Even with the ever-increasing cost of living in New Jersey, some couples are able to save money on a routine basis if they make sure that their household expenses do not exceed their income.
In a New Jersey divorce, should these regular monthly savings – rather than just monthly expenses – be factored into the amount of any alimony obligation which the higher earning spouse has to the lower earning spouse?
The answer is yes.
In a New Jersey divorce, the goal of alimony is to attempt to allow the lower earning spouse to achieve a post-divorce lifestyle that is reasonably comparable to the one enjoyed during the marriage. That is not possible without accounting for a couple’s monthly savings.
This principle was recently illustrated in a Decision issued by a New Jersey appeals court in a case entitled Lombardi v. Lombardi.
In that case, the parties had lived a comfortable, though not lavish, lifestyle during their marriage. However, the family had been able to save an average of about $67,000 per month because of the husband’s very high level of income.
The parties’ assets were worth approximately $5.5 million, including over $4 million in savings.
In the divorce trial, the New Jersey family court judge awarded the wife 50% of the marital savings and set her alimony at an amount that would cover the level of expenses which had been incurred during the marriage.
However, the judge did not include in the alimony award an additional amount which would allow the wife to continue to save money.
The New Jersey family court judge reasoned that the wife could continue to save an ample amount of money after the divorce by simply investing the money which she had been awarded from the parties’ savings during the marriage.
The trial judge ruled that including monthly savings in alimony calculations was only necessary in cases where a dependent spouse needed to ensure her economic security in case of a later reduction or termination of support. The court did not believe that this was such a case, due to the husband’s earning capacity and assets.
The wife appealed the trial judge’s Decision, on the basis that it would allow the husband to save much more money than her and thereby maintain a better lifestyle.
The New Jersey appeals court agreed with the wife. It said that savings is a fundamental element of the marital lifestyle that must be accounted for in a support award. That is why it is a separate line item on the Case Information Statement—the financial disclosure form that each party must fill out in the beginning of the divorce process.
The appeals court rejected the trial court’s conclusion that it could adequately address the savings issue through equitable distribution of the parties’ assets. It said that equitable distribution determinations were intended to be in addition to, and not as substitutes for, alimony awards.
The New Jersey appeals court also observed that it would not be equitable to require the wife to rely solely on the assets she received through equitable distribution to support the standard of living, while the husband was not confronted with the same burden.
Therefore, the case was remanded to the New Jersey family court judge, who was directed to recalculate the husband’s alimony obligation to include monthly savings.
Salvaggio Law Group devotes its entire practice to New Jersey Family Law matters, including those related to Alimony. If you want to talk, please call us at (973) 455-1220 or fill out the Contact Form on our firm’s website.