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Savings Component Can Be Considered When Determining Alimony

According to a decision published by the New Jersey Appellate Division in September 2016, a couple’s habit of saving regularly should be taken into consideration when determining alimony.

For many years, New Jersey case law has recognized that a savings component of alimony is sometimes necessary in order to protect the dependent spouse. Including enough in alimony so that the recipient can save some of the alimony each month, allows that spouse to build up a safety net in case the spousal support stops or decreases.

Lombardi v. Lombardi

The case that led to the September 2016 Appellate decision—Lombardi v. Lombardi—involved a high-asset divorce in Mercer County. The couple had lived a very frugal lifestyle for such a high-income couple. In fact, the two saved most of what they earned. Lisa Lombardi, the wife, appealed the trial court’s decision not to consider this fact when calculating an appropriate alimony award.

Background Information

When Lisa Lombardi filed for divorce the couple had been married 20 years.

At the time of the appeal, the couple had 3 children aged 15, 18, and 20.

Lisa Lombardi had given up her career to be a full-time homemaker when their oldest child was born. At the time of the divorce, she was working part time as a fitness instructor and was earning about $10,000 per year.

Anthony Lombardi was a successful financial analyst. His income for the last 5 years of their marriage ranged from $1,087,000 to $2,275,000.

For such a high-income family, the Lombardis lived an extremely modest lifestyle. They had mutually agreed to put a large portion of their earnings into savings. In fact, they saved almost three-fourths of their income.

While working out their divorce settlement, the couple agreed on many important issues, including child custody, parenting time, equal distribution of the marital property based on equitable distribution, and the fact that alimony would be permanent.

However, they could not reach an agreement regarding the appropriate amount of that alimony. Lisa believed that it should include a savings component;  Anthony disagreed.

The Trial Court’s Decision

The New Jersey Family Part Court agreed that habitual saving was a part of their lifestyle. However, it affirmed the commonly held assumption that a savings component was necessary only if the dependent spouse needed it for protection.

Because Lisa Lombardi did not have to fear a future reduction or loss of alimony, the trial judge did not include it in the calculations. Instead the Family Part based the amount of alimony on the couple’s “modest middle-class lifestyle.”

In explaining the decision, the court judge also expressed the opinion that Lisa Lombardi still had the ability to save money and accumulate additional wealth. He cited these reasons:

  • The $2,000,000 Lisa got from equitable distribution can be invested.
  • She is not responsible for the children’s college expenses.
  • She is not responsible for the children’s extracurricular activities.
  • Lisa has the right to claim the children as dependents for tax purposes.
  • She has the ability to work more hours.

The New Jersey Appellate Court Addresses the Issue

Lisa Lombardi appealed the trial court’s decision not to consider their habitual savings when calculating spousal support.

In siding with the plaintiff, Lisa Lombardi, the Appellate Court noted that the 2014 amendment to NJ alimony law made it clear that both parties are entitled to live a lifestyle reasonably comparable to their marital lifestyle.

The Court stated that the Lombardis’ habitual saving was an important component of their marital lifestyle. The couple put their money into savings in the same way that another couple might spend money on extravagant vacations, luxury cars, and other costly items. It would not be fair to enable Anthony Lombardi to continue to save in this manner as part of his lifestyle and not allow Lisa to do the same.

The Appellate Division sent the case back to Family Part with the instruction to reconsider their marital lifestyle. He ordered the court to recalculate the amount of alimony based upon that new assessment.

 

 

Do you have questions about alimony, equitable division of property, or other high-income divorce matters? The experienced high-asset divorce attorneys at Aretsky Law Group, P.C., can answer your questions about property distribution and other issues you are about to face. For an initial consultation, call us 24/7 at 800-537-4154.

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