Attached is the Decision in Temple v. Temple. I previously wrote about the importance of this decision in which this office created a new and easier standard for a payor of alimony to prove a claim of cohabitation. Although not originally published many prominent attorneys, as well as the American Academy of Matrimonial Lawyers, wrote to the Committee on publications asking that the case be published. If you have a cohabitation case we would be happy to review it and discuss your rights. Since in this area as in many issues involving Family Law, “We made the Law.”
On June 8th, I argued a case of significant importance in the Appellant Division. Although I have not received a decision as of yet, I am still of the belief I was heard. The case involved an application from the supporting spouse to terminate alimony based on the cohabitation of his former spouse. Although I did not represent my client at the trial level I believe that my predecessor made the necessary arguments allowing me to present the important issues to the higher court. The Trial Judge had misread the recently decided, Landau decision, believing that the fact in Landau created a litmus test as to what constituted a Prima Facia case allowing discovery and a plenary hearing as to the issue of cohabitation. In fact, Landau provides that before one is entitled to discovery and a plenary hearing one must establish a prima facia case.
A prima facia case is one where the court is to consider the issues presented by the proponent of a proposition in the light most favorable to said, petitioner. In considering the assertions of the petitioner the defenses offered by the opposition are not to be given weight. Since the opposition is not required to give evidence, their election to give selected evidence is should not be considered as the issue is not ultimately a success on the merits but rather the sufficiency of the assertion to justify a full examination of the issue.
The idea of a prima facia case as an entry ticket is based on the privacy right of the dependent spouse who ought not to be forced to divulge intimate details absent the presentation of more than innuendo. In my case, there was significant proof including a private investigator’s report, statements by the paramour of the closeness of the relationship, and some economic proof. The initial problem was that the Trial Court had misread the law, this error of the law was compounded by the trial courts weighing the defenses of the dependent’s former spouse and finding her explanations more credible.
I am frequently asked if It makes sense to buy out of an alimony obligation with a lump sum payment. The answer to the question is a bit complex but I will try to tackle it in the length of this post. Usually, when there is a discussion of the buy-out of alimony, the question that is most common to follow is what motivates the desire for a buyout? The recipient of alimony may want a lump of money to use to invest, buy a house, or start a business. The payor can be looking for a clean break and may find the process of paying alimony on a regular basis annoying or emotionally destabilizing or they can be in the process of seeking a final end to the interaction with the payee and has a concern for what can feel like the never-ending revolving door of the courtroom. What motivates a recipient to want a lump sum is personal and that motivation should be discussed with your attorney. This post is to focus on the payor’s rational decision-making process, the emotional need to walk away with a clean break once again should be discussed with your attorney.
When a lump sum is discussed at the very least the payment of alimony overtime must be established. In a marriage of under 20 years the likely length of alimony and amount that needs to be established and then discounted to present value using the present value formula. In marriages, over 20 years alimony is usually assumed to end at the social security retirement age of the payor. Once the term and the amount of alimony is agreed upon there then needs to be an agreement as to the discount rate. The discount rate is the assumed interest rate that will prevail in the marketplace during the term of alimony. The assumption is that if a payee banked the money paid to them or annuitized it they would end up with their full alimony over a period of time.
To put it simply, if you compute the present value of the future payment of alimony and pay it out while assuming you have the economic ability to do so the payment makes very little economic sense for a multitude of reasons. One obvious consideration that is to be made is that you in theory could bank or set up your own annuity to pay the alimony which would hedge your obligation against the possibility that alimony might not be paid for the full term. For example, if your ex-spouse should die, alimony ends. If your spouse received a lump sum the beneficiaries of the remaining lump fund could be your children or could be a new spouse. The payor; could die and alimony would then also come to an end. In most circumstances, alimony is protected with some sort of insurance, however, the money you did not payout in lump sum would be part of your estate and would go to people you love. Your ex-spouse could remarry, alimony ends upon remarriage.
In 2014, the New Jersey divorce statute, NJSA 2A: 34-23 as it pertains to the issue of spousal support or alimony was substantially modified. One such modification dealt with the vexing question of what the duration or term of the obligation to pay alimony should be. While a prior amendment to the statute had afforded courts the ability to award “limited duration” alimony, the lack of specific standards of under what circumstances this would apply, or for how long, versus an awarding of “permanent” alimony, led to divergent interpretations and applications by the courts. The Legislature sought to bring clarification to this issue when it included the following language to NJSA 2A: 34-23(c):
“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.”
Hence, for a marriage of over 20 years, the duration of a possible alimony award was left “open”, and subject to the discretion of the trial court, applying the statutory factors and other legal principles to the facts and circumstances of a given case. Hence the development of what has been come to be known as “open duration alimony” for marriages in excess of 20 years.
