The Legislature has declared that an alimony obligation “shall terminate” upon the remarriage of the supported spouse. N.J.S.A. 2A:34-25. This statute memorializes “the strong public policy against enforcing support orders on behalf of remarried former [spouses].” Ehrenworth v. Ehrenworth, 187 N.J. Super. 342, 347 (App. Div. 1982). Despite the public policy, the courts have recognized that parties may contract for the continuation of alimony beyond the date of a supported spouse’s remarriage. Id. at 349. Accordingly, the court must initially turn to the PSA to consider whether the parties unambiguously agreed that defendant would remain obligated to pay alimony following the recipient’s remarriage.

In this case, the parties included in their PSA a provision that declares alimony would continue “for the natural lives of the parties, unless terminated by any one or more of the following” and then lists two events: repudiation or modification of the PSA by the written “mutual consent of the parties”; and defendant’s death.

The PSA’s silence on the subject of remarriage renders plausible the contention that defendant waived the rights set forth in N.J.S.A. 2A:34-25.

If the parties never reached an agreement that alimony would continue after the recipient’s remarriage, then the payor is entitled to the benefit of N.J.S.A. 2A:34-25 and its expression of the strong public policy that alimony end upon the remarriage of the supported spouse. See Flaxman v. Flaxman, 57 N.J. 458, 461 (1971) (holding that “[t]here is no question but that a valid second marriage extinguishes a wife’s right to alimony from her first husband”); Ehrenworth, supra, 187 N.J. Super. at 347-48. “[T]he law is a silent factor in every contract[, and p]arties in New Jersey are likewise presumed to have contracted with reference to the existing law.” Camden Bd. of Educ. v. Alexander, 181 N.J. 187, 195 (2004) (quoting Silverstein v. Keane, 19 N.J. 1, 13 (1955)).

Absent an actual agreement to the contrary, the parties must be deemed to have contracted in a manner consistent with the mandatory directive of N.J.S.A. 2A:34-25. Should a judge find, following an evidentiary hearing, that the parties did not agree about the impact of remarriage on the obligation to pay alimony, then the payor is entitled to an order declaring that the alimony obligation terminated on the date of the supported spouse’s remarriage.

In ascertaining the parties’ intent, the judge may also consider surrounding circumstances. Also, the subsequent conduct of contracting parties often reveals their actual intentions. Michaels v. Brookchester, Inc., 26 N.J. 379, 388 (1958).

See related Blog Post, by Eric S. Solotoff, Esq. of Fox Rothschild LLP

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The purpose of an alimony award is “to assist the supported spouse in achieving a lifestyle that is reasonably comparable” to the marital standard of living. Crews v. Crews, 164 N.J. 11, 16 (2000). The court has the power to modify an alimony award based on changed circumstances. Lepis v. Lepis, 83 N.J. 139, 146 (1980); see also N.J.S.A. 2A:34-23 (providing that support orders “may be revised and altered by the court from time to time as circumstances may require”). Since the goal of an alimony award is to enable the dependent spouse to maintain the standard of living the parties enjoyed while married, that standard serves as the “touchstone” for adjudicating motions to modify the alimony award. Glass v. Glass, 366 N.J. Super. 357, 370-71 (App. Div.), certif. denied, 180 N.J. 354 (2004).

The support award will be decreased to the extent it is unnecessary to maintain the standard of living of the dependent spouse. Lepis v. Lepis, supra, 83 N.J. at 152-53. Thus, a significant improvement in the financial circumstances of the dependent spouse is a changed circumstance warranting reconsideration of a support award. Glass v. Glass, supra, 366 N.J. Super. at 371 (stating that “‘a significant change for the better in the circumstances of the dependent spouse,’ [] may obviate the need for continued support” (citation omitted)). However, the change must be “significant” and not a “modest” increase in income. Id. at 379.

