Edward R. Weinstein, Esq.Edward R. Weinstein, Esq.

If My Salary Decreases Will My Alimony Automatically Decrease Too?

            No.  They must first make serious efforts to obtain similar employment.  The divorce lawyers at our East Brunswick, New Jersey law firm handle this issue on almost a daily basis.  Many times a former or new client comes in for a consultation immediately after they have lost their job.  Now with less ability to make the alimony payments, they are hopeful that a judge of the Family Part of the Superior Court of New Jersey shall instantly terminate alimony until a new job is found.  However this is not consistent with New Jersey divorce and alimony laws and the attorneys at our law firm explain in great detail what needs to be done.  The person who was fired has a clear legal obligation to seek similar employment as to the position they had before they were fired.  As a New Jersey Family Court judge will apply strict scrutiny upon any motion to reduce or terminate alimony, we advise our clients to have proof of at least 30-60 similar jobs that they have applied for and were not hired for.  Only then will a judge find it to be reasonable for you to ultimately take a lower paying job.  The key here is a good faith effort in seeking a similar job with similar pay.  The experienced lawyers at our law firm help build our client’s case in order to enhance the likelihood of success.  Following please find a case that grapples with this complex issue of N.J. divorce law. 

            In S.O. v. M.O., the parties were divorced on March 25, 2003, and a Dual Final Judgment of Divorce (“DFJD”) was entered.  There were two daughters born of the marriage, both of who were minors at the time of divorce.  During the marriage, the husband earned approximately $200,000 per year while the wife earned approximately $30,000 per year.  The husband worked as a company sales representative and project manager, earning  $100,000 in base salary and an additional $100,000 in bonus income.  Pursuant to the DFJD, the husband agreed to pay child support and $55,000 per year in permanent alimony, as the wife’s monthly budget ranged from $8,000-$8,400.   The husband also agreed to maintain a life insurance policy in the amount of $500,000.  The DFJD also stated that the parties could bring an application for modification of alimony if there is a substantial change in the party’s circumstances. 

            After the DFJD was finalized, the now ex-husband’s company altered its bonus eligibility formula making it more difficult to obtain bonus income even though the husband’s base salary was raised to $160,000.  The ex-husband has also remarried since the DFJD was entered and has two minor children from his new marriage.  Due to the change in salary, the ex-husband made a motion in 2009 to the Family Part of the Superior Court of New Jersey to reduce his alimony obligation.  The court denied the ex-husband’s motion, holding that the ex-husband failed to demonstrate a change in circumstances.  The ex-husband did not appeal that decision.  Since then, the ex-husband has continued to earn below $200,000 while the ex-wife’s earnings have increased.  In 2014, the ex-wife was earning $52,000 per year, which is $22,000 per year more than she was earning at the time of divorce in 2003.  Also, the ex-wife’s household expenses have decreased since the DFJD was entered. 

            In 2014, the ex-husband filed another motion to modify and reduce alimony.  The ex-wife was served with the motion documents through the mail despite the fact that the ex-husband and ex-wife had been communicating about the children by email and text message.  The ex-husband’s attorney did not provide the ex-wife with the alimony modification motion or the accompanying emancipation motion by email because he was supposedly worried about confidentiality and security issues.  As a result, the ex-wife did not see either motion and, therefore, did not oppose either motion. 

            On December 12, 2014, the trial court issued an order that emancipated the parties’ daughters.  The court also scheduled a plenary hearing in 2015 to discuss the issues of material fact regarding the alimony modification motion, and to hear testimony from the parties.  The ex-wife was again only served with the plenary hearing documents by mail and, therefore, did not respond.  On January 16, 2015, the trial court judge considered the alimony modification motion unopposed and ordered that the ex-husband’s alimony obligation be cut in half to $27,500 per year.  The judge also ordered the ex-husband’s life insurance obligation be cut in half to $250,000 per year. 

            The ex-wife discovered that motions had been filed regarding alimony reduction when she received her first reduced alimony check in 2015.  The ex-wife then filed a motion to throw out the court’s orders for inadequate service.  The judge hearing the motion decided to hold a plenary hearing.  After testimony from both parties, the judge found the ex-wife credible but not the ex-husband.  The judge found that the ex-husband intentionally misled the court about not sending the motion documents by email because of the confidentiality and security issues.  The judge then rescinded the January 2015 modification order and scheduled another plenary hearing for the alimony issues, which occurred in March and April of 2016.  At this hearing, the judge found both parties to be credible.  On June 17,2016, the judge denied the ex-husband’s motion to modify and reduce alimony because the ex-husband did not demonstrate a substantial change in circumstances.  The court then awarded the ex-wife counsel fees in the amount of $7,961.75 to be paid by the husband because of the ex-husband’s unfair actions. 

            On appeal, the New Jersey Appellate Division recognized that courts have the power to modify and reduce alimony at any time.  The Appellate Division considered the ex-husband’s arguments, which consisted of four main points.  The ex-husband argued that the trial court should have considered the ex-wife’s increase in earnings and decrease in expenses after the children were emancipated.  The ex-husband also argued that the judge should not have found that the ex-husband was voluntarily underemployed, and that the attorney fee award was too high.  The Appellate Division noted that it is guided by the New Jersey Supreme Court’s decision in Lepis v. Lepis, which states that the party making the motion must demonstrate that their circumstances have changed so significantly that it has decreased the party’s capability to support him or herself.  After a change in circumstance is demonstrated, under Lepis, the court must decide if a plenary hearing is necessary.  At the plenary hearing stage, the court will evaluate factors such as whether the change in circumstances is voluntary; whether the change is permanent; whether the change was made in bad faith; and whether the change makes the person paying alimony unable to pay. 

            The Appellate Division held that the ex-husband demonstrated a substantial change in circumstance to permit a plenary hearing.  The court found that the ex-husband’s annual earnings were reduced by approximately $35,000 while the ex-wife’s annual earnings increased by approximately $22,000.  The Appellate Division also found that both parties’ household expenses have changed since the children’s emancipation and ex-husband’s remarriage.  The Appellate Division found that the trial court did not consider the ex-wife’s increase in annual earnings, and that a closer examination of her expenses is necessary.  The court also disagreed with the trial court’s finding that the ex-husband was voluntarily underemployed since the ex-husband has worked for the same company for twenty-five years and has no power over his employer’s alteration in the bonus formula.  The Appellate Division also found that a review of the ex-husband’s current household expenses is needed since it is unclear what his expenses are since he shares expenses with his current wife. 

            The Appellate Division, therefore, vacated the orders regarding alimony and sent the case back down to the Family Part to decide the issues left open, such as current annual earnings of both parties and current household expenses.  The Appellate Division also stated that the Family Part should permit the parties to provide financial evidence, and that the ex-husband’s alimony obligation is still in effect until the issues are decided.