Termination of Alimony for Retirement

One of the biggest issues surrounding New Jersey’s Alimony Reform Act of 2014 (“the Act”) is how the retirement of a payor ex-spouse can affect alimony payments. The Act resulted in significant changes to prior law in this area. Consequently, whether you are the payor or the recipient of alimony, no matter whether your divorce happened before or after the Act was passed, you need to understand how the Act may affect your situation. If you have questions about alimony and retirement, or if you need legal representation, contact Bergen County alimony lawyer Brian D. Iton.

Nearly everyone looks forward to the time when they can retire from the grind of the workweek, whether to travel, satisfy an unfulfilled bucket-list of aspirations, pursue a hobby, or just relax and spend more time with loved ones. However, the burden of having to continue alimony payments on a reduced retirement income is often difficult to manage.

Prior to the 2014 Act, retirement was a “gray area” for payors and recipients of alimony in New Jersey, particular when it came to “permanent” alimony. If a payor ex-spouse wanted to be relieved of this obligation, he or she was forced to gamble with his or her livelihood: retire first, file for a termination or reduction of alimony based upon a reduced income, and then bear the burden of proving that the ex-spouse no longer needed the alimony.

This situation frequently led to unfair results. By retiring first, the payor ex-spouse took the risk that his or her alimony obligation would remain unchanged, resulting in economic hardship as he or she was forced to cope on a reduced income. Furthermore, the burden of proof often meant that only the recipient spouse’s income was protected as the ex-spouses reached retirement age. Proponents of alimony reform argued successfully that the law should provide payor ex-spouses with a better way to plan for retirement.

Consequently, the Act revised the factors that courts must consider in determining whether alimony may be terminated or reduced upon the payor ex-spouse’s retirement:

• First, the payor ex-spouse may now seek the termination or modification of alimony in anticipation of retirement. Although any modification will not be effective until the retirement date, payor ex-spouses may obtain a judgment ahead of time, and both parties can then plan accordingly.

• Second, if a payor ex-spouse retires at full retirement age—currently, 67 years old under the Social Security Act—courts must presume that the retirement decision is made in good faith, regardless of whether the payor is capable of continuing to work. The burden is on the recipient ex-spouse to rebut this presumption, based on specific enumerated factors. (If the payor ex-spouse seeks retirement before this age, he or she may still seek termination or reduction, as long as the retirement is reasonable and in good faith.)

• Third, even if the recipient spouse is able to rebut the presumption, the court will nevertheless determine the conditions under which modification or termination would be appropriate upon the payor’s retirement.

• Fourth, a court may now consider whether the recipient ex-spouse could or should have provided, or in fact did provide, for his or her own retirement.

• Finally, contrary to prior law, which focused almost exclusively on a recipient ex-spouse’s right to maintain his or her pre-divorce standard of living, the presumption now is that neither party has a greater right to maintain a particular lifestyle following divorce or retirement.

Importantly, however, the Act does not alter existing agreements regarding retirement. If the final divorce judgment specified the terms that would apply upon retirement, those terms take precedence over any provisions of the Act.

While the provisions of the new alimony law may seem relatively clear, there are nuances that affect how they may apply in your particular situation, depending upon when you obtained your divorce and the terms of your final judgment. For advice or representation, contact Bergen County alimony attorney Brian D. Iton toll-free at (844) 431-3380, or online to set up a free consultation. Mr. Iton represents people who need a divorce lawyer in Hackensack, Paterson, Newark, Jersey City, and elsewhere in Bergen, Essex, Hudson, and Passaic Counties.