The Appellate Division “give[s] deference to a trial judge’s findings as to issues of alimony, if those findings are supported by substantial credible evidence in the record as a whole.” Cox v. Cox, 335 N.J. Super. 465, 473 (App. Div. 2000). To vacate an award of alimony, the Appellate Division “must conclude that the trial court clearly abused its discretion, failed to consider all of the controlling legal principles, or . . . must otherwise be well satisfied that the findings were mistaken or that the determination could not reasonably have been reached on sufficient credible evidence present in the record[.]” Rolnick v. Rolnick, 262 N.J. Super. 343, 360 (App. Div. 1993), appeal after remand, 290 N.J. Super. 35 (App. Div. 1996).

The award of alimony is largely discretionary with the trial judge. Steneken v. Steneken, 367 N.J. Super. 427, 434-35 (App. Div. 2004), aff’d in part and modified in part, 183 N.J. 290 (2005). That discretion is informed, however, by thirteen factors set forth in N.J.S.A. 2A:34-23(b). Those factors are intended to further the overarching goal of alimony, which is to assist the supported spouse in maintaining a lifestyle reasonably comparable to the one enjoyed during the marriage. Crews v. Crews, 164 N.J. 11, 16 (2000). The trial court is required to analyze all thirteen factors and in contested define the marital standard of living pursuant to the fourth factor as a base line for potential future modifications. Id. In addressing the obligated spouse’s earning capacity, it is within the judge’s discretion to “employ as a benchmark the amount of time plaintiff had devoted to his work during the marriage and to expect him to continue working at that level.” Clarke v. Clarke, 349 N.J. Super. 55, 58 (App. Div. 2002).

Any income generated by the supporting spouse during the marriage is relevant to the proper determination of an alimony award. See Rogers v. Gordon, 404 N.J. Super. 213, 223-25 (App. Div. 2008) (holding in calculating alimony, that the trial court properly imputed income for a husband’s “side jobs” that generated additional income during the marriage); Clarke, supra, 349 N.J. Super. at 58 (holding that the trial court may consider overtime employment when determining the proper amount of alimony).

However, the law requires the court to consider net income, not gross income when determining support obligations. Caplan v. Caplan, 364 N.J. Super. 68, 89 (App. Div. 2003), aff’d, 182 N.J. 250 (2005).

A party may not deliberately remain underemployed in order to shirk his or her support obligations, and a trial court has the discretion to impute a higher income to any individual it believes is doing so. Golian v. Golian, 344 N.J. Super. 337, 341 (App. Div. 2001). There are, however, no bright-line rules which govern the imputation of income. Storey v. Storey, 373 N.J. Super. 464, 474 (App. Div. 2004).

However, there is no legal authority for either imputing income to a teacher who does not work in the summer, or holding that a teacher who does not work in the summer is “underemployed.”

In alimony cases, the trial judge must analyze the thirteen factors in N.J.S.A. 2A:34-23(b). The judge must also articulate, on the record, the “specific findings of fact and conclusions of law” that support his or her conclusions. Pressler, Current N.J. Court Rules, comment on R. 1:7-4 (2010). Naked conclusions are insufficient. A judge must fully and specifically articulate findings of fact and conclusions of law. Heinl v. Heinl, 287 N.J. Super. 337, 347 (App. Div. 1996); Curtis v. Finneran, 83 N.J. 563, 570 (1980). If sufficiently clear factual findings are absent from the record, the Appellate Division will remand to the trial court for additional findings. Curtis, supra, 83 N.J. at 571.

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It is proper for the court to find “no basis to impute additional income to defendant over and above her Social Security Disability benefit,” if plaintiff presented no evidence rebutting the defendant’s prima facie showing of her inability to work. (citing Golian v. Golian, 344 N.J. Super. 337, 342-43 (App. Div. 2001)).

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In calculating child support, the “Considerations in the Use of Child Support Guidelines” allow for the imputation of income based on “the average earnings for that occupation as reported by the New Jersey Department of Labor (NJDOL).” Pressler, supra, ¶ 12(a), Appendix IX-A to R. 5:6A at 2393 (2010). I.e., the court may rely upon the job description and income data set forth in the New Jersey Occupational Wage Compendium published by the Department of Labor.

