by Corrinne E. Cooke, Esq.
One of the most common divorce myths involves the assumption that permanent alimony, which is typically awarded in divorces where the parties have been married for many years, will continue indefinitely. In New Jersey, it is well settled law that an alimony obligation is modifiable based upon a showing that a substantial change in circumstances has occurred since the time that a divorce was entered. Examples of a "change in circumstances" that may warrant a modification of an alimony obligation include an increase or decrease in either party’s income, cohabitation of the alimony recipient tantamount to remarriage, receipt of an inheritance, loss of employment (if it is not voluntary), and good faith retirement.
The termination of an obligor’s alimony obligation occasioned upon the payor’s retirement is not automatic. It is up to the obligor to file an application with the Court for a modification or termination of their alimony obligation. In determining whether an obligor’s impending retirement constitutes a substantial change in circumstances warranting a modification or termination, the Court must consider: (1) the age and health of the party seeking to retire and (2) the motive and timing of the impending retirement. The Court will also look to the obligor’s ability to pay alimony after retirement, and the dependent spouse’s ability to provide for themselves, which involves an examination of both parties’ incomes and assets. In the event the Court determines that the reason for the obligor’s retirement is to avoid his or her alimony obligation, the application will be denied.
Even if the Court determines that the payor has advanced a good faith reason for retirement, the Court must then decide whether the advantage of the retirement to the retiring spouse outweighs the disadvantage to the other party. This determination is critical to the analysis. If this inquiry is answered in the affirmative, only then will the Court address whether and to what extent the payor’s alimony obligation should be modified.
In the event that the Court determines that the advantage to the payor in retiring does not “substantially outweigh” the disadvantage to the participant, then the payor’s retirement –– even if pursued in good faith –– will not be a basis to modify their alimony obligation. This is a fact-sensitive inquiry that the Court determines on a case-by-case basis.
Of course, divorcing parties have the ability to negotiate through counsel an automatic date for the termination of alimony, if both parties agree. If an agreement is reached that contemplates an automatic termination of alimony upon a triggering event (reaching a certain age, retirement, etc.), courts will enforce that agreement. In negotiating these provisions, it is important that the payor of alimony understand that this is a benefit they would not normally receive and must be willing to offer something in exchange for an automatic termination.
If you are contemplating a divorce, or are divorced, have an alimony obligation and are considering retirement, it is important to consult with an experienced family law attorney to determine how to best proceed.
Corrine Evanochko Cooke is an Associate and member of the Divorce Group ofStark & Stark, 993 Lenox Drive, Lawrenceville 08648. www.stark-stark.com.