When coping with a request for termination of alimony, the court docket could think about a potential retirement – ​​no actually, it could actually | Fox Rothschild LLP

When the Child Support Act was amended in 2014, in addition to introducing the presumptive bona fide retirement age of 67, it also included several standards for the court to consider if a party attempted to terminate or change child support due to retirement. One standard dealt with divorces that predated the new law and another dealt with divorces that occurred after the law.

Specifically, pursuant to NJSA 2A:34-23(j) “[a]limony may be modified or terminated upon the probable or actual default of the debtor.” We previously discussed the Mueller v. Mueller blogged from 2016, in which the court said filing at age 62, allegedly 5 years before retirement, was premature. Since that time there has not been much law on the subject. However, the law remains in force and is subject to scrutiny by courts.

Such was the case in Mulholland v. Sweigart, an unreported (non-precedent) decision of the Appellate Division dated May 18, 2022. In that case, the parties divorced in 2013 after 31 years. Her Property Settlement Agreement (PSA) called for ongoing alimony payments. The alimony was based on the wife’s imputed annual income of $35,000 and the husband’s agreed income of $416,000 as the sole shareholder of his company. This divorce apparently took place before the amendment to the articles of incorporation.

In 2019, the husband attempted to terminate his alimony based on an alleged plan to sell his business and retire. The filing judge denied that his filing was not mature because he had no concrete plan to sell the company. About a year later, he applied to have his alimony terminated effective 12/31/21, filing a certificate stating that he would soon be sixty-eight and that during the marriage “that was expected [husband] would eventually sell the business and retire.” He claimed he had “operated [his] Business in a reduced status due [his] Age and health” in the last two years “decreased [his] hours and responsibilities and [had] transferred them to [his] Employee” and had reduced his salary to $285,358 in 2018 and $184,523 in 2019 “to reflect this transfer and to ease the transition [his] Retired.” He certified that he had entered into an agreement to sell his business “with a target closing date of December 31, 2020,” and included an acquisition term sheet outlining the proposed terms of the sale. The closing was held did not take place at that time or thereafter. The ex-wife opposed the request, claiming that the husband had always said he would work until his death. She also claimed that the alleged sale was a bogus deal involving his long-time employee and right-hand man The trial judge denied the motion primarily because the sale of the business had not taken place, saying the husband could file another motion if the business was sold, specifically noting that he denied the motion, “… because he could not “make decisions on conditional precedents”. ”

The husband filed for a reconsideration, claiming he could not complete the sale, not knowing if the court would uphold his lawsuit, claiming he “cannot quit in good faith”. [his] full earning capacity without special court approval, or a
Estimate from [his] Child support obligation for the future.” He also argued that the judge had refused to consider his prospective pension obligation. The request for review was denied with the finding:

“There was no change of circumstances because . . . Retirement is key to selling the company.” The motions judge noted that the actual retirement of the defendant and the sale of his company “would create changed circumstances . . . but we are not
still there.”

That appeal followed, and the Appeals Division reversed the trial court’s decision and ordered a hearing of evidence on the husband’s application, finding this to be the case

By denying the defendant’s motion without considering NJSA 2A:34-23(j)(3) or the factors enumerated therein, the motion judge misapplied the law.” The motion judge declined to consider these statutory factors , since the defendant had not yet sold his business. With this reasoning, the application judge ignored the clear and unambiguous language of the law. Subsection (j) of the Act allows alimony payments to be varied or terminated “upon the probable or actual default of the debtor.” NJSA 2A:34-23(j). By requiring the actual sale of the defendant’s business before considering the provisions of NJSA 2A:34-23(j)(3), the motions judge ignored the word “promising” in the articles of incorporation. Courts cannot ignore legal language.

The Appellate Division further noted that “…by including the word “prospective” in this amendment, the legislature clearly intended, through its plain language, that a debtor would not have to wait until after their actual retirement before having to move with an amendment or termination Alimony.

While the woman argued that she would never have agreed to the PSA if she thought the alimony would only be for 7 years, that argument rings hollow to me. Even before the 2014 amendment to the Maintenance Act, there was case law on retirement as a possible change in circumstances, even if it was not expressly reserved in the contract. In fact, most competent attorneys would never allow retirement to cancel alimony. At best, you could perhaps get someone to agree that retirement alimony could be re-examined in accordance with the law then in force (similar to the language sometimes used for cohabitation before 2014).

However, this raises a common problem in “gray divorces” after long-term marriages that would merit open (previously permanent) alimony. That is, the term temporary or permanent maintenance has always been illusory, because retirement, income reduction, disability, cohabitation, etc. have long been possible changes in living conditions. Sometimes people actually negotiate end dates for what would otherwise be open perpetuity. For example, if the parties divorce when the payer is 64 years old, there may be circumstances where it makes sense to negotiate a term or to link the termination to actual retirement, etc.

In any case, this case serves as a good reminder that the language in the Expected Retirement Act is more than advisory.

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