Is Savings a Component of the Marital Lifestyle That Should Be Protected in an Alimony Award?
There has been a long running dispute in matrimonial circles about whether marital savings was a component of the marital lifestyle entitled to protection under our alimony statute and case law. The closest definitive answer (until now) came from the case Martindell v. Martindell, 21 N.J. 341 (1956) and its progeny of cases, particularly Capodanno v. Capodanno, 58 N.J. 112 (1971), which permitted reasonable savings in order to protect against the day when alimony would stop being paid to the supported ex-spouse. This did not, however, result in the automatic inclusion of a savings component for dependent spouses post-divorce and when the argument ensued by divorce counsel, each party made their respective arguments for why it should or should not be included. No New Jersey case, however, resulted in a published trial decision or binding authority on the issue of whether the specific savings component was protected in the alimony analysis. Enter the Lombardi family.
Mr. and Mrs. Lombardi were tremendous savers. According to the Appellate Division’s review of the twenty-eight (28) day trial in Mercer County, they lived a “comfortable, but not extravagant, standard of living…”, spending $22,900 per month (almost $275,000 net a year in spending) exclusive of savings and gifts to their three (3) children. Mr. Lombardi’s investment firm job provided him with annual income of between $1,087,000 and $2,275,000 during the five years leading up to the divorce, and the parties saved almost $67,000, a month according to Mrs. Lombardi. By the time of the divorce judgment, they had about $4.18 million in savings to be divided, not including the marital home, college savings accounts, and retirement accounts.
Mrs. Lombardi was seeking $16,291 per month in alimony to maintain reasonably comparable expenses, $30,000 per month for savings, and $5,000 a month for child support. After the lengthy trial, she was granted the $5,000 a month in child support and $7,600 per month in alimony, with no savings component. The trial court slashed her budget from $22,900 to a comparable $14,516, which it then used to determine her need. After child support, her nominal income, and after-tax income from investment of her equitable distribution share, the Court found she would need another $5,300 per month to meet her budget. Adjusting for taxes, the Court determined that $7,600 would be sufficient and found that she was not entitled to a savings component as there was no real risk of her becoming economically insecure if her alimony was reduced or stopped. Her appeal ensued, arguing that the marital lifestyle included a significant savings component, a fundamental element of the family lifestyle, which Mr. Lombardi would continue to enjoy but she would not.
The Appellate Division took twenty-one (21) pages to confirm, forty-five (45) years after Capodanno that, yes, savings is a component of the marital lifestyle that should be protected in an alimony award, even though Case Information Statements in matrimonial cases include a specific line item for savings. The Appellate Division reasoned that “it is the manner in which the parties use their income that is determinative when establishing a marital lifestyle…” and found that there was no “demonstrable difference” between whether a family used their income for savings or to go on vacation.
When these arguments about whether savings should be a component come up, I have frequently responded as the Appellate Division apparently has that, of course, recognized it as a component. I felt more, though, why this was even a question. It seems a little ludicrous to me that it has taken forty-five (45) years and multiple decisions from the Appellate Division to get to this point. Marital earnings are either spent or saved and it should not much matter under what category marital income finds its ultimate destination. This won’t make the Mr. Lombardis of the world happier, but there is little to no logic in the alternative position that if the money was spent, the supported spouse would clearly be entitled to a higher alimony, but since it was not spent the supported spouse has no claim to a monthly budget that permits them to continue to save in a reasonably comparable fashion. Put another way, it does not make sense that because Mrs. Lombardi saved money instead of buying Louboutin shoes during the marriage, that she should be stripped of a reasonably comparable ability after the marriage is over to either buy those shoes or save that money. I believe that this is exactly what is meant in the new alimony statute that neither party has a greater right to the marital lifestyle.
I think the larger point of Lombardi for practitioners and future litigants is that, in general, what categories a married couple puts their marital income into during the marriage is somewhat inconsequential. I have seen, and been involved in, far too many cases where an attorney is questioning a litigant spouse on each line item of their Case Information Statement during direct or cross examination. By and large, this is painful, irrelevant, and a waste of time unless there are specific line items that are fabricated or significantly understated/overstated. What matters, in my view, is whether the overall picture is roughly representative of what the parties did during the marriage. I would challenge my colleagues to ask any Family Part judge whether the line item testimony is helpful to them as a trier of fact in the run of the mill case. I would also ask them how much time is spent going over each line item in a typical challenge. In the foregoing case, it would be quite interesting to know how many of the twenty-eight (28) days were spent on these questions. In any event, it is my position that in most cases the overall combined marital income of the parties and how to equitably allocate that income between the parties upon a divorce is the ultimate goal.
Whether the parties spent their income on the line item for leasing a car in Schedule B or on the line item for pet food is largely irrelevant – which is the larger lesson to be taken from Lombardi. Understanding that could cut down on litigating alimony questions where the incomes and expenses are clear and for marital purposes when someone is improperly attempting to shift marital income outside of the alimony calculus, which is exactly what Mr. Lombardi attempted to do by claiming that savings was an exempt category of marital lifestyle.
The Family Law attorneys at Hoagland, Longo, Moran, Dunst & Doukas are experienced in the intricacies of their field. Should you have any questions or wish to schedule a free initial consultation, please do not hesitate to contact me at firstname.lastname@example.org or at 732-545-4717.