The burden is on the litigant seeking a modification of the support award to first make a prima facie showing of changed circumstances. Crews v. Crews, supra, 164 N.J. at 28. Once a prima facie showing has been made, the court may order any necessary discovery and conduct a plenary hearing to resolve any questions of fact. Lepis v. Lepis, supra, 83 N.J. at 157-59. Whether to modify an alimony award based on changed circumstances rests in the sound discretion of the family court. Larbig v. Larbig, 384 N.J. Super. 17, 21 (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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Innes v. Innes, 117 N.J. 496 (1990) represents the culminating decision in a progression that commenced with D’Oro v. D’Oro, 187 N.J. Super. 377 (Ch. Div. 1982), aff’d, 193 N.J. Super. 385 (App. Div. 1984). In D’Oro the court affirmed a trial court’s determination that a spouse’s pension could not be considered income for purposes of determining alimony if the income was derived solely from an asset that had been equitably distributed at the time of divorce. D’Oro’s holding was subsequently statutorily enacted in N.J.S.A. 2A:34-23(b), which, as amended in 1988, provides in relevant part:

When a share of a retirement benefit is treated as an asset for purposes of equitable distribution, the court shall not consider income generated thereafter by that share for purposes of determining alimony.

In Innes, the Supreme Court applied N.J.S.A. 2A:34-23(b) retroactively to preclude consideration of income derived from an annuity purchased with the proceeds of an equitable distribution pension award for purposes of modifying alimony. Innes, supra, 117 N.J. at 504-13.

However, in Steneken v. Steneken, 367 N.J. Super. 427 (App. Div. 2004), aff’d as modified, 183 N.J. 290 (2005), in discussing the possibility of double-dipping arising from the manner in which the husband’s salary and the value of his closely-held business were calculated, the court limited the doubledipping prohibition to pensions, and the court further stated in the pension context:

In New Jersey, the bar against double counting of pensions is restricted to income from pension benefits that have been treated as an asset for equitable distribution purposes. Conversely, the rule does not bar counting as income for determining alimony that portion of the former spouse’s pension attributable to post-divorce employment, and therefore not subject to division as marital property at time of divorce. Innes, supra, 117 N.J. at 504-06; Staver v. Staver, 217 N.J. Super. 541, 545 (Ch. Div. 1987). In other words, a supporting spouse’s pension may be considered for purposes of alimony to the extent that post-divorce earnings enhance its value.

[367 N.J. Super. at 437-38.]

In this case, the court accepted as wholly rational the notion that after-acquired “income” received by a supported spouse — derived from her employment and not from equitably distributed assets — should be considered in connection with any alimony award.

Furthermore, the court held in Heller-Loren v. Apuzzio:

Absent a [property settlement agreement] dictating otherwise, the law generally holds that income is generated by the exercise of an option earned and acquired post-divorce if exercised at a price below fair market value or if sold at a profit. It does not support the contention that stock options should be treated as income upon mere vesting.

[371 N.J. Super. 518, 522 (App. Div. 2004).]

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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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Support orders are subject to increase or reduction when the party seeking modification shows that the relief is warranted. Lepis, supra, 83 N.J. at 157. The changes relevant are those that substantially affect need and ability to pay. Id. at 151, 155. Circumstances such as income, employment, disability with impact on earning capacity or living expenses, changes in the children’s needs and emancipation of a child are relevant. Id. at 151-52.

One who seeks modification can establish a sufficient change based upon circumstances that have an impact on either party’s need and ability to pay or “a combination of changes on the part of both parties which together have altered the status quo which existed at the time of the entry of the support order under review.” Stamberg v. Stamberg, 302 N.J. Super. 35, 42 (App. Div. 1997). ^[1]

A temporary change is generally deemed inadequate to warrant modification of support. Lepis, supra, 83 N.J. at 151. Nonetheless, there is limited precedent for suspension of support for a defined period related to a specific circumstance warranting a suspension. For example, the court has approved such measures in cases where the payor’s ability to meet the support obligation is due to a term of incarceration or the payee’s need for support is diminished by his or her incarceration or a period of cohabitation warranting retroactive modification for that period. Calbi v. Calbi, 396 N.J. Super. 532, 543-44 (App. Div. 2007); Kuron v. Hamilton, 331 N.J. Super. 561, 572 (App. Div. 2000); Garlinger v. Garlinger, 137 N.J. Super. 56, 65 (App. Div. 1975).

