What is alimony?
Alimony payments are periodic, court-determined payments made by one former spouse to another under circumstances where the receiving spouse needs financial support from the other party. Alimony exists to allow former spouses to enjoy a similar lifestyle to when they were married and mitigate the financial hardships associated with divorce. [However, family courts are aware that inasmuch as spouses receive a financial benefit that is derived from marital cohabitation, the ability of both spouses to maintain the same standard of living (once their divorce has been finalized) is not attainable in all but a minority of divorces].
Types of Alimony
For ease of understanding, let's assume that the wife is the obligee (the person receiving alimony).
Temporary (pendente lite): Temporary support that assists one spouse in meeting living expenses while the divorce is pending;
Limited duration: Provides support to a former spouse as she seeks to become self-sufficient after the dissolution of the marriage;
Rehabilitative: Granted to a former spouse while she pursues the education and the training necessary to succeed on the job market and become self-sustaining;
Reimbursement: Granted when one spouse financially supported her former spouse's educational and career advancement and the time had not elapsed for her to reap the return on her investment. For example, if she got divorced before her former partner was fully qualified; and
Permanent: A rare form of alimony that may be granted after the dissolution of a long-term marriage, where one spouse would not be able to become self-sustaining.
Did you know!?
If you were married for less than twenty years, you cannot receive alimony for a duration exceeding the marriage length.
How is alimony calculated?
In New Jersey, there is no fixed formula for calculating alimony payments. The court will weigh several factors to determine what compensation is appropriate.
The court will consider the following factors related to the parties:
Their income, financial stability, and ability to support themselves/ pay alimony;
The standard of living of the marital home and the parties' ability to maintain a similar lifestyle after the dissolution of the marriage;
The distribution of marital assets;
Their professional and educational achievements and competitiveness on the job market;
Their childcare responsibilities;
Their age and health; and
The length of the marriage.
Did you know!?
You and your spouse can privately determine your proposed alimony agreement and submit it to the court for approval.
Alimony agreements may contain information such as:
The payment amount and schedule of payment;
The alimony end date (may be tied to specific milestones); and
The conditions under which the agreement may be modified.
Rationale for the Termination/Amendment of an Alimony Agreement
A former spouse remarries;
The spouse who makes alimony payments becomes unemployed, ill/disabled, or dies; and
The spouse who receives payment obtains an increased salary and no longer requires support.
How to modify an alimony agreement?
An application can be filed with the family court to modify the alimony obligation. Each former spouse will be required to provide the necessary, supporting financial documents in order for the family court to assess the application for modification.
Again former spouses may independently draft an amended agreement and submit it to the court for approval.
Tax Implications of Alimony
Effective January 1, 2019, as part of the "Tax Cuts and Jobs Act," the Internal Revenue Service (IRS) altered the tax implications of alimony. If an alimony agreement was finalized before 2019, alimony was considered taxable income for the receiving ex-spouse and tax-deductible for the paying ex-spouse. For alimony agreements finalized in/after 2019, alimony is no longer considered taxable or tax-deductible on federal taxes.
However, for New Jersey state taxes, alimony is considered tax-deductible for the paying ex-spouse and taxable income for the receiving ex-spouse.
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