See: Occupational Employment Statistics Wage Data For New Jersey

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A court can impute income to a party for support purposes when the party is, without just cause, intentionally and voluntarily underemployed or unemployed. Caplan v. Caplan, 182 N.J. 250, 268 (2005); Golian v. Golian, 344 N.J. Super. 337, 341 (App. Div. 2001). Stated differently, when a spouse is not earning his or her true potential income, “an imputation of income based on that potential is appropriate.” Stiffler v. Stiffler, 304 N.J. Super. 96, 101 (Ch. Div. 1999). Accord Halliwell, supra, 326 N.J. Super. at 448 (potential earning capacity of party, not his or her actual income, should be considered). The imputed income figure is one the party is capable of earning. Dorfman v. Dorfman, 315 N.J. Super. 511, 516 (App. Div. 1998). Before imputing income, however, a judge must first find that the spouse was voluntarily underemployed or unemployed without just cause. Caplan, supra, 182 N.J. at 268.

In Miller, supra, 160 N.J. at 423-25, our Supreme Court expanded the notion of imputed income by holding that it was appropriate to impute income to a spouse based on his or her substantial investments in non-income producing stocks. The Court ruled that income could be imputed based on the interest one could earn on his or her financial assets based on the five-year average return on the Moody’s Composite Index for A-Rated bonds. Id. at 424-26.

A court must consider the supporting spouse’s ability to contribute to the supported spouse’s needs. As previously noted, the central issue is the ability to pay. Miller, supra, 160 N.J. at 420. Further, Rule 1:7-4(a) provides that a “court shall, by an opinion or memorandum decision, either written or oral, find the facts and state its conclusions of law thereon in all actions tried without a jury.” The rule has been interpreted as requiring a trial court sitting without a jury to clearly state its factual findings and “correlate them with relevant legal conclusions.” State v. Locurto, 157 N.J. 463, 479 (1999) (quoting Curtis v. Finneran, 83 N.J. 563, 570 (1980)). Accord Rolnick v. Rolnick, 290 N.J. Super. 35, 42 (App. Div. 1996).

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“‘[T]he goal of a proper alimony award is to assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed while living with the supporting spouse during the marriage.’” Steneken v. Steneken, 183 N.J. 290, 299 (2005) (quoting Crews v. Crews, 164 N.J. 11, 16 (2000)). Although “[t]he award of spousal support is broadly discretionary . . . the exercise of this discretion is not limitless.” Steneken v. Steneken, 367 N.J. Super. 427, 434 (App. Div. 2004), aff’d in part, modified in part, 183 N.J. 290 (2005). Rather, “N.J.S.A. 2A:34-23(b) sets forth the [authority] of the trial court to award alimony and lists, on a non-exclusive basis, those factors the trial court must consider in that context.” Steneken, supra, 183 N.J. at 300.

Moreover, income may be imputed to an obligor when fashioning an alimony award, see Pressler, Current N.J. Court Rules, comment 2.5.1 on R. 5:7-4 (2010), because the “calculation of imputed income. . . [is] within our courts’ capabilities[,]” despite the fact that it is a “complex process” that at times yields imprecise results. Miller v. Miller, 160 N.J. 408, 424 (1999). Accordingly, “‘[a] trial judge’s decision to impute income of a specified amount will not be overturned unless the underlying findings are inconsistent with or unsupported by competent evidence.’” Overbay v. Overbay, 376 N.J. Super. 99, 106-07 (App. Div. 2005) (quoting Storey v. Storey, 373 N.J. Super. 464, 474-75 (App. Div. 2004)).

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A healthy skepticism arises when a party’s financial situation results from self-employment where he controls the purse strings. “[I]t is the self-employed obligor who is in a better position to present an unrealistic picture of his or her actual income than a W-2 earner.” Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006).

