those statistics are troubling.
More recent research has reaffirmed the validity of those studies. See, e.g., Stephen P. Jenkins, Marital Splits and Income Changes over the Longer Term, Institute for Social and Economic Research 2007-08 (2008) (“In the past two decades, as panel surveys have become widespread, substantial evidence has accumulated concerning the economic consequences of marital disruption measured in terms of the change in some measure of net household income adjusted for differences in household size and composition. Almost without exception, these studies have found large falls in income in the year after a marital split for separating women.”).
The conclusion that a supported spouse will not enjoy equal access to the marital lifestyle post-judgment is buttressed by the unofficial rule of thumb by which alimony is calculated at one-third of the difference between the parties' incomes. I recognize, of course, that it would constitute reversible error for a court to rely upon that so-called rule in setting alimony. As held in Connor v. Connor, “It goes without saying that the final alimony order in this case should take into consideration the real facts and circumstances of each party's financial situation …. No rule of thumb or percentage should be applied.” 254 N.J. Super. 591, 604 (App. Div. 1992) (citing Di Tolvo v. Di Tolvo, 131 N.J. Super. 72, 77 (App. Div. 1974)).
But the rule of thumb remains widely applied by attorneys in negotiations if not by the court in written decisions, and many settlement agreements are based upon it. Under that rule of thumb, the supported spouse will be in lesser financial circumstances post-judgment. Although no official presumption requires an equal split, marital property is most often divided equally. “[I]f a divorce ensues, in the usual case they share all marital assets equally.” DeLorean v. DeLorean, 211 N.J. Super. 432, 434 (Ch. Div. 1986). Thus, if the supporting spouse retains approximately two-thirds of post-judgment income, he or she will by necessity maintain a substantially higher standard of living.
Consider this scenario: Spouse 1 earns $450,000 per year, and Spouse 2 earns $80,000 per year. Marital assets have been divided equally. Alimony has been set by agreement at one-third of the difference between the parties' gross incomes: $123,333.33 per year, taxable to the recipient (while it remains permissible under federal law). As a result, Spouse 1 enjoys the benefit of $326,666.67 per year. Spouse 2 enjoys the benefit of $203,333.33 per year. The disparity is clear. Applying a new rule that requires the court to ensure both parties are permitted equal access to the marital lifestyle would shift this landscape substantially in favor of the supported spouse. In the same scenario, Spouse 1 would pay alimony to Spouse 2 of $185,000 per year, and their incomes would be equalized at $265,000 annually. If a supporting spouse is asked to choose between these two outcomes, the choice is clear.
It is unlikely that lifestyle equalization is consistent with legislative intent. But what other conclusion can be reached when our alimony statute requires, in not one but two separate provisions (one of which has been separated from and arguably elevated above the statutory factors), that the court must calculate alimony with “neither party having a greater entitlement” to the marital standard of living than the other? On what basis might the court conclude that one spouse should be provided substantially more ongoing income than the other? Lifestyle equalization is the obvious, and perhaps necessary, outcome. In attempting to redress the injustices of a pendente lite support order, the alimony reformers have shot themselves in the foot. Supported spouses may do better under this new rule than under its predecessor. If so, let it be a lesson in unintended consequences.
Andrew M. Shaw is an associate with DeTommaso Law Group in Warren, where he practices divorce and family law.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View All'I've Worked Until 2 in the Morning': Lawyers Brace for Trump Policy
6 minute readGOP Trifecta in Washington Could Put Litigation Finance Industry Under Pressure
Lowenstein Hires Ex-FTX US General Counsel Ryne Miller to Lead Its Commodities, Derivatives Practice
3 minute readMany Lawyers Are Reeling From Election Results, but Leaders Are Staying Mum
6 minute readTrending Stories
- 1How to Support Law Firm Profitability: Train Partners Up
- 2Elon Musk Names Microsoft, Calif. AG to Amended OpenAI Suit
- 3Trump’s Plan to Purge Democracy
- 4Baltimore City Govt., After Winning Opioid Jury Trial, Preparing to Demand an Additional $11B for Abatement Costs
- 5X Joins Legal Attack on California's New Deepfakes Law
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250