This month, the Appellate Division approved for publication the case of Gormley v. Gormley, A-1428-18, (App.Div. 2019) which addressed the standard to apply in determining the income of a litigant who has been determined by the Social Security Administration to be disabled and whether the Court should impute income for someone who has been adjudicated disabled and does not work.
In this case, the parties married in 2000, had one child, and the plaintiff filed a Complaint for Divorce in 2015. The Defendant had already been diagnosed with multiple sclerosis at the time of the marriage. In 2002, also during the marriage, the Social Security Administration determined that the Defendant was disabled by multiple sclerosis. As such, she did not work and was receiving $2,023 per month in social security disability benefits. The Plaintiff was employed full-time and earned a commission based income. In the two years before the trial, he had been earning approximately $150,000 per year. However, in the year of the trial, he was working fewer hours in order to represent himself at trial, and to study psychology and parental alienation. As such, he was earning approximately $112,000 per year.
The family court judge imputed $240 per week of earned income to the Defendant even though the Social Security Administration had determined that she was disabled and had been paying monthly social security disability benefits since 2002. The judge reasoned that she did not visibly observe Defendant exhibit in court disabling symptoms from multiple sclerosis such as fatigue, bladder issues, tremors , difficulty in concentration or any other difficulties that the judge felt would prevent her from working. No income was imputed to the plaintiff.
In Amzler v. Amzler, (Docket No. A-3384-18), 2020 N.J. Super. LEXIS 38 (App. Div. 2020), the Appellate Division provided direction on the effect of the September 2014 amendments to New Jersey’s alimony statute, N.J.S.A. 2A:34-23 as it relates to a litigant’s desire to retire before his full retirement age and stop paying alimony. Before the 2014 amendments, a party seeking to modify an alimony obligation was required to “demonstrate that changed circumstances have substantially impaired the ability to support himself or herself.” Landers v. Landers, 444 N.J. Super. 315, 320 (App. Div. 2016) (quoting Lepis v. Lepis, 83 N.J. 139, 157(1980)). The Legislature amended the alimony statute to add subsection (j), which applies in situation applies in situations involving “the prospective or actual retirement of the obligor.”
In the Amzler case, the parties in 2009 signed a matrimonial settlement agreement (MSA) that required the plaintiff to pay alimony. The MSA contained an “anti-Lepis” provision, meaning that a “voluntary reduction in income of either party” would not constitute a substantial change in circumstance for the purpose of reviewing alimony. After the parties’ divorce, the plaintiff continued to work, but due to medical reasons, retired before reaching full retirement age. The defendant filed a motion seeking to enforce the MSA and the plaintiff’s alimony obligation; the plaintiff filed a cross motion seeking to terminate or reduce his alimony obligation due to his retirement.
The trial court granted the plaintiff’s motion to terminate alimony, relying on section N.J.S.A. 2A:34-23(j)(2) of the alimony statute, which applies when a payor spouse retires before reaching full-retirement age. The defendant argued that the judge incorrectly applied subjection (j)(2) of the statute rather than subsection (j)(3), which governs the review of final alimony orders or agreements that were established before the effective date of the 2014 statutory amendments.
After years of a booming economy, the coronavirus pandemic has wreaked havoc on our state and national economies. Non-essential businesses have been forced to close and millions have become unemployed. Many others who have held onto their jobs have had their hours or pay reduced. The pandemic has caused households to struggle financially and many are worried about how they will pay their bills and trying to determine how they can reduce expenses. What are the options to modify alimony and/or child support obligations if one or both parties has experienced a reduction in income or a loss income due to the coronavirus pandemic?
If one or both litigants cannot resolve the issue on their own, a lawyer and/or mediator can offer up assistance to resolve the matter. A resolution is going to require both parties to be reasonable and understanding. The person receiving support may need to be understanding of the obligor party’s financial distress and worry. The person paying support may need to understand that alimony and child support may represent all or most of the receiving party’s income and that party cannot apply for unemployment benefits to replace lost support. The matter is more significant when there are children that have to be cared and provided for, and that is paramount.
If the parties cannot come to an agreement, can the court offer relief? The courts have not been having hearings but for emergency matters, and financial disputes are generally not considered emergent. However, the courts in New Jersey have risen to the occasion and applications to modify support can be filed electronically. A Family Division judge can decide the matter based on the review of the papers alone if that is requested, or the judge can conduct oral argument, settlement conferences and the like via telephone and/or video conference. The courts are still open to conduct family law business.
