New Jersey Family Law Blog
How Is Alimony Calculated?
While the determination of child support has been largely standardized across New Jersey thanks to the Child Support Guidelines, when it comes to deciding an alimony agreement or modifying an existing alimony agreement, there are no precise “guidelines.” Rather, alimony is awarded based on the idea that an alimony agreement should “enable each party to live a lifestyle ‘reasonably comparable’ to the marital standard of living.”
So if you are going through a divorce or planning on a divorce, how will alimony be calculated in your unique situation? Let’s take a look.
“Establishing a Standard of Living”
Morris Plains Alimony and Divorce Attorneys
Since alimony is based on allowing each spouse to enjoy a similar post-divorce lifestyle to that which they enjoyed during their marriage, the first and most important thing to determine is what exactly the pre-divorce lifestyle actually entailed.
Determining the pre-divorce lifestyle involves creating a Case Information Statement, which is a financial summary of the marriage, most importantly the lifestyle over the last year of the marriage. Once the Case Information Statement of each party is prepared, this important documents must be reviewed along with other financial documents like bank account statements, income tax returns, expenditures, outstanding debts and loans, etc. These documents will help determine the “marital lifestyle,” or the pre-divorce lifestyle. Of course, the more complex a marriage’s finances, the more each party will want to make sure they have an experienced Morris Plains alimony and divorce attorney on their side to both be able to process the information within these documents, as well as to draw conclusions from them which are fair and accurate.
Once a marital standard of living has been established, the actual alimony negotiation process can begin.
“Calculating the Numbers”
East Hanover Spousal Support Lawyers
Again, while there is no legal formula for determining alimony, negotiations tend to begin by employing a general “rule of thumb,” that being a variable percentage which is based on the difference between the two party’s incomes. One attorney might say “let’s start at 25% of the difference because X reason” while the other party’s attorney might then say “No, we start at 35% because Y reason,” and negotiations begin from there.
However, there are scenarios where it may not make any sense to even apply a “rule of thumb,” for example in cases involving higher income marriages and divorce since this difference may not really represent the marital lifestyle that was enjoyed. Additionally, with the changes to the tax laws which eliminates alimony being taxable to the recipient and tax-deductible to the payor, as of 2019 (discussed in last week’s blog), here again this “rule of thumb” may not be realistic for one party or the other.
The most important thing to understand is that alimony must be ultimately based on the principle of allowing both parties to enjoy a lifestyle similar to that which they enjoyed during the marriage, and not based on any kind of formula. If a trial court awards alimony based on a formula rather than this governing principle, such a ruling would be subject to an appeal, as recently evidenced in Waldbaum v. Waldbaum. In this case, the Appellate Division found that the original trial court (wherein the trial judge was ruling on an alimony modification hearing) failed to base its decision on the marital lifestyle of the involved parties, and instead made its ruling based on a formula described within the parties’ alimony agreement. The Appellate Division ultimately reversed the original trial court ruling.
The bottom line is that alimony is based on the hard-to-define and open-to-determination idea of “marital lifestyle,” meaning there is often a great deal of room for interpretation, argument, flexibility, and negotiation by both parties and their alimony attorneys.
Contact Our Morris County Divorce and Alimony Attorneys Today
At Jacobs Berger, our attorneys have extensive experience working with our clients and their families to create family law agreements which protect the stability of the entire family, while still addressing our client’s specific needs and concerns moving forward in towns across New Jersey and Morris County, including Madison, Randolph, Morris Plains, East Hanover, Florham Park, Denville, Dover, Morristown, Morris Township, and the surrounding communities.
By practicing exclusively family and matrimonial law, our firm can focus on providing the informed, knowledgeable, and highly attentive legal service that we know our clients need and deserve when it comes to the matters most important to their financial, legal, and parental futures.
To speak with one of our attorneys in a comprehensive and confidential case assessment regarding your divorce, your alimony agreement, any kind of post-divorce modification or enforcement issue, or any other kind of family law matter, please contact us online, or through our Morristown, NJ office at (973) 718-7705.