When the alimony statute was modified in 2014, aside from making 67 the presumptive, good faith retirement age, it also included multiple standards for the court to consider when a party sought to terminate or modify alimony based upon retirement. One standard was for divorces that preceded the new statute and another addressed divorces that occurred post-statute.
Specifically, pursuant to N.J.S.A. 2A:34-23(j) “[a]limony may be modified or terminated upon the prospective or actual retirement of the obligor.” We previously blogged on the Mueller v. Mueller trial court opinion from 2016 where the trial court said that an application made at age 62, ostensibly 5 years before retirement, was too soon. There hasn’t been a lot of law on this issue since that time. That said, the statute remains in effect and courts must give it consideration.
That was the case in Mulholland v. Sweigart matter, an unreported (non-precedential) Appellate Division decision from May 18, 2022. In that case, the parties were divorced in 2013 after 31 years. Their Property Settlement Agreement (PSA) called for permanent alimony. The alimony was based on the wife imputed annual income of $35,000 and the husband’s agreed-upon income of $416,000 as the only shareholder of his business. This divorce obviously predated the amendment to the statute.
In 2019, the husband sought to terminate his alimony based upon an alleged plan to sell his business and retire. The motion judge denied his motion was not ripe because he did not have a specific plan to sell the business. Approximately one year later, he moved to terminate his alimony effective 12/31/21, wherein he filed a Certification that stated that he would soon turn sixty-eight years old and that during the marriage “it was anticipated that [husband] would eventually sell the business and retire.” He asserted he had been “operating [his] business at a reduced status due to [his] age and health” for the past two years, had “reduced [his] hours and responsibilities and [had] transferred them to [his] employees,” and had reduced his salary to $285,358 in 2018 and $184,523 in 2019 “to reflect that transfer and ease the transition to [his] retirement.” He certified he had entered into an agreement to sell his business “with a target closing date of December 31, 2020” and attached an acquisition term sheet memorializing the proposed terms of the sale. The closing did not happen as of that date or thereafter. The former wife opposed the motion asserting that the husband always said that he would work until he dies. She also asserted that the purported sale was a sham transaction with his long time employee and right hand man. The trial judge denied the motion primarily because the sale of the business had not occurred, said husband could make another motion when the business sold and specifically held that he was denying the motion “…because he could not “make decisions on conditioned precedents.””
The husband sought reconsideration asserting that he could not finalize the sale without knowing whether the court would grant his relief asserting that he could not “in good faith terminate [his] entire earning ability without specific authorization from the court, or an
estimation of [his] alimony obligation going forward.” He also argued that the judge was wrong in refusing to consider his prospective retirement obligation. The reconsideration motion was denied finding:
“there was not a change of circumstances because . . . retirement is key to the sale of the business.” The motion judge indicated defendant’s actual retirement and sale of his business would “create changed circumstances . . . but we’re not
there yet.”
This appeal followed and the Appellate Division reversed the trial court’s decision and ordered an evidentiary hearing on the husband’s application finding that
In denying defendant’s motion without considering N.J.S.A. 2A:34-23(j)(3) or the factors enumerated in it, the motion judge misapplied the law.” The motion judge declined to consider those statutorily-required factors because defendant had not yet sold his business. With that reasoning, the motion judge ignored the clear and unambiguous language of the statute. Subsection (j) of the statute permits alimony to “be modified or terminated upon the prospective or actual retirement of the obligor.” N.J.S.A. 2A:34-23(j). By requiring the actual sale of defendant’s business before he would consider the provisions of N.J.S.A. 2A:34-23(j)(3), the motion judge ignored the word “prospective” in the statute. Courts cannot ignore statutory language.
The Appellate Division went on to note that “…by including the word “prospective” in that amendment, the Legislature by its plain language clearly intended that an obligor did not have to wait until after his or her actual retirement before moving to modify or terminate alimony.
While the wife argued that she would never have agreed to the PSA if she thought that the alimony would only be for 7 years, that argument rings hollow to me. Even before the 2014 amendment to the alimony statute, there was case law regarding retirement as a potential change of circumstances, even if it wasn’t specifically reserved in the Agreement. In fact, most competent attorneys would never prospectively allow retirement to terminate alimony. At best, perhaps you could get someone to agree that alimony could be revisited at retirement consistent with the then existing law (similar to the language some times used for cohabitation pre-2014).
But this brings up a common issue in “gray divorces” after long term marriages that would merit open-durational (previously permanent) alimony. That is, the term open-duration or permanent alimony was always illusory because retirement, reduction of income, disability, cohabitation, etc. have long been possible changes of circumstances. Some times, people actually negotiate end dates for what otherwise would be open durational alimony. For instance, of the parties divorce when the payor is age 64, there might be circumstances where negotiating a term makes sense, or coupling termination with actual retirement, etc.
In any event, this case serves as a good reminder that the language in the statute regarding prospective retirement is more than just advisory.
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