If you are contemplating divorce, one of your concerns may be alimony. Are you eligible for it? Or, will you be required to pay it? What about your savings accounts? Will they have any bearing on the calculation of alimony payments?
All reasonable questions. Divorce raises many legal problems. Among them are equitable distribution , as well as child support and custody issues. For some individuals, alimony is also a consideration.
First off, it’s important to understand the concept behind alimony. Its intention is to help the parties maintain the lifestyle they enjoyed during their marriage. In many cases, alimony is only temporary until the low-earning spouse becomes self-supporting.
How exactly is alimony calculated? Several factors are used to determine alimony payments. They may include:
- Length of marriage
- Respective income of both parties
- Husband and wife’s health and age
- Education of both individuals
- Lifestyle during the marital relationship
Other issues may also require review when calculating spousal alimony. In a recent New Jersey Appellate Court decision, marital savings accounts were further deemed an important consideration.
New Case Finds Marital Savings Relevant to Alimony Calculation
The parties to the new case on point are Lisa and Anthony Lombardi. According to the legal opinion approved for publication, Lisa Lombardi filed for divorce a few months after the couple’s ten year anniversary.
Lisa and Anthony had three children together. Both parties are college educated. After the birth of their first child twenty years ago, Lisa left a job making approximately $80,000 annually. She did so to stay home with the children. Anthony’s annual compensation ranged from $1,087,000 to $2,275,000 during the five years before the divorce complaint was filed.
As the children became older, Lisa decided to reenter the workforce on a part time basis. She became a fitness instructor and worked in local fitness clubs. Her annual earnings were approximately $10,000.
The couple’s high net earnings during the course of their marriage afforded them many advantages. Among them was the fact that they only had to apply a fraction of their income to monthly bills. The balance was put into savings accounts and totaled over $4 million.
Prior cases have addressed the relevance of accumulated savings as they pertain to alimony. In addition to alimony payments, provisions are allotted to ensure the protection of the supported case. In this matter, the trial court judge ruled this was a non-issue. Although Lisa was awarded permanent alimony, the amount did not include an amount for savings. This was problematic as it was proven that savings was a part of the couple’s marital lifestyle.
In its ruling earlier this month, the Appellate Division disagreed with the trial court. Although there was not a need to create savings to protect Lisa’s payments, the marital savings needed to be included in calculating alimony. Otherwise, Anthony would have the ability to continue to accumulate savings; Lisa would not. Since savings was an integral part of the marital lifestyle, alimony payments needed to include a portion for proposed savings.
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If your divorce may include alimony payments, it is important to seek experienced legal counsel. It is also helpful to find an attorney who has a clear understanding of financial matters. Sam Stoia’s accounting background is coupled with multi-million dollar contract negotiation. There is no cost for an initial meeting. Contact us.