Amzler v. Amzler, 2020 N.J. Super. LEXIS 38 (App. Div. 2020)
Breaking it Down: The Effect of Retirement on Alimony in New Jersey
In September 2014, the New Jersey Legislature enacted significant amendments to the alimony statute, N.J.S.A. 2A:34-23, regarding the effect of retirement on alimony obligations. Prior to the amendments, a retiring spouse had to make a case for modification or termination of alimony under a change of circumstances analysis.
Now, for original alimony orders entered after September 10, 2014, a rebuttable presumption exists that alimony shall terminate upon reaching “full retirement age” (typically the generally accepted age of retirement in a specific type of employment). N.J.S.A. 2A:34-23(j)(1). This presumption may be “rebutted” or overcome by a court’s consideration of several factors, including:
- Ages of parties both at time of motion for retirement and when obligation was established
- Length of economic dependency
- Consideration recipient forewent to obtain more alimony
- Duration and amount of alimony already paid
- Health of parties at time of retirement application
- Assets and financial circumstances of parties at time of retirement application
- Whether the recipient is of full retirement age
- Sources of income of the parties
- The ability of the recipient to have adequately saved for retirement
If the presumption is overcome, the next step for the court is to consider whether modification or termination is appropriate under 14 factors that are used to establish initial alimony awards – for example, the standard of living and economic circumstances of each party. N.J.S.A. 2A:34-23(a).
What has been unclear until recently is whether subjection (j)(2) of the statute applies only to orders or agreements established after the September 2014 amendments, and how subsection (j)(2) interplays with subsection (j)(3).
Subsection (j)(2) states that when an alimony obligor is contemplating retirement or retires before reaching full retirement age, he or she must demonstrate that retirement is reasonable and in good faith. N.J.S.A. 2A:34-23(j)(2). Subsection (j)(3) provides: “When a retirement application is filed in cases in which there is an existing final alimony order or enforceable written agreement established prior to the effective date of this act, the obligor’s reaching full retirement age as defined in this section shall be deemed a good faith retirement age.” N.J.S.A. 2A:34-23(j)(3).
The Appellate Division recently published an opinion in an important case of first impression, Amzler v. Amzler, 2020 N.J. Super. 38 (App. Div. 2020). The case not only establishes new precedent in family law but also provides a good overview of the impact of retirement on alimony obligations.
The parties in Amzler divorced in 2009 with a marital settlement agreement (MSA) in place. The MSA required Plaintiff (ex-husband) to pay Defendant (ex-wife) permanent alimony of $415 per week.
An anti-Lepis (waiver of modification) provision in the MSA provided that “a voluntary reduction in income of either party would not constitute a substantial change in circumstances for the purpose of reviewing the alimony obligation.”
During the marriage, Plaintiff worked as a chief underground technician at Public Service Electric & Gas (PSE&G). His job function included field work and physically demanding tasks.
At the age of 59, Plaintiff retired due to medical issues. Through PSE&G pension, he was entitled to full retirement benefits of $5,164 per month, of which Defendant received $809 per month as her portion under the MSA.
Based in part on Plaintiff’s failure to pay alimony after he retired, Defendant filed a motion, relying on the anti-Lepis provision, to enforce the alimony obligation. Plaintiff opposed the motion and sought to modify or terminate his alimony obligation. He argued that his retirement was reasonable and in good faith and was due to severe knee problems that prevented him from working.
The judge denied Defendant’s motion and granted Plaintiff’s cross-motion to terminate alimony. The judge relied on N.J.S.A. 2A:34-23(j)(2), agreeing that Plaintiff’s retirement was reasonable and in good faith.
Defendant argued that the judge erred by applying the subsection (j)(2)of the statute, and that N.J.S.A. 2A:34-23(j)(3), which “governs the review of final alimony orders or agreements established before the effective date of the 2014 amendments to the alimony statute”, should have controlled.
The Appellate Division vacated the order granting Plaintiff’s application to terminate alimony and remanded the case. Acknowledging this was a case of first impression, the Appellate Division agreed with Defendant that subsection (j)(3) controls this case.
First, the Appellate Division noted that the judge did not consider whether Plaintiff’s retirement was a “voluntary reduction in income” under the MSA; however, Plaintiff’s own expert conceded he was “still capable of working, albeit at a different job”, despite his medical condition. Id. at 3.
In remanding, the Appellate Division emphasized the need for the judge to consider the alimony factors under N.J.S.A. 2A:34-23(a) in light of the anti-Lepis provision in the MSA.
The reason for this case being deemed as first impression, as the Appellate Division stated: “We have not previously had the occasion to address whether subsection (j)(2) applies to all cases in which a party retires before full retirement age, or only those cases in which an MSA was executed after the 2014 amendments to the alimony statute.”
In reconciling the arguably conflicting language in the statute, the Appellate Division found that (j)(2) applies only to orders or agreements established after the 2014 amendments. The Appellate Division reasoned that any other interpretation would undercut otherwise enforceable agreements entered by parties.
Lastly, the Appellate Division expressed concern that the judge did not consider: (1) the anti-Lepis provision, and (2) subsection (j)(3) which focuses on whether Defendant had adequately saved for retirement. Noting that Plaintiff’s own vocational expert conceded that Plaintiff could continue working in a different capacity, the Appellate Division emphasized his ability to supplement his PSE&G pension to continue meeting his alimony obligation, but left it to the judge on remand to consider whether the Anti-Lepis provision bars any reduction of alimony.
If you have any questions regarding alimony and retirement, please contact the skilled matrimonial attorneys at Sarno da Costa D’Aniello Maceri LLC. Call us today at (973) 274-5200.