NOTE: This Blog/Blawg, NJ Family Issues, is managed by Paul G. Kostro, Esq., an attorney/lawyer/mediator in Linden, Union County, New Jersey.

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1. In Stamberg, the court suggested measures judges should employ when submissions on a motion for modification indicate a need for discovery of the other party’s income or assets or competent evidence to support a claim. 302 N.J. Super. at 42. There are other options as well. See Rule 5:5-4(a) (specifying documentation required for motion to modify support).

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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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Alimony and support orders define only the present obligations of the former spouses, those duties are always subject to review and modification on a showing of ‘changed circumstances.’ Lepis v. Lepis, 83 N.J. 139, 146 (1980). Importantly, consensual agreements and judicial decrees are reviewed under the same standard of changed circumstances. Id. at 148. Thus, “the extent of the change in circumstances, whether urged by plaintiff or defendant, shall be the same, regardless of whether the support payments being questioned were determined consensually or by judicial decree.” Smith v. Smith, 72 N.J. 350, 360 (1977).

Where the PSA is “silent on the issue of cohabitation and its impact on spousal support,” the court must “decide the issue based on decisional law rather than by construing the settlement agreement.” Ozolins v. Ozolins, 308 N.J. Super. 243, 247-48 (App. Div. 1998).

An application for modification of a PSA is governed by the same standard as the original judgment of divorce. Miller v. Miller, 160 N.J. 408, 420 (1999). That is, “[w]hen support of an economically dependent spouse is at issue, the general considerations are the dependent spouse’s needs, that spouse’s ability to contribute to the fulfillment of those needs, and the supporting spouse’s ability to maintain the dependent spouse at the former standard.” Lepis, supra, 83 N.J. at 152.

“[O]ne of the procedural prerequisites to discovery and a hearing in a modification proceeding under Lepis is an initial showing of changed circumstances.” Gayet v. Gayet, 92 N.J. 149, 155 (1983). Cohabitation constitutes such changed circumstances. Ibid.; see also Ozolins, supra, 308 N.J. Super. at 248 (citing Lepis, supra, 83 N.J. at 151) (“[C]ohabitation by a supported spouse may constitute changed circumstances justifying discovery and an evidentiary hearing.”). The test for whether cohabitation warrants modification of the alimony award is based on economic needs. Gayet, supra, 92 N.J. at 155.

A decrease in alimony is appropriate “when circumstances render all or a portion of support received unnecessary for maintaining” the “standard of living reflected in the original decree or agreement.” Lepis, supra, 83 N.J. at 153. Alimony modification is appropriate where “‘(1) the [cohabitant] contributes to the dependent spouse’s support, or (2) the [cohabitant] resides in the dependent spouse’s home without contributing anything toward the household expenses.’” Ozolins, supra, 308 N.J. Super. at 248 (quoting Gayet, supra, 92 N.J. at 153).

Significantly, “a showing of cohabitation creates a rebuttable presumption of changed circumstances shifting the burden to the dependent spouse to show that there is no actual economic benefit to the spouse or the cohabitant.” Id. at 245.

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Maria P. Imbalzano, Esq. from Stark & Stark’s Divorce Group, authored the article, Post-Judgment Motions To Modify Support in a Poor Economy, which was published in the New Jersey Law Journal.

In these times of economic turmoil, familiarity with the concepts discussed is very important — the article is available HERE.

NOTE: This Blog/Blawg, NJ Family Issues, is managed by Paul G. Kostro, Esq., an attorney/lawyer/mediator in Linden, Union County, New Jersey.

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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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