The Double Dip: Great For Ice Cream, Bad For Potato Chips And Alimony

New Jersey alimony laws are written to be fair to both parties. Support formulas count assets and income in a comprehensive and unbiased manner and avoid counting any asset multiple times. When the recipient is reimbursed twice for something as part of an alimony agreement, this is called "double dipping".

One example is the payor’s pension fund. The ex-spouse is typically entitled to a share of the pension that reflects the contribution to the marriage and therefore the payor’s employment situation, but that share can be treated in one of two ways: as property or as income.

In most cases the pension will be considered property. Lawyers use involved and tedious calculations to determine the current value of future pension payments adjusting for inflation, age of retirement, life expectancy and so on. This value is listed on the Case Information Statement with other assets and divided equitably.

The other option is to treat the pension as income in the alimony calculations on the New Jersey CIS form. It is treated like any other income and the monthly maintenance amount will be calculated accordingly. The ex receives a portion of the pension as part of the alimony settlement.

The better option for a specific couple depends on how close the payor is to retirement. A couple in their 20s will almost certainly opt for a property distribution. On the other hand if the payor is very close to retirement or has already retired, it might make more sense to list the pension as income.

When it comes to the Case Information Statement (NJ) state law says “When a share of a retirement benefit is treated as an asset for purposes of equitable distribution, the court shall not consider income generated thereafter by that share for purposes of determining alimony.” In other words, you can’t treat pensions as both property and income. If an ex has already received compensation in a lump sum then the court will not consider the pension as income for future alimony as this would be "double dipping".

Attorneys can use Case Information Statement software to examine both scenarios for couples who are old enough to be near retirement but not so close that it’s obviously a better decision. In fact even a retired worker might find it better to pay a lump sum out of savings rather than pay alimony for years.

Multiple settlement scenarios are one of the reasons law practice management software is an essential negotiating tool in divorce settlement. Find out more about how Easysoft products help your clients get a fair deal by downloading a demo of any of our software titles.

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