If you are preparing to divorce, you might wonder whether you might be ordered to pay or if you will receive alimony or spousal support.
Alimony is a series of financial payments one spouse pays to the other when a significant difference in their incomes exists. The reason for alimony is to help the recipient enjoy a standard of living that is similar to what they enjoyed during the marriage.
New Jersey state law governs alimony, and it may be awarded in dissolutions of marriage and civil unions. The type and amount of alimony will be determined based on many factors, including how long the marriage or civil union lasted, each spouse’s income and ability to earn a living, and the standard of living both enjoyed while married/ together. There are a few types of alimony in New Jersey; one type, open durational alimony, can only be awarded for long-term marriages that end in divorce. Here’s what to know about open durational alimony and how the payments are calculated from Ziegler Law Group, LLC.
What is Open Durational Alimony?
Open durational alimony was created in 2014 when New Jersey passed an alimony reform law. Prior to this, permanent alimony could be awarded; Permanent alimony was alimony that didn’t end after the payor retired, and it could be awarded in marriages that were not as lengthy. Open durational alimony replaced permanent alimony. This type of alimony is only terminated upon by a court or when the payor reaches retirement. In addition, there are limits to which it a be awarded.
Open durational alimony does not have a fixed termination date, it is typically the longest type of spousal support that might be awarded. However, it can only be awarded when the lower-earning spouse truly needs financial support, and the marriage lasted 20 or more years.
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How to Determine Open-Duration Alimony Amounts
If you think that you might be eligible for open-duration alimony or be ordered to pay it, you likely want to know how much the payments will be. Unlike child support, there are no guidelines in New Jersey for calculating alimony awards.
Courts consider multiple factors found in N.J.S.A. 2A:34-23 when determining whether to award alimony, the type of alimony, and how much the payments should be:
- The need for the requesting spouse for financial support
- The other spouse’s ability to pay
- The length of the marriage
- Each spouse’s age and health
- Each spouse’s income, earning capacity, and education
- The standard of living each spouse enjoyed during the marriage
- Length of the requesting spouse’s unemployment, if any
- Each parent’s responsibility to support children
- Whether one spouse remained home to care for the home and the children while giving up their career
- How long it might take for the requesting spouse to complete training or education and find suitable employment
- How the marital assets will be divided
- The tax consequences for each spouse of any award of alimony
- Any investment income
- Other relevant factors
Since each divorce is unique, courts weigh each of these factors as they relate to the couple’s circumstances when deciding whether to award alimony and how much the payments should be. Since alimony determinations by the court involve complex considerations, it is often best for people going through divorce to try to secure a settlement agreement with the help of a divorce lawyer in New Jersey that addresses alimony.
Financial Considerations for Open Duration Alimony in N.J.
Courts look at the gross incomes of each spouse, including the spouse’s before-tax unearned and earned wages, tips, salaries, bonuses, and commissions.
Investment income, business income, rental income, capital gains, and other pre-tax income sources are also considered.
The court might impute income to a spouse who is voluntarily underemployed or unemployed. This means that a spouse who expects to pay alimony can’t evade it by quitting their job or taking a position that pays substantially less than what they can earn. The court will look at the spouse’s education, work history, salary history, and current ability to pay based on data from the New Jersey Department of Labor to determine their capacity to earn an income. The court might use the average salary for professionals in the same career with a similar educational background as the income amount when calculating their alimony amount.
Another financial aspect of open durational alimony that should be considered during negotiations concerns taxes. Any divorce finalized since Jan. 1, 2019, undergoes different federal tax treatment for alimony paid by the paying spouse and received by the recipient spouse. The paying spouse can no longer claim a deduction on their federal income tax returns for alimony payments. The recipient does not have to report the alimony payments received as income on their federal income tax returns.
Open durational alimony awards in divorces finalized before Jan. 1, 2019, still allow the paying spouse to deduct the payments and require the recipient to claim the payments as income.
For state income taxes, however, the rules differ. Spouses paying alimony can claim state income tax deductions for their payments, and recipients must report their alimony received as income and pay taxes on them.
Negotiations should also include a consideration clause of what would happen if the payor files for bankruptcy. Alimony awards are generally not dischargeable when the payor files for bankruptcy, but they must be reduced to a support order to ensure this.
Marital Duration and Support Period
A marriage must have lasted for a minimum of 20 years before open durational alimony will be considered. If a marriage lasted fewer than 20 years, durational alimony will come into effect for the maximum length of the marriage might be awarded.
If open durational alimony is awarded, the payments will last from the date of the order until the payor reaches retirement age, which is currently age 67. In some cases, the term can be extended based on either spouse’s request. The parties can also agree to an extension or an early termination. Any type of alimony will end if the recipient remarries or enters a cohabiting relationship with a new romantic partner.
Age, Health, and Other Factors
The court considers the age and health of each spouse when determining whether to award open durational alimony. If the recipient is older and unlikely to enter the workforce, despite additional training and education, the court may be inclined to award open durational alimony. Similarly, if the requesting spouse has a serious illness that prevents them from working and keeps them from becoming financially independent, the court is more likely to order alimony payments from their spouse.
The payor spouse’s age and health are also important factors when determining payments. If the spouse who would pay alimony is in poor health, the court might find their earnings capacity is reduced. If they are near retirement age, any award of alimony might only last for as long as it takes them to reach age 67.
Negotiating Alimony Agreements
In most cases, it is best to work with an attorney for open durational alimony in N.J. when you believe it might be an issue in your case. Whether you are the intended recipient or the potential payor, a negotiated agreement is the best mechanism to protect your financial interests, rather than leaving the decision up to the court.
Negotiating an agreement can help to ensure you receive favorable tax treatment if alimony is agreed upon. If you believe you might be ordered to pay open durational alimony, your lawyer might work to secure an agreement for your estranged spouse to take a larger share of the property and assets in exchange for waiving open durational alimony. Your attorney will consider all of the factors in your case to ensure any agreement for open durational alimony in N.J. will be in your best interests.
Consult an Attorney for Open Durational Alimony in NJ
If you are contemplating divorce and believe you might be eligible for open durational alimony or may be ordered to pay it, then it would be wise to consult a knowledgeable New Jersey family law attorney at Ziegler Law Group, LLC. We can review your situation and the factors courts commonly consider to advise you about and how open durational alimony might affect your case. Call us today to request an appointment at (973) 533-1100.
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