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