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New Jersey Allows Alimony Savings Component in Divorce of Frugal Couple

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Every family has different spending and savings habits. Some spend every cent almost as soon as it comes in. Others have the means and will to sock much of it away. Most fall somewhere in between. But when a marriage is over, can both spouses expect to spend and save as they once did?

As our New Jersey divorce lawyers can explain, Courts have ruled in previous cases that when a couple parts ways, savings can be a component in part of their alimony award, protecting a dependent spouse from future income losses by allowing him/her to build up a financial safety net. In 2016, the New Jersey Court of Appeals held that a history of savings during the marriage can be considered part of the marital lifestyle, key in determining how much to award in alimony.

More recently, in the case of A.J.V. v. M.M.V., the question was whether the savings component in an alimony determination could be retroactive to the start of the divorce filing. The Court ruled yes, though the decision was non-precedential.

But let’s back up. Five years ago, in the case of Lombardi v. Lombardi, the issue was how to set the alimony award in a case where the spouses used only a small portion of their income to pay monthly expenses and put the rest into savings. They lived a comfortable life together, while also saving $70,000 monthly, the idea being that they wanted no worries when it came to paying for their kids’ college and entering retirement. In fact, the husband could reasonably retire at age 45 and still maintain the family’s lifestyle, if they chose. The question the Court asked was whether a history of regular savings meant that there must be a savings component in the alimony, even when the need to protect the supported spouse from future losses doesn’t exist.

The trial Court found that the pair’s monthly average savings was a component of their lifestyle, but that it should only be included in the alimony award to the extent it was necessary to ensure the dependent spouse maintains economic security in the event the payments were either modified or ceased - and that wasn’t an issue here. The Court noted a number of points regarding the equitable distribution, and denied the wife’s request to include more of a savings component in the alimony payments.

That ruling was reversed on appeal, with the Court holding that a family’s savings habits are a core element of shared lifestyle. Both parties are equally entitled after a divorce to live in a manner as reasonably comparable to what they had during the union. Further, the Court held that the most appropriate cases in which to include a savings component in an alimony award are those wherein the couple prioritized regular savings. There isn’t any demonstrable difference, the Court held, between one family regularly using a sizable part of income to fund savings and another using it to enjoy fancy cars, dinners and trips. The fact that alimony payments may be protected by other financial tools like life insurance doesn’t make consideration of the savings component less appropriate. The Court rejected the husband’s argument that the Court had appropriately considered savings through equitable distribution, noting determinations of equitable distribution are in addition to - not substitutes for - alimony awards.

That brings us to the more recent appellate case, decided in May of 2021. In that case, the trial Court included $5,000 as a savings component in the determination of an alimony award, which was $11,500 monthly for 11 years. The Court further held that the savings component should be 52 months retroactive, to account for when the divorce was in the pendente lite (awaiting litigation) stage.

If you are considering divorce in New Jersey and have questions about alimony, our Hackensack alimony attorneys are available to answer your questions.

Call Rozin|Golinder Law, LLC today at (732) 810-0034 for a free and confidential consultation.

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