There are two basic types of support in divorce cases in New Jersey – child support and alimony. In contrast to child support, which is usually calculated based on standardized guidelines, there is no formula for the amount of alimony or the length of time it will be paid. Instead, alimony is based on several factors, including the duration of the marriage, each party’s actual income, each party’s ability to earn (especially if either or both parties are underemployed or not employed at all), the health of the parties, one party’s need for support and the other party’s ability to pay it, and the marital standard of living. For couples who live together but have never married, no alimony is available.
New Jersey law provides five types of alimony:
Rehabilitative: This form of alimony provides support for a limited period of time and for a specified purpose to assist a former spouse while going to school, getting training, or becoming employed at an entry level after an extended absence from the workforce
Reimbursement: In some instances, reimbursement alimony may be granted when one spouse supported the other to go to school and earn a professional degree
Limited durational: This is paid for a defined, limited period of time. For marriages lasting fewer than twenty years, the maximum period for alimony is the length of the marriage. In practice, however, the term of alimony is usually significantly shorter than the marriage.
Open durational: For marriages lasting twenty years or more, the law provides for open durational alimony, in which there is no cut-off date.
Pendente Lite: Support paid during the divorce process is called pendente lite support. Once a divorce case is filed, parties either agree on how they will pay their bills until the divorce is final, or the court will decide this for them.
These types of alimony are not mutually exclusive. It is possible that someone going back to school to train for employment could receive both open durational alimony and rehabilitative alimony. This would provide long-term stable support at one level, but, for the first couple of years following the divorce, there could be an additional support award to help cover expenses while that person attends school and is not working.
Although alimony is based on an agreement or a court order, it may be modified or terminated after divorce based on substantial and non-temporary changes in circumstances. Certain events may result in reduction or termination of alimony, such as a job loss, or retirement or, in some instances, cohabitation.
Until this year, federal law gave favorable income tax treatment of alimony for families. The person paying alimony could deduct it from his or her higher taxable income and the person receiving paid income taxes at a lower tax rate. This generally resulted in the family keeping more money and the federal government receiving less in taxes. The new federal tax law changed this. For alimony established by signed agreements or court orders after December 31, 2018, former spouses paying alimony will not be able to deduct it and former spouses receiving it will not claim it as taxable income. Couples who know they are divorcing and want to benefit from the current tax benefits should consider filing and completing the process before the end of 2018.