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

Is Rental Income Included In Child Support Calculations In New Jersey?

Yes.  All income, earned or unearned should be included in any calculation as per New Jersey’s Child Support Guidelines. Following is the lawyer’s take on this issue.   

In Newman v. Newman, ex-husband John Newman appealed from specific sections of the dual judgment of divorce that terminated his marriage to Valerie Newman. In his appeal he claimed that the Family Part court of Mercer County, Superior Court of New Jersey failed to make satisfactory findings of fact, committed error in determining each party’s incomes and the length of alimony, and further committed error by awarding his ex-wife counsel fees.

Valerie and John got married in October 1994, and had two children together, born in 1997 and 2001. Valerie filed for divorce in June 2007, and John responded with an answer and counterclaim. After a twelve day trial, the Family Part entered a dual final judgment of divorce on December 22, 2008. According to the dual final judgment of divorce, John was required to pay Valerie $ 2,250 a month in limited duration alimony. This amount was based the $ 122,300 a year imputed on to John, and $ 45,000 a year in income imputed on to Valerie. John appealed this arrangement.

Valeria was forty years old at the time of trial, and John was fifty one. Both of them were high school graduates. During the marriage, Valeria worked as an administrative assistant at Merrill Lynch, and earned around $ 28,000 to $ 30,000 every year. She left work on maternity leave 1997 after the couple’s first child was born. In January of 2001 she returned to the workforce on a part-time basis at Peddie Child Development Center. During this time, their son was enrolled in full-time day care. After a six-month maternity leave for the birth of the former couples second son in 1997, she returned to Merrill Lynch on a part time basis. She started working full time again in 2003. Her gross income in 2007 was $ 64,979. During this time, she also primarily responsible for taking care of the every day needs of the children. Valerie’s job at Merrill Lynch was terminated in May 2008. She then took a temporary position as an administrative assistant to a marketing director at Church & Dwight. She was now getting reimbursed on an hourly basis, at $ 25 an hour for 35 hours a week.

John worked at the Peddie School, a private school located in Hightstown, for thirty two years. The school allowed John and Valerie to live in a house located on campus and owned by the school, free of charge. For the few years right before the divorce and during the trial, John was earning $ 86,500 a year, not counting the value of the free living accommodations. At trial Valeria presented the testimony of a real estate appraisal expert which stated that the gross monthly rental potential of the free housing was $ 2,900.

At trial, John’s attorney argued that limited term alimony would be the most appropriate remedy in this situation as the couple had been married for twelve and a half years. He further alleged that Valerie’s current unemployment and choice to earn less money was her own choice, and wanted the Family Part judge to impute a gross income of $ 58,938 on her, as that was her average income from 2005 to 2008. Conversely, Valerie’s attorney argued that she had lost her job in 2008 and now only earned $ 43,000 a year at her new job. The Family Part judge calculated John’s annual income at $ 122,300 for purposes of child support. He income the value of the Peddie home benefits in this figure. He also imputed $ 45,000 of annual gross income on to Valerie. The judge then conducted a statutory analysis according to the factors enumerate in New Jersey Statute 2A:34-23(b), and determined that the appropriate term for alimony was ten years, and that John should pay Valerie $ 2,250 a month. John appeal.

On appeal, John argued that the Family Part court committed error by failing to state sufficient findings of fact and conclusions of law, calculating support by imputing income on to him for the free shelter he received from his job, in setting Valerie’s income in relation to determining support, and in determining the length of the alimony duration.

The New Jersey Appellate Division started its opinion by explaining that Family Part judges have a duty to make factual findings and state reasons to support their conclusions of law. Generally, if the Family Part court failed to make factual findings, the New Jersey Appellate Division will remand the case back to the trial level so that those findings of fact can be made. But when a Family Part judge had the chance to observe witnesses at trial, the New Jersey Appellate Division will only disturb that judge’s findings of fact if they are clearly wrong, and not supported by the credible evidence in the record. 

In his appeal, John basically argued that the Family Part court overstated his income, while understating Valerie’s income, and that the duration of the ordered alimony was unwarranted. He further contended that the Family Part judge failed to make sufficient findings of fact and conclusions of law. The New Jersey Appellate Division did not agree, and held that based on the evidentiary record and the law, the Family Part court did make adequate factual findings to support the conclusions of law.

The New Jersey Appellate Division explained that alimony is a financial right that comes from the marital relationship to provide the dependent spouse with a certain level of support that is comparable with the standard of living enjoyed during the course of the marriage.

The Family Part judge found that John’s salary was around $ 87,000 to $ 89,000 a year, and that he had been receiving free housing for many years, that Valerie’s expert valued at $ 2,900 a month. In addition, the Family Part judge also found that was receiving free utilities, lawn care, electric and gas, water and sewer, snow removal and garbage removal. The judge reasoned that according to Appendix IX-B of the Child Support Guidelines, he had a duty to impute in-kind income to John due to the free housing he was receiving because it effectively reduced his personal living expenses. As such, the Family Part judge concluded that for alimony and child support purposes, he had to calculate John’s income at $ 122,300 a year. John argued that this in-kind housing value should not have been imputed for alimony purposes without the court also adjusting his shelter expenses. The failure to do so, he argued, allowed his ex-wife to “double dip” into his income. The New Jersey Appellate Division did not agree.

The appellate panel stated that John earned around $ 87,000 gross income every year. Furthermore, there was no discernable error in the Family Part imputing the in-kind housing expense as gross income to John. The appraisal expert suggested that a fair rental value for the property based on a tenant paying the utilities was $ 2,900 a month or $ 34,800 a year. As such, the New Jersey Appellate Division held that it was within the Family Part court’s authority to impute $ 1,000 a year of in-kind income because of the added benefits John got from the free utilities, lawn care, water and sewer charges, and snow removal. Therefore, the Family Part’s alimony award was affirmed.

Please reach out to our law firm if you have a child support related matter.