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In order to impute income, the court must make a finding that the party is voluntarily underemployed without just cause. Dorfman v. Dorfman, 315 N.J. Super. 511, 516 (App. Div. 1998). The party must be “intentionally failing to earn that which he or she is capable of earning.” Ibid. The imputation of income is discretionary and requires the judge to “realistically appraise” the party’s job prospects and earning capacity. Storey v. Storey, 373 N.J. Super. 464, 474 (App. Div. 2004).

See related Blog Post, published in the New Jersey Family Law blog.

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The income a party can “derive from personal attention to business,” not actual income, is the measure of ability to pay alimony. Lepis, supra, 83 N.J. at 150; see Capaccio v. Capaccio, 321 N.J. Super. 46, 58 & n.16 (App. Div. 1999) (discussing proof of incapacity); Deegan v. Deegan, 254 N.J. Super. 350, 358 (App. Div. 1992) (discussing early retirement).

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A judge may appropriately impute income to an obligor spouse based upon his or her investments in income-producing equities. Miller v. Miller, 160 N.J. 408, 423-25 (1999).

In Overbay v. Overbay, 376 N.J. Super. 99 (App. Div. 2005), the court held that:

when a spouse with underearning investments has the ability to generate additional earnings — without risk of loss or depletion of principal — but fails to do so, it is fair for a court to impute a more reasonable rate of return to the underearning assets, comparable to a prudent use of investment capital.

[Id. at 111.]

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A trial judge establishing a spousal support obligation must consider the thirteen factors enumerated in N.J.S.A. 2A:34-23(b). See Crews v. Crews, 164 N.J. 11, 26 (2000) (“An alimony award that lacks consideration of the [factors set forth in N.J.S.A. 2A:34-23(b)] is inadequate . . . .”).

“A trial judge’s decision to impute income of a specified amount will not be overturned unless the underlying findings are inconsistent with or unsupported by competent evidence.” Storey v. Storey, 373 N.J. Super. 464, 474-75 (App. Div. 2004).

Generally, “[a] supporting spouse’s potential to generate income is a significant factor to consider when determining his or her ability to pay alimony.” Miller v. Miller, 160 N.J. 408, 420 (1999). A party may not deliberately remain underemployed to evade his or her support obligations, and a trial judge has the discretion to impute a higher income to an individual if it finds that the party is intentionally earning less than he or she is capable of. Golian v. Golian, 344 N.J. Super. 337, 341 (App. Div. 2001). However, the court has recognized that there are no bright-line rules which govern the imputation of income. Storey, supra, 373 N.J. Super. at 474. See also Caplan v. Caplan, 182 N.J. 250, 270 (2005) (discussing factors a court should consider in imputing income for the purpose of calculating child support).

For instance, in Storey, supra, 373 N.J. Super. at 468, an obligor spouse appealed a trial judge’s order denying his postjudgment application to reduce his alimony obligation based on his diminished earnings. We held that a trial judge must first assess whether the “obligor’s decision [to earn less] is ‘reasonable’ under the circumstances,” and that this assessment of reasonableness requires the consideration of many factors, such as the availability of work and parental responsibility for children. Id. at 469-71 (quoting Deegan v. Deegan, 254 N.J. Super. 350, 357 (App. Div. 1992)).

Parental responsibility is a relevant factor in determining whether a supporting spouse with diminished earnings has acted reasonably. Storey, supra, 373 N.J. Super. at 470-71. This factor is also specifically enumerated in N.J.S.A. 2A:34-23(b)(7).

A trial judge has the discretion to impute income, but only after he has first found that a party is voluntarily unemployed or underemployed. Caplan, supra, 182 N.J. at 268; Golian, supra, 344 N.J. Super. at 341; Dorfman v. Dorfman, 315 N.J. Super. 511, 516 (App. Div. 1998). In fact, “[s]uch a finding is requisite, before considering imputation of income.” Dorfman, supra, 315 N.J. Super. at 516.

See related Blog Post, published in the New Jersey Family Law blog.

NOTE: My legal services include family law, divorce, child support, litigation, arbitration, mediation, child custody and visitation, alimony, equitable distribution, and palimony.

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