It goes without saying that the impact of the coronavirus pandemic has been widespread and devastating. It has been dramatic and sudden. It has reached every corner of the globe. It has affected virtually every institution – political, economic and social. It has touched every community, every family and every person in some way. For those already going through the personal upheaval of divorce, it’s emotional and financial consequences have only served to make a difficult situation even more stressful and complicated. Even though the vast majority of divorce cases will end up being resolved by the parties by way of a negotiated agreement, the pandemic’s impact has clearly had a drastic effect upon the parties’ ability to negotiate a resolution of their cases at this juncture.
Front and center on our website is the quote from Justice Brandeis: “Nothing is settled until it is settled right.” The pandemic has certainly put this to the test. Until six to eight weeks ago, we were in the midst of a period of sustained economic prosperity. Unemployment was at historic lows. Incomes and wages were up. Businesses were flourishing. The stock market and other investments were at record highs. The real estate market had finally rebounded from the impact of the recession years earlier. One of the biggest keys in trying to negotiate a resolution of a divorce case is having some sense of stability in regards to the family’s financial picture now and of its predictability into the future. When it comes to issues of support, a payor spouse’s willingness to commit to an amount to pay is not only tied to what he or she is earning then, but the reliability of these earnings going forward. When it comes to the division of assets, determining what allocation or distribution of same would be fair and equitable depends not only on being able to identify and value those assets at that time, but some level of predictability of what will happen with those assets into the future. Until recently, that task seemed fairly easy. However, the pandemic has swiftly turned this process on its head.
Record employment has turned to record unemployment in a matter of weeks, largely the consequence of the government’s policy to shutdown “non-essential” businesses in an effort to blunt the spread of the virus. Twenty-two million claims were made for unemployment in the past three weeks alone. Even if people didn’t lose their jobs, they may have suffered a reduction in hours or pay. Social distancing and stay home requirements have further curtailed many jobs and other economic activity. Many businesses have been closed or have seen their revenues drastically reduced. To make matters worse, no one has been able to predict with any level of certainty how long the shutdown will last – weeks, months, until there is a vaccine – or even what the impact all of this economic dislocation will have either short-term or long-term. Whenever it is over, will things simply return to the prior “normal” or will a new “normal” come into being? Will people get their old jobs back? Will there even be businesses or jobs to return to? How much will future earnings be impacted? Will the stock and financial markets rebound?
Ascertaining whether a supported spouse is cohabiting with a romantic partner in such a way that it constitutes a changed circumstance warranting a modification of alimony is often an issue that family courts have address. In 2014, the New Jersey Legislature modified the alimony statute, N.J.S.A. 2A:34-23(n), to codify factors to determine whether a former spouse is cohabiting with a romantic partner such that an alimony award may be modified. Those factors are:
(1) Intertwined finances such as joint bank accounts and other joint holdings or liabilities;
(2) Sharing or joint responsibility for living expenses;
“All you need is a dollar and a dream”. Mega Millions. Powerball. Pick-6. State lotteries all over the country encourage people to pluck down their dollars for the dream of possibly winning a fortune and being financially set for the rest of your life.
However, for one Michigan man that “dream” may have been considered more of a nightmare when he was directed in his divorce case to turn over to his ex-wife $15 million, nearly one-half of the Mega Millions jackpot he won in 2013. That decision was recently affirmed by the Michigan Court of Appeals in Zelasko-v-Zelasko (Docket No: 342854 decided June 13, 2019). Why the husband may have considered a lottery jackpot to be a “nightmare” included the fact that the parties married in 2004, separated in 2008, filed a divorce complaint in 2011 – almost two years before the winning lottery ticket was purchased – and where the wife had been the primary breadwinner, earning roughly three times what the husband earned. Why such a result? Most critically, under Michigan law “marital property” subject to equitable distribution in a divorce includes all property acquired from the date of marriage until the date of entry of the divorce decree. Hence even property acquired after a separation or after a divorce complaint is filed is considered marital property in Michigan. Since these parties’ actual divorce did not become final until 2018, the lottery winnings of 2013 were still considered marital property.
Among the other reasons this significant award to the wife was affirmed on appeal included: (1) that the determination was made by an arbitrator during a binding arbitration process which had been agreed upon by the parties, with the ability to challenge such rulings being statutorily limited; (2) the arbitrator’s ruling that such a division was fair and equitable, opining that the winning lottery ticket was probably not the first lottery ticket the husband purchased during the marriage and that as losses throughout the marriage were incurred jointly, winnings should also be shared jointly; and (3) that the dollar spent for the ticket was arguably marital money and as such a joint investment. Beyond this, the husband had not engendered much sympathy since he allegedly failed to contribute any money for the support of the parties’ three children.