Alimony—the legal obligation to provide financial support to a former spouse—can be one of the most contentious parts of a divorce.
Alimony amounts do not take into account gender, and in New Jersey, they’re based upon thirteen different statutory factors. The highest-earning spouse, male or female, is typically the party required to pay alimony, although each situation involving alimony is unique. Just like equitable distribution of assets doesn’t necessarily mean a 50/50 split, alimony is intended to give both parties the ability to maintain a lifestyle that is reasonably comparable to the lifestyle they enjoyed while they were married.
New Jersey law doesn’t rely on a set formula for calculating alimony. Rather, the court uses information provided in the Case Information Statement (CIS) and other financial information when deciding alimony.
Keep reading to learn more—and if you’re looking for an even better understanding of what goes into determining the amount and duration of alimony payments, an experienced alimony attorney can help.
Establishing a standard of living
The first step toward determining the amount of any alimony payments, their duration, and any other conditions is to establish what your standard of living was while married.
But here’s the catch—there isn’t a statute that tells you how to establish that standard of living.
Instead, identifying your standard of living involves looking at a number of factors that, taken together, create a holistic picture of your financial life. This includes information about:
- Your income and your ex’s income
- Separate budgets listing lifestyle expenses for the family, children, and yourself
- A summary of debts and assets
Because this information may be used as evidence throughout your divorce process, it’s important to provide accurate, detailed documentation from your bank and credit card accounts, pay stubs, dividend statements, tax returns, and bills.
Keep in mind that establishing a standard of living isn’t just about being able to cover your bills. It’s also about showing the courts what your life looked like while you were married.
If you traveled frequently, even if it was for pleasure and not work, those travel expenses should be included in your standard of living estimate. If your children take violin lessons, participate in a travel hockey league, or attend a private school, those costs should be submitted just like the gas or grocery bills. Did you put aside money for tax obligations or for a designated savings component?
On the flip side, if you and your ex lived on a tight budget with the expectation that you’d be able to retire early and comfortably, the court should know what your anticipated future looked like.
Don’t be tempted to gloss over this step. It’s an opportunity for you to advocate for yourself, regardless of whether you’re expecting to receive or pay alimony. At a minimum, it also helps you figure out how much it costs you to live, and will help you formulate a realistic budget moving forward.
Factors that contribute to how alimony is calculated
Note that the figures below are only intended to illustrate potential calculations in alimony discussions.
As mentioned, New Jersey doesn’t have a specific formula for calculating alimony amounts. A standard formula often used when discussing alimony is 20–25% of the net difference between your annual income and that of your ex. However, these percentages could be smaller or larger, or a combination of a variety of percentages, depending on your specific factual circumstances.
For example, say you earn $120,000 per year and your former partner earns $50,000. A reasonable baseline expectation for beginning to calculate alimony might look like this:
$120,000 – $50,000= $70,000
$70,000 x .20 = $14,000/year
$70,000 x .25 = $17,500/year
$14,000/12 = $1,166.67/month
$17,500/12 = $1,458.33/month
In this scenario, you could potentially expect to receive between $1,166.67 and $1,458.33 each month in alimony obligations.
But that simple calculation isn’t the final word in determining alimony. Besides the need and ability of parties to pay alimony, New Jersey law also mandates that the court must consider a variety of factors before landing on an alimony award, including:
- The length of the marriage or civil union
- The ages of the parties involved
- The physical and mental health of the parties involved
- The earning capacity of each party
- Equitable distribution of property
- Parental responsibilities
- Investment income available to each party
- The tax implications of alimony
Once a standard of living is established, these factors can significantly increase or decrease the alimony awarded. And, as with any legal matter, the final outcome will depend on the unique facts of your situation.
Length of marriage
The length of a marriage or civil union can have a major impact on the court’s final order. There’s no direct relationship between the number of years married and the duration or amount of alimony payments, but the longer a marriage lasted, the longer a certain lifestyle was enjoyed.
The court can also consider both financial and non-financial contributions to the marriage made by each partner. For example, if one party worked to help pay tuition and living expenses for the other while they attended graduate school or other advanced training, they may be awarded reimbursement alimony.
Age
Older couples going through a “gray divorce” are more likely to have limited working years left and more in retirement savings or investments. The health of their retirement portfolio and earning capacity for the remainder of their career usually plays a role in determining a payment amount.
Physical and mental health
The costs of managing chronic physical or mental conditions (or anticipated costs of long-term senior care) may be a key element of any awarded alimony.
Earning capacity
When it comes to alimony, it’s important to look what what one can reasonably anticipate earning. It would be unrealistic to expect an individual who has earned lower wages or hasn’t enjoyed extensive perks or bonuses in the past to suddenly match the income of a partner with historically higher earnings.
Additionally, if one partner has been out of the workforce for a long time, they may need additional education or training to be competitive in the current job market. In this situation, alimony may include additional funds for a finite period.
These funds, sometimes called rehabilitative alimony, are intended to help the party with the lower earning capacity get the education or training they need to improve their ability to secure a good job.
Division of property
Under New Jersey law, marital assets are supposed to be divided equitably, not equally. Any property or payouts that are part of this equitable distribution of assets and come out of current income can affect how much alimony is awarded.
Parental responsibilities
Your expected parental responsibilities after divorce also play an important role in determining alimony. For example, if you are the lower-earning spouse and you have primary physical custody of your children, or if your child has special needs that make it difficult for you to work full-time, you might be awarded more alimony.
Note that alimony isn’t the same thing as child support. The amount of child support you pay or receive can have an impact on the amount of alimony awarded.
Tax implications
In 2014, the New Jersey Legislature amended factors for determining alimony to include the following: “The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment.”
New Jersey allows obligated parties to deduct alimony payments and requires receiving parties to report alimony as taxable income on state tax returns, but neither is currently allowed or required on federal tax returns. Depending on which tax bracket you and your ex fall into, the impact of this decision can be significant. That’s why it’s important to consult with a tax advisor or financial professional in addition to your lawyer when negotiating alimony.
How long do alimony obligations last?
Except in exceptional circumstances, New Jersey law hasn’t supported permanent alimony (alimony that continues for as long as a former partner is alive) since 2014. Instead, the courts tend to award limited-duration alimony, which is spousal support payments that are limited to a specific period of months or years not to exceed the length of the marriage.
It’s also considered standard for alimony payments to cease once the recipient moves in with a new partner, remarries, or begins collecting benefits from entitlement programs such as Social Security.
However, in NJ, barring exceptional circumstances, if the parties are married for less than 20 years, the Court cannot order that an alimony term last longer than the total time the couple was married. If the marriage lasts more than 20 years, however, the length of an alimony term is considered to be one of open duration—the Court can weigh the factors and use its discretion.
Let our New Jersey alimony attorneys help you
Negotiating alimony can seem like an overwhelming and difficult process, but it’s much easier when you have a skilled alimony attorney on your side.
If you need help navigating your divorce process, contact our team to coordinate your strategic planning session.
