Factoring in Savings to Determine Alimony
There is a multifaceted approach to awarding alimony in New Jersey, which includes any savings held by the couple.
A family law court in New Jersey may award a savings component to alimony when routinely accumulated savings was a part of the marriage lifestyle. Two pivotal appellate court cases put New Jersey in the minority among states for recognizing the savings habits of wealthy couples when calculating alimony in a divorce and allowing credits for savings in pendente lite orders. The first key decision occurred in Lombardi v. Lombardi, 447 N.J. Super. 26 (App. Div. 2016).
The Court’s Ruling in Lombardi v. Lombardi
In Lombardi, the appellate court reviewed the lower court’s alimony award that excluded an allotment for savings. During the twenty-year marriage, the Lombardi’s saved nearly all of Mr. Lombardi’s annual salary of one to over two million dollars. Mrs. Lombardi made less than $100,000.00 a year before she stayed home to raise their child. They were a couple with a high net worth that lived frugally to dedicate most of their money to savings. Both parties acknowledged their regular savings contributions were the foundation of their financial lifestyle.
And because saving money was a staple of their lifestyle, the appellate court remanded the case to the lower court to include savings in the alimony, despite the absence of a need to protect the supported spouse. The lower court figured that since she had other means of ensuring future alimony payments, she did not need the additional savings allotment to safeguard her future alimony. The appellate court’s ruling essentially eliminated the need to justify the savings component of alimony as protection against future alimony loss when the marital lifestyle includes regular savings.
In its ruling, the appellate court reiterated that a court configures an alimony award after considering the enumerated statutory factors in N.J.S.A. 2A:34-23. The court emphasized that the parties’ division of labor during the marriage results in the income level the marital partners enjoy. The supported party has a right to enjoy the continued married lifestyle, even at the expense of the supporting party. Thus, based on the parties’ income and the assets they enjoy that are hallmarks of their lifestyle, such as residences, vacation homes, and private schools, the family court judge calculates the fair amount that would keep the supported spouse in such a lifestyle.
As to savings, in the Lombardi case, the lower court expected the supported spouse to replace her savings with a return on her assets from the property division. The appellate court noted the inequality since the supporting spouse enjoyed the marital lifestyle, putting aside savings from his income. And case law concedes a spouse’s need to save for the future when alimony should end due to the death of the supporting spouse or other circumstances that terminate alimony. The concept is much like an insurance policy where the supported spouse is the beneficiary to ensure continued support.
Moreover, the appellate court stated that property divisions are separate from alimony awards. Everyday savings are part of the marital lifestyle. It is not fair to have one spouse rely on their property distribution to maintain their lifestyle while the other does not have to do so. As such, the court held that the lower court must consider the parties’ savings for alimony purposes, regardless of whether the supported spouse needs protection against losing alimony to the supporting spouse’s death or a change in circumstances.
The Implications of A.J.V. v. M.V.V.
In A.J.V. v. M.V.V., No. A-3990-18 (App. Div. May 14, 2021), the trial court ordered $5,000.00 a month in savings as part of the $11,500.00 monthly alimony. On appeal, the payor spouse contended that the supported spouse did not need savings. The payor spouse earned between $600,00.00 to over a million annually as a pharmaceutical executive, while the supported spouse earned $187,000.00, at most, when she was not home raising their child. The facts detailed by the lower court show a married life of reasonable comfort and frugality. They owned vacation property but drove modest vehicles.
After reviewing the superior court’s detailed transcript supporting its decision, the appellate court reiterated that alimony is for raising the supported spouse to the standard of living during the marriage. In addition, court law establishes that the family court judge has discretion in awarding alimony according to the parties’ circumstances after determining whether maintenance is appropriate. The court uses 14 factors outlined in N.J.S.A. 2A:34-23 to award alimony.
N.J.S.A. 2A:34-23 lists alimony factors as the need of the supported spouse and the ability of the supporting spouse to pay alimony, the length of marriage or union, the age and health of the parties, the standard of living during the marriage, and the parties’ differing abilities to maintain the marital lifestyle. Also included are the parties’ earning capacity and educational or vocational skills for employability, noting any gaps in employment for household duties. Further, a court may consider parental responsibilities, a party’s rehabilitative vocational needs for employability, and each party’s financial contributions during the marriage. When applicable, the court considers property distribution, investment income availability, tax consequences of an alimony award to each, the pendente lite support paid and for how long (temporary support), and anything else the court finds applicable.
The lower court in A.J.V. carefully addressed the 14 factors and determined that regular savings and investing accounted for 7 million in assets, and both parties agreed that between $12,000.00 to over $21,000.00 were allotments to savings. Citing Lombardi, the appellate court confirmed that lifestyle and standard of living during the marriage and equity are foundational when ordering alimony. And when couples save money consistently during the marriage, a court may consider this lifestyle habit when ordering maintenance, even when protecting the dependent spouse’s support is not an issue.
Can the Court Retroactively Apply Savings to Alimony Paid Before the Divorce Decree in NJ?
In addressing the $5,000.00 per month credit to the payee spouse for the temporary or pendente lite alimony, the court referenced Mallamo v. Mallamo, 280 N.J. Super. 8 (App. Div. 1995) 654 A.2d 474. The Mallamo court allowed temporary support credits after confirming that temporary support orders cover the parties’ needs until the divorce is final. Since pendente lite support is not a complete picture of the parties’ lifestyle, income, and assets, a judge may go back and compensate an under-supported spouse to reflect the accurate award after the judge knows the complete picture post-trial. So, referring to A.J.V., since the pendente lite order did not include the $5,000.00 in savings of the permanent alimony award, the court credited that monthly component to the payee spouse. Besides, the appellate court noted that 52 months of temporary support allowed the payee spouse to save and not the payee spouse.
After these two pivotal cases, divorcing couples and family law attorneys must remember that savings must be a part of temporary alimony before the court orders the permanent alimony award when the divorce is final. In that way, the higher-paid spouse does not accumulate savings, while the supported spouse gets shortchanged until the final alimony award. An experienced family law attorney at The Bronzino Law Firm knows the unique intricacies of the law in these complex and often high-asset divorce cases and can ensure that a temporary support award includes a savings component from the outset.
Seek Experienced Support at Our Firm for Your High Net Worth Divorce Case in Ocean County, NJ
If you are considering divorce or have questions regarding your savings as a consideration for alimony during and after the divorce, contact a family lawyer at The Bronzino Law Firm, with offices in Brick and Sea Girt, to advise you of your alimony rights. We assist clients with all aspects of divorces, including division of assets, financial concerns in the divorce process, spousal and child support, hidden assets, handling investments and real estate properties, and more. If you have a need for help with a divorce matter in Tinton Falls, Toms River, Bay Head, Red Bank, Rumson, Monmouth Beach, Sea Bright, and other communities in Monmouth and Ocean County, contact us at (732) 812-3102 for a free consultation.