Whether you are paying or receiving alimony, it’s important to understand the finer points of the law before agreeing to any sort of settlement. With this this podcast, New Jersey family lawyer Bari Zell Weinberger discusses the topic of alimony and some of the ways you can negotiate alimony settlements in New Jersey with your ex-spouse.
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Hosted by: Diana Shepherd, Editorial Director, Divorce Magazine
Guest speaker: Bari Zell Weinberger, Certified Matrimonial Law Attorney
Bari Zell Weinberger is a renowned family law expert and the founder of Weinberger Divorce & Family Law Group, a family law firm with offices throughout New Jersey. She is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney, a certification achieved by only 2% of the attorneys in New Jersey. Bari is also an experienced family law mediator, a published author, and a frequent media contributor on divorce and family law for both local and national audiences.
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Read the Transcript of this Podcast Below.
Why is it helpful for divorcing parties to try to negotiate their own alimony settlement rather than go before a judge?
When parties negotiate alimony in an out-of-court setting, they take control of the process and its outcome rather than give all of the control to the judge. Negotiating also leaves more room for creative solutions. Litigating in court over any matter can be time-consuming and costly. In contrast, negotiating alimony out of court can save you both on time and money and can be much less stressful.
What types of alimony are available in New Jersey?
There are five basic types of alimony in New Jersey. Courts can award pendente lite alimony, also known as temporary alimony, early in the divorce process or throughout in an effort to maintain each spouse in the same financial position that existed prior to the divorce. Temporary support terminates automatically once a divorce is final. It may be replaced by one or more of the other types of alimony.
Another form is open durational alimony, which replaced permanent alimony in the alimony reform statute. Like permanent alimony, open durational alimony has no predetermined fixed ending date. Unlike permanent alimony, however, unless exceptional circumstances exist, a court can order open durational alimony only after a long-term marriage.
Also unlike permanent alimony, open durational alimony is presumed to end when the paying spouse reaches full retirement age, although this presumption can be rebutted under certain circumstances.
New Jersey also offers limited duration alimony. This type of alimony is also sometimes called “term alimony” because it provides for payments to be made for a specific number of months or years and has a predetermined ending date.
Rehabilitative alimony is a type of alimony that has the purpose of rehabilitating a spouse who needs the financial support to reintegrate into the workforce. Courts order rehabilitative alimony for a specific period of time to help a lower-earning spouse obtain re-education and training necessary to become self-supporting.
Finally, there is reimbursement alimony. This type of alimony reimburses one spouse for financial contributions to the education or career advancement of the other.
What are the first steps in negotiating the best alimony settlement possible?
Consider your marital assets. For many couples the family home is the largest marital asset that requires division and distribution in a divorce. The house can be used as an important bargaining chip when negotiating spousal support, especially in cases where the equity in the home will split roughly 50/50 between spouses.
For example, if you’re the higher-earning spouse who will pay alimony, one negotiation strategy is to offer some, or all of your portion of the home equity to the other spouse in lieu of future alimony payments, or for a lowered alimony amount. If the total amount of alimony you would pay over the support term, five years, 10 years, etc, works out to $50,000 and you offer $30,000 in home equity to cover part of it, payments could be reduced to reflect this. Just keep in mind tax implications.
If you will be receiving support, carefully consider whether being bought out by your spouse and staying in the family home is important to you or is selling the house and splitting the proceeds more practical. It might seem like a windfall to have your ex-spouse offer up his or her share of the home equity, but remember, it’s just that: equity. It’s not actually liquid cash.
If your house requires a great deal of upkeep or is in need of repair, factor in these costs first before making any decisions. Depending on your situation, an alimony arrangement with regular monthly payments may make much more financial sense, especially if you think you may sell your home in the long run.
How do alimony reform laws affect the ability to negotiate alimony?
