A New Jersey appellate court recently heard a case concerning termination of alimony upon retirement. In Imposimato v. Imposimato (2019), the spouse who had been making alimony payments according to the terms of the divorce property settlement—the defendant—sought to modify the amount of alimony he would pay to the other spouse—the plaintiff—due to a change in his income. However, both the trial court and the appellate court agreed that, despite experiencing a substantial change in circumstances, the defendant could not modify the alimony amount. Since he still had means to make the alimony payment outlined in the parties’ settlement agreement, the defendant would be required to continue making that payment despite experiencing a significant change in his monthly income.

The case suggests that permanent alimony awards only can be changed in circumstances where the paying spouse has no available options for continuing to make ordered alimony payments. We will say more about the specific facts of this case.

The Facts of the Case

In Imposimato, the defendant, Biagio Imposimato, was ordered to pay permanent alimony to his former spouse, Bonnie Imposimato, as part of their divorce settlement. The parties were initially divorced in 2004, and they agreed defendant would “pay permanent alimony to . . . plaintiff in the amount of $40,000 per year, in monthly installments . . . of $3,333.33.” At the time of the divorce, the defendant was 64 years old and the plaintiff was 57 years old. It is important to make clear that the parties’ settlement agreement did not outline how and whether alimony payments would change once the defendant retired.

At the time of the divorce, both of the parties were employed full-time, and the defendant owned a business that was worth a substantial amount. In addition to being permitted to keep the business, the defendant also kept investment accounts as part of the settlement. The plaintiff kept the marital home.

In 2015, the business “unexpectedly lost its last client and defendant was forced to close the business, laying off all the employees, including family members.” At that time, the defendant was 75 years old and the plaintiff was 68 years old. Given that the defendant could not keep the business open, he decided to retire in good faith. At that time, he stopped paying alimony and sought to modify the alimony obligation.

Defendant Argued He Should Be Able to Modify Alimony Due to Income Loss

Given his loss of income after closing his business and retiring in good faith, the defendant argued that he should not have to pay the same alimony obligation established while his business was open. With the business closed and the defendant retired, he would be earning only $46,000 from Social Security and IRA distributions. However, he still had savings and investments, which totaled more than $4 million.

The plaintiff argued that losing the $40,000 per year of alimony would cause a financial hardship due to debt and spending habits. The defendant contended that “it was plaintiff’s inability to manage money and her uncontrolled spending that created her financial straits and that she had ample opportunity to save for retirement.” After the divorce, the plaintiff paid for a costly drug treatment program for the adult daughter she shared with the defendant, and she also cared for the defendant’s mother. The plaintiff admitted “she was not a good money manager,” but explained that her debt resulted from “family expenses.”

Court Weighed Factors in Determining Whether Retirement Should Result in Modification of Alimony Obligation

The trial court judge found in favor of the plaintiff, and the appellate court affirmed. While the court explained that New Jersey law allows a party to modify alimony based on a showing of “changed circumstances,” the appellate court reasoned that previous case law requires a balancing test when a request for modification is based on retirement. Citing previous case law, the court clarified that the “pivotal issue is whether the advantage to the retiring spouse substantially outweighs the disadvantage to the payee spouse.”

The appellate court reasoned that, looking at the statutory factors and given the defendant’s accumulated wealth, the trial court appropriately weighed the factors in the plaintiff’s favor. Accordingly, the defendant was required to continue paying the alimony obligation.

Contact a New Jersey Divorce Lawyer

If you have questions about alimony in New Jersey, you should speak with a New Jersey family law attorney about your case. Contact Jessica Mazur at jmazur@hoaglandlongo.com or call 732-545-4717 for more information.