Close
Updated:

New Jersey Appellate Division Addresses Consideration of a Savings Component When Awarding Alimony

In the preface to Benjamin Franklin’s famous 1758 almanac he proclaimed: “A penny saved is a penny got.” In the parlance of our times, the quote has been more commonly used to stand for “a penny saved is a penny earned.” Whether or not Benjamin Franklin, a learned economist, meant that a penny saved, as opposed to reinvested, was in fact a penny earned is up for debate. On September 12, 2016, in the case of Lombardi-v-Lombardi, the New Jersey Appellate Division addressed the issue of how alimony should be calculated in a divorce case when the parties during the marriage historically saved money.

The case involved litigants whose annual income was approximately one million dollars.  At trial it was shown that the parties’ monthly budget was approximately $17,000 in monthly spending. On top of their monthly spending, the litigants saved an additional $60,000 per month.  After a lengthy trial, the trial court issued a decision awarding the Wife alimony that met the monthly spending budget but which failed to factor in any savings element into its alimony calculation. At trial, the Wife sought half the savings component to be given to her as part of her alimony award.  The trial court reasoned that while savings is a component of support, it is only a component to insure the risk of alimony in the future. The trial court, given the extent  of the equitable distribution award to the Wife in this case, did not view that the Wife was at financial risk.

The Wife appealed and Appellate Division reversed the decision of the trial court,  noting that although saving for a future is one of the ways that the savings component is realized, the savings component can also be used as a buffer for disaster, future acquisitions and other unforeseen circumstances. The Appellate Division by no means concluded that savings is an absolute right; the concept of savings in this case was fact based. The marital budget in this case was just a small fraction of the litigants’ earnings.

It is worth noting that only recently was the New Jersey Family Part Case Information Statement, a financial disclosure document that the family court requires litigants to complete, was recently updated by the judiciary to include a line item for a savings component.  It is again important to note that savings has to be part of the historical routine of the litigants.  Also, the alimony statute was amended in 2014 to reflect that neither party is more entitled than the other to enjoy the standard of living experienced during the marriage.  Specifically, the court found: “It is not equitable to require plaintiff to rely solely on the assets she received through equitable distribution to support the standard of living while defendant is not confronted with the same burden. As expressed under the alimony statute’s current version, the court must recognize that ‘neither party ha[s] a greater entitlement to that standard of living than the other.’ N.J.S.A. 2A:34-23(b)(4).”  Footnote 6 of the Appellate Division’s decision also noted that the “holding is limited to the establishment of alimony. We do not decide in this opinion the extent to which the savings component should be considered upon a change in circumstances, such as the payor spouse’s retirement.” The Appellate Division ultimately remanded the case to the trial court noting “that the court attempted to identify areas through which plaintiff might be able to save money at some level, but the court’s suggestions did not amount to a consideration of savings as part of the parties’ standard of living, especially where there was no dispute that the parties saved the lion’s share of the family’s income or that defendant had the ability to continue to fund such savings.”

The fact pattern of the Lombardi case surely raises questions of public policy that were likely were not far from the minds of the Appellate Division jurists.  Why should the court treat the spouse who saves different from the spouse who spends? And  if so, why would the court award the fiscally reckless spouse and penalize the spendthrift spouse? The Family Court is part of the Superior Court of New Jersey Division of Equity and Chancery. Equity is commonly defined as the quality of being fair and impartial.  The Lombardi is classic example of the New Jersey Judiciary’s tireless quest to find the most just and equitable result.

Contact Us