Under the alimony reform laws when there is a long-term marriage, the duration of alimony payments cannot exceed the duration of the marriage unless a judge decides that there are exceptional circumstances. In other words, if a marriage lasted for 15 years, alimony would be required at most for 15 years in most cases.
If you had a relatively brief marriage and are the spouse obligated to pay, negotiating other assets to cover alimony may be even more within reach given the shorter duration, and thus lower total amount of support to be paid.
If you are the receiving spouse and had a brief marriage, be prepared to make a strong case for why alimony is necessary in your situation. For example, if you left your career as a computer programmer to stay at home and raise the kids, you may be able to make a case that rehabilitative alimony can provide support as you pursue education and/or re-training to re-enter the workforce in this fast-changing career field.
How can taxes serve as a bargaining chip in negotiations?
In general, alimony payments are tax deductible to the paying spouse and taxable to the receiving spouse because spousal support payments are viewed by the government as income. If your are the supported spouse, take time during negotiations to run numbers through various tax implications to see how support payments will affect your tax bracket and taxes due.
If the proposed alimony amount pushes you into a higher tax bracket, consider swapping some percentage of alimony for non-taxable alternatives, such as having the paying spouse make payments directly toward expenses such as certain home upkeep-related expenses. When in doubt, your tax attorney can work with your accountant or your financial planner to walk you through different tax scenarios. This information will help you choose the best alimony settlement option for you.
If negotiations stall or reach a stalemate, what are some ways to jumpstart them?
Couples who are splitting up are often hurt and angry. Setting these emotions aside can be difficult. But it is absolutely necessary to ensure productive negotiation. Focus on the law as you have been advised by your attorney or mediator and concentrate on concrete aspects of your case, such as the appropriate amount for you to pay or receive. Focusing on the emotions that alimony negotiations can trigger may only serve to upset and exhaust you more.
If you are using a mediator, remember that you hired your mediator as a professional to help you reach a resolution that will work for you and your family now and going forward into the future. Trust their knowledge and experience and listen to your mediator or attorney when they offer you advice on how to proceed. Ignoring their recommendations could harm you and your case in the long run.
How can your divorce attorney help with alimony negotiations?
Before negotiations start, you and your attorney can work together to develop strong and practical alimony recommendations. You can roleplay how they might be received and devise other alternatives to have ready to propose. Depending upon how you and your spouse are settling your issues, your attorney may actually be the one speaking on your behalf during the negotiations and/or mediation session.
As you choose an attorney, look for one with demonstrable negotiation experience to ensure that you receive the feedback and guidance you will need to successfully navigate this process.
What about alimony modifications later on? Are they also open to negotiation?
If the financial circumstances of either the payor or the receiver of alimony significantly changes, an alimony award may need to be modified to reflect this. Circumstances that may lead to a modification request include: experiencing a substantial involuntary decrease to your income, failure of a business, or a substantial increase to your spouse’s income.
You can apply to the courts for a modification, but you may also want to explore the option of privately negotiating a mutually agreeable change. For example, let’s say a paying ex-spouse loses their job and can’t make the payments. If the former spouses are on good terms, the paying spouse may negotiate with the receiving spouse some type of temporary payment reduction until the spouse becomes re-employed and gets back on their feet.
This avoids the receiving spouse from having to go to court to enforce the alimony which they will be unable to collect anyway if the paying spouse has no income. Still, in some cases, going before the courts for a modification may be preferable. Your attorney will be able to guide you in making the right choice.
How can listeners learn more about alimony in New Jersey?
I encourage listeners to download our free guide, “Three Tips for Negotiating a Better Alimony Settlement,” for details on everything we have discussed today, plus more tips on making sure your spousal support determination is fair. Please find it at wlg.com/downloads.
What special help can your firm provide to individuals with questions about their alimony negotiations during divorce or questions about their current agreement?
If you are seeking a trusted family law attorney with experience helping clients reach positive solutions in their divorce and alimony matter, please contact us today to set up your free consultation.