8 Things You Should Know About Alimony in New Jersey Divorce CasesBy Moskowitz Law Group, LLC |
This New Year is bringing some big changes to how the U.S. government will treat alimony – meaning no more deductions for paying parties, and tax-free income for recipients. Those big changes have been the subject of considerable news coverage over the past few months, and they’re raising more awareness about the many complexities of alimony overall.
Although alimony is one of the most defining aspects of divorce, as most people are familiar with the payments one party may have to provide an ex-spouse, there’s a lot the average person doesn’t understand about the ever-infamous “A” word. From when and how it’s awarded to how it’s taxed and modified, there are numerous intricacies and laws that apply.
To help you gain a better perspective of alimony and how it works in New Jersey divorce cases, our legal team at Moskowitz Law Group, LLC has distilled a few major concepts you should know:
- Alimony taxes are changing – If you haven’t heard already, changes to the U.S. tax code set to take effect on January 1, 2019 will change how alimony is taxed. Currently, people who pay alimony can deduct those payments when filing their federal income taxes, and people who receive alimony have that income taxed in accordance to their bracket. Come the first of the year, that will change; alimony payments will no longer be deductible for the paying party, nor will they be taxed on a recipient’s income, which can potentially allow them to qualify for various federal benefits. The tax change applies only to divorces finalized in 2019 or later. However, post-divorce modifications to alimony, even if for divorces finalized when the old tax law was in effect, will mean any new award will be subject the new tax treatment.
- There are different types of alimony – While most people think of alimony as the payment someone has to make to an ex after a divorce, the truth is that there are different types of alimony in New Jersey divorce cases. This includes temporary alimony awarded during a pending divorce case to ensure bills are paid and each party has financial resources they need, rehabilitative alimony usually awarded after a shorter marriage, reimbursement alimony in cases where a spouse made considerable sacrifices for their partner’s career, and limited duration and permanent alimony. The type of alimony awarded in any given case is dependent on the individual facts and circumstances.
- There’s no specific formula – Unlike child support, which is determined using state guidelines, there is no specific formula used to determine alimony. Instead, New Jersey law allows for consideration of over a dozen statutory factors when determining a fair award. These include factors like the current and future needs of each spouse, the duration of the marriage, the standard of living created during the marriage, each spouse’s earning potential, their respective education and employment history, and more.
- You can decide alimony without the court – All the factors mentioned above are indeed considered in divorce cases where alimony is awarded, but the court doesn’t have to be the one to “decide” alimony in your case. In fact, divorcing spouses can arrive at whatever arrangement they deem to be fair in their divorce. Although that can and often is achieved when spouses can effectively communicate, negotiate, and compromise, it’s not always possible in every case. When spouses dispute alimony, courts then turn to the statutory factors to determine what a fair award looks like.
- You have options – Not only are there different types of alimony, divorcing couples have various options when it comes to settling alimony awards in their divorce. Again, the individual facts of a case may dictate what options you have, as will evaluations about what type of alimony would apply under the given circumstances. However, spouses don’t have to simply award what the court would find fair and reasonable. For example, a spouse may choose to relinquish other assets the other party would not have been entitled to during community property division in order to make up for some or all of an alimony award. A person may also choose to give up the family home, award more of their retirement benefits, take on more liabilities and debts, or find a fair award for other tangible assets that lessen the amount or duration of alimony awarded to the other spouse. An experienced attorney can help you explore possible options in your case.
- Earnings matter – Earnings can be a big factor in alimony-related matters. That’s because there are cases where one spouse may not have worked for many years. Under New Jersey law, the court will award alimony that is reasonable in relation to each spouse’s earnings, either as the income they obtain from their job, investments, interest or dividends from other assets, or pensions, or as their earning potential, which is driven by factors like a person’s education, training and skills, and how long they’ve been out of the workforce. Divorcing spouses will need to address issues of non-employment and under-employment, and arrive at agreeable settlements or take a case to trial in order to demonstrate either the need for more alimony, or the employability that wouldn’t necessitate more substantial awards.
- Alimony isn’t “permanent” – Although longer duration alimony awards may be referred to as “permanent” alimony, they are not actually permanent. Following alimony reform, courts did away with lifetime alimony awards common in cases involving long-term marriages (i.e. 20 years or more). Now, alimony is calculated more consistently with the factors mentioned above. With longer marriages, a more open-ended form of permanent alimony is also used. While it may persist indefinitely, permanent alimony can be modified or even terminated upon retirement, a new marriage, death, cohabitation with a new partner, job loss or serious illness, or for other reasons.
- Every case is unique – Despite whatever you’ve heard about a friend’s divorce case or what your Uncle has to pay his ex-wife for alimony, it’s important to remember every marriage and divorce is different. A young couple without have kids or much property is more likely to have no or limited alimony awarded in their case than an older couple that had one parent staying at home to raise the children. The unique factors present in every case, as well as the individual goals and options of the spouses themselves, means alimony can look different for everyone.
Questions About Alimony? Our New Jersey Divorce Lawyers Can Help.
Alimony can be a very important aspect of divorce, and one that requires ample attention, due diligence, and creative solutions. It is also only one part of the divorce process. As such, anyone with questions regarding alimony and other important elements of their divorce should consult with experienced attorneys like those at Moskowitz Law Group, LLC. Our firm serves clients throughout New Jersey and New York, and offers free consultations to help you learn more about your options and what we can do to help. Contact us to request your free case review.