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Divorce and Retirement

Divorce after retirement requires application of the same statutory factors concerning equitable distribution and support, but with emphasis on issues relevant to those who have needs that differ from working families and families with young children.

Older people who are already receiving retirement pensions at the time they divorce will have to address the division of marital assets and how to treat their pensions and Social Security.

“Full Retirement Age” means the age at which a person is eligible to receive full retirement benefits included in section 2/6 of the Federal Social Security Act (42 U.S.C.   § 416). Social Security payments are not subject to equitable distribution.

Although the retiree’s income is significantly less than when he or she was working there still may be a claim for alimony. A pension that has been equitably divided cannot also be considered for alimony as that is called “double dipping”.

Assuming that the parties have reached full retirement age at the time of divorce and pensions are in pay status, the Courts will effectuate an equitable distribution of the property both real and personal, which was legally and beneficially acquired during the course of the marriage upon dissolution.

When a share of a retirement benefit is treated as an asset for purposes of equitable distribution the Court shall not consider income generated by that share for purpose of determining alimony.

There is no rule that the division of marital assets or alimony will result in a 50/50 split or that each party will have the same total income to live on. Equitable distribution does not always mean equal distribution.

If the parties already are divorced and alimony is being paid and the obligor seeks to retire, after appropriate proofs are submitted, there may be a reduction or complete stop to alimony payments.

Where the obligor has reached full retirement age, alimony may be modified or terminated upon the prospective or actual retirement of the obligor.

There are recent amendments to the law enacted concerning alimony.

(1). There shall be a rebuttable presumption that alimony shall terminate upon the obligor spouse or partner attaining full retirement age, except that any arrearages that have accrued prior to the termination date shall not be vacated or annulled. The Court may set a different alimony termination date for good cause shown based on specific written findings of fact and conclusions of law.

The rebuttable presumption may be overcome if, upon consideration of the following factors and for good cause shown, the Court determines that alimony should continue:

(a) The ages of the parties at the time of the application for retirement:

(b) The ages of the parties at the time of the marriage or civil union and their ages at the time of entry of the alimony award:

(c) The degree and duration of the economic dependency of the recipient upon the payor during the marriage or civil union:

(d) Whether the recipient has foregone or relinquished or otherwise sacrificed claims, rights or property in exchange for a more substantial or longer alimony award:

(e) The duration of amount of alimony already paid:

(f) The health of the parties at the time of the retirement application:

(g) Assets of the parties at the time of the retirement application:

(h) Whether the recipient has reached full retirement age as defined in this section:

(i) Sources of income, both earned and unearned, of the parties:

(j) The ability of the recipient to have saved adequately for retirement: and

(k) Any other factors that the Court may deem relevant.

If the Court determines, for good cause shown based on specific written findings of fact and conclusions of law, that the presumption has been overcome, then the Court shall apply the alimony factors as set forth in subsection b. of this section to the parties’ current circumstances in order to determine whether modification or termination of alimony is appropriate. If the obligor intends to retire but has not yet retired, the Court shall establish the conditions under which the modification or termination of alimony will be effective.

In all actions brought for divorce, dissolution of a civil union, divorce from bed and board, legal separation from a partner in a civil union couple or nullity the Court may award one or more of the following types of alimony: open durational alimony; rehabilitative alimony; limited duration alimony or reimbursement alimony to either party. In so doing the Court shall consider, but not be limited to, the following factors:

(1) The actual need and ability of the parties to pay;

(2) The duration of the marriage or civil union;

(3) The age, physical and emotional health of the parties;

(4) The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living, with neither party having a greater entitlement to that standard of living than the other;

(5) The earning capacities, educational levels, vocational skills, and employability of the parties;

(6) The length of absence from the job market of the party seeking maintenance;

(7) The parental responsibilities for the children;

(8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;

(9) The history of the financial or non-financial contributions to the marriage or civil union by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities;

(10) The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;

(11) The income available to either party through investment of any assets held by that party;

(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment;

(13) The nature, amount, and length of pendente lite support paid, if any: and

(14) Any other factors which the Court may deem relevant.

In each case where the Court is asked to make an award of alimony, the Court shall consider and assess evidence with respect to all relevant statutory factors. If the Court determines that certain factors are more or less relevant than others, the Court shall make specific written findings of fact and conclusions of law on the reasons why the Court reached that conclusion. No factor shall be elevated in importance over any other factor unless the Court finds otherwise, in which case the Court shall make specific written findings of fact and conclusions of law in that regard.

(2) Where the obligor seeks to retire prior to attaining the full retirement age as defined in this section the obligor shall have the burden of demonstrating by a preponderance of the evidence that the prospective or actual retirement is reasonable and made in good faith. Both the obligor’s application to the Court for modification or termination of alimony and the obligee’s response to the application shall be accompanied by current Case Information Statements or other relevant documents as required by the Rules of Court, as well as the Case Information Statements or other documents from the date of entry of the original alimony award and from the date of any subsequent modification.

(3) When a retirement application is filed in cases in which there is an existing final alimony order or enforceable written agreement prior to the new law, the obligor’s reaching full retirement age as defined in this section shall be deemed a good faith retirement age. Upon application by the obligor to modify or terminate alimony, both the obligor’s application to the Court for modification or termination of alimony and the obligee’s response to the application shall be accompanied by current Case Information Statements or other relevant documents as required by the Rules of Court, as well as the Case Information Statements or other documents from the date of entry of the original alimony award and from the date of any subsequent modification. In making its determination, the Court shall consider the ability of the obligee to have saved adequately for retirement as well as other factors in order to determine whether the obligor, by a preponderance of the evidence, has demonstrated that modification or termination of alimony is appropriate:

An important element is the accuracy of each party’s Case Information Statement identifying the full financial picture for equitable distribution and/or support.

Helfand & Associates has handled numerous divorces of parties who have reached retirement age. We have extensive experience in dividing pensions, addressing tax issues, medical coverage, and insurance after retirement.

 

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