The Appellate Division’s recently published (precedential) decision in Amzler v. Amzler provided much needed clarity on a question of first impression regarding early retirement and related applications to modify or terminate alimony obligations established prior to the 2014 amendments to our alimony statute.
Specifically, the Appellate Division was presented with the question of whether N.J.S.A. 2A:34-23(j)(2), which governs the modification or termination of an alimony obligation upon the prospective or actual retirement of an obligor prior to attaining full retirement age, applies to all alimony orders and agreements or only to those alimony orders or agreements established after the effective date of the 2014 alimony amendments. In a noteworthy decision, the Appellate Division determined that the statutory factors set forth in N.J.S.A. 2A:34-23(j)(2) are applicable only to alimony orders or agreements which were established after the amendments’ effective date.
Before I proceed to summarize and analyze this important new decision, I will premise with a few remarks on the amended alimony statute.
2014 Amendments to Alimony Statute
In September 2014, the New Jersey legislature enacted legislation amending our alimony statute, N.J.S.A. 2A:34-23, which provided additional statutory factors and considerations for determining alimony, including the amount and length of an alimony obligation. The amendments also provided statutory factors that courts must analyze to determine applications to modify or terminate alimony obligations based on cohabitation and retirement, amongst other things.
With respect to retirement applications, the amended alimony statute sets forth the general rule that alimony may be modified or terminated upon the prospective or actual retirement of the obligor.
Notably, the amended statute explicitly distinguished – although not clearly – between applications filed in cases in which an existing alimony order or enforceable written agreement was established prior to the effective date of the amended alimony statute (September 10, 2014) from cases in which alimony orders or agreements were established after the effective date of the amended alimony statute. Unfortunately, although the amended statute clearly sought to distinguish between applications to terminate or modify alimony obligations established prior to the 2014 amendments and obligations established after the 2014 amendments, there was great confusion as to how courts were to analyze early retirement applications, meaning applications in which the obligor was seeking to retire before reaching full retirement age.
The relevant portion of the amended statute on retirement, N.J.S.A. 2A:34-23(j), bears three separate subsections and appeared to provide two similar, yet critically different, set of factors for situations in which an obligor was seeking to modify or terminate alimony based on early retirement depending on when the alimony obligation was established.
Subsection (j)(1) – The “Rebuttable Presumption”
The first subsection, or N.J.S.A 2A:34-23(j)(1), created a rebuttable presumption providing that alimony shall terminate upon the obligor spouse attaining full retirement age, except that arreages accrued prior to the termination date shall not be vacated or annulled. Parenthetically, full retirement age under the amended statute is defined as the age at which a person is eligible to receive full retirement for full retirement benefits under section 216 of the federal Social Security Act (42 U.S.C. 416). Under the amended statute, and more particularly, N.J.S.A. 2A:34-23(j)(1), the rebuttable presumption may be overcome, if, upon consideration of the following factors and for good cause shown, the court determines alimony should continue:
(1) the ages of the parties at the time of the application for retirement;
(2) the ages of the parties at the time of the marriage or civil union and their ages at the time of entry of the alimony award;
(3) the degree and duration of the economic dependency of the recipient upon the payor during the marriage or civil union;
(4) whether the recipient has foregone or relinquished or otherwise sacrificed claims, rights or property in exchange for a more substantial or longer alimony award;
(5) the duration or amount of alimony already paid;
(6) the health of the parties at the time of the retirement application;
(7) assets of the parties at the time of the retirement application;
(8) whether the recipient has reached full retirement age;
(9) sources of income, both earned and unearned, of the parties;
(10) the ability of the recipient to have saved adequately for retirement; and
(11) any other factors that the court may deem relevant.
If the rebuttable presumption is overcome, then the Court, in accordance with the amended statute is to re-apply the initial alimony factors, of which there are 14, to the parties’ current circumstances in order to determine whether modification or termination of alimony is appropriate. If the obligor intends to retire but has not yet retired, the statute permitted the court to establish the conditions under which modification or termination of alimony will be effective. This subsection of the amended statute, which applied to situations in which an obligor attained full retirement age, was understood to apply only to those alimony obligations which were established after the effective date of the amendments. This was clarified by the Appellate Division in Landers v Landers, 444 N.J. Super. 315 (App. Div. 2016), wherein it was held that subjection (j)(1) only applied to alimony obligations that were established after the amendments.
Subsection (j)(2) – Early Retirement
As to situations in which an obligor seeks to retire prior to attaining full retirement age, the amended statute, specifically, N.J.S.A. 2A:34-23(j)(2), provides that the obligor shall have the burden of demonstrating by a preponderance of the evidence (more likely than not) that the prospective or actual retirement is reasonable and made in good faith. In this situation, the factors to be considered by the Court to determine whether the obligor has met the burden of demonstrating that the obligor’s prospective or actual retirement is reasonable and made in good faith are as follows:
(1) the age and health of the parties at the time of the application;
(2) the obligor’s field of employment and the generally accepted age of retirement for those in that field;
(3) the age when the obligor becomes eligible for retirement at the obligor’s pace of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;
(4) the obligor’s motives in retiring, including any pressures to retire applied by the obligor’s employer or incentive plans offered by the obligor’s employer;
(5) the reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce dissolution;
(6) the ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part-time or work reduced hours;
(7) the obligee’s level of financial independence and the financial impact of the retirement by the obligor upon the oblige; and
(8) any other relevant factors affecting the obligor’s decision to retire and the parties’ respective financial positions.
Notably, subjection (j)(2) did not explicitly state whether the foregoing factors applied to alimony obligations that were established prior to the effective date of the amendments.
Subsection (j)(3) – Pre-Amendment Alimony Obligations
Finally, the third subsection, specifically N.J.S.A. 2A:34-23(j)(3), provided a set of statutory factors for the court to consider 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 the amendments. Subsection (j)(3) stated that an obligor’s reaching full retirement age shall be deemed a good faith retirement age but provided that the obligor has the burden of demonstrating, by a preponderance of the evidence, that modification or termination of alimony is appropriate. The factors to be considered by the Court to determine whether the obligor has met the burden are as follows:
(1) The age and health of the parties at the time of the application;
(2) the obligor’s field of employment and the generally accepted age of retirement for those in that field;
(3) the age when the obligor becomes eligible for retirement at the obligors pace of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;
(4) the obligor’s motives in retiring, including any pressures to retire applied by the obligor’s employer or incentive plans offered by the obligor’s employer;
(5) the reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce dissolution;
(6) the ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part-time or work reduced hours;
(7) the obligee’s level of financial independence and the financial impact of the retirement by the obligor upon the oblige; and
(8) any other relevant factors affecting the obligor’s decision to retire and the parties’ respective financial positions.
The Early Retirement Conundrum and the Amzler Decision
The foregoing factors in subjection (j)(3) are clearly distinguishable from the factors set forth in N.J.S.A. 2A:34-23(j)(1) in determining retirement applications for obligors who have reached retirement age. However, N.J.S.A.2A:34-23(j)(3), did not specifically address those situations in which an obligor was seeking to retire prior to attaining full retirement age in which there was an existing alimony obligation that predated the 2014 amendments. More poignantly, subsection (j)(3) differs from subsection (j)(2) in one critically important respect – namely, subsection (j)(3) requires the court to consider an additional factor not present in subsection (j)(2). More specifically, subsection (j)(3) requires the court to “consider the ability of the obligee to have saved adequately for retirement.”
In view of the foregoing, a cloud of confusion was cast over the amended statute as to which factors were to be applied to a situation in which an obligor was seeking to modify or terminate an alimony obligated that was established prior to the amendments based on early retirement. Ultimately, clarity arrived with the Appellate Divisions’ published decision in Amzler v. Amzler.
In Amzler, following a twenty-three (23) year marriage, the Plaintiff-Husband and Defendant-Wife entered into a Matrimonial Settlement Agreement requiring the Plaintiff-Husband to pay “permanent” alimony to the Defendant-Wife in the amount of $21,600.28 per year. The Husband’s alimony obligation was premised upon his earnings of $110,000 per year stemming from his position as chief underground technician at PSE&G. The Wife, on the other hand, was imputed an income of $35,000 per year. Parenthetically, in their Agreement, Mr. and Mrs. Amzler agreed to include what is known as an anti-Lepis provision, which stated that a “voluntary reduction in income of either party” would not constitute a substantial change in circumstance for the purpose of reviewing the alimony obligation.
After the parties divorced, Mr. Amzler continued in his position at PSE&G even beyond the “early unreduced retirement date” of January 12, 2013, which he allegedly declined to recover money “he lost in the divorce.” Notwithstanding, Mr. Amzler did eventually retire, in or about July 2017, at the age of fifty-nine, at which point he was entitled to full retirement benefits of $5,164.37 per month through his PSE&G pension. However, as set forth above, this constituted early retirement under amended statute as he had not yet attained full retirement age under the statute.
Upon Mr. Amzler’s retirement, his former Wife filed a motion to enforce Mr. Amzler’s alimony obligation and to compel him to maintain and provide proof of his life insurance policy, as was required under the parties’ Agreement. Mr. Amzler responded with a cross motion seeking to modify or terminate his alimony obligation, “claiming that he retired from PSE&G in good faith due to medical problems that precluded him from performing the tasks required by his job.”
The dueling motions resulted in a Plenary Hearing wherein the Court heard testimony from both parties and the Plaintiff-Husband’s vocational counselor, who was charged with evaluating plaintiff-Husband’s ability to work.
The vocational expert testified that Mr. Amzler’s health issues – namely, degenerative joint disease in his left knee coupled with bilateral hand swelling – would make it difficult for him to continue to work as a chief underground technician. Ultimately, the vocational counselor opined that Mr. Amzler retired from his position at PSE&G in good faith.
Mr. Amzler testified that the parties contemplated his retiring at the age of fifty-five (55) during the marriage. He also testified that the expected age of retirement for PSE&G employees in his position was 59.5 years. Mr. Amzler further testified that he attempted to find alternate work but determined that all such alternatives for which he was potentially qualified required physical labor that he could not endure.
Mrs. Amzler testified that her current salary at the time of the Plenary Hearing was $43,680 and that she had a retirement account with an approximate value of $27,466. She also testified that her portion of the Husband’s 401(k) which she received pursuant to their Matrimonial Settlement Agreement was valued at approximately $257,220.86 at the time of the hearing. Additionally, she testified that she received a portion of her former Husband’s pension in the amount of $808 per month. She testified that she anticipated working for another thirteen (13) years.
After the plenary hearing, the trial court denied Mrs. Amzler’s motion to enforce the Agreement and granted Mr. Amzler’s cross motion to terminate his alimony obligation. In rendering the decision, the trial court applied the factors set forth in N.J.S.A. 2A:34-23(j)(2). In so doing, the trial court determined that the Plaintiff-Husband had retired in good faith and terminated his alimony obligation. Thereafter, the Wife filed a motion for reconsideration of the Court’s Order, primarily arguing that the Court erred in applying the factors set forth in N.J.S.A. 2A:34-23(j)(2). The trial court denied the reconsideration motion and an appeal ensued.
The Appellate Court’s Decision
The Appellate Division vacated the trial court order and remanded the matter back to the trial Court. Most significantly, the Appellate Division, in its decision, clarified that subsections (j)(1) and (j)(2) only apply to alimony orders or agreements established after the 2014 amendments became effective. As discussed above, the Appellate Division, in Landers v Landers, 444 N.J. Super. 315 (App. Div. 2016), already clarified that subjection j(1) only applied to alimony obligations established after the amendments. However, Amzler marks the first time the Appellate Division clarified that subjection (j)(2) also only applies to alimony obligations established after the amendments of 2014. As such, an obligor’s application to terminate or modify alimony established prior to the effective date of the 2014 amended statue is to be analyzed under N.J.S.A. 2A:34-23(j)(3) which requires the court to consider the ability of the obligee to have saved adequately for retirement.
As set forth above, the trial court’s decision was vacated for failure to consider whether Defendant-Wife had adequately saved for retirement under subjection (j)(3). Ultimately, the matter was remanded to the trial court to determine whether termination or modification of the alimony obligation is appropriate under subjection (j)(3). It will be interesting to see whether the trial court reaches the same conclusion under subsection (j)(3) with the additional consideration as to the ability of Mrs. Amzler to have saved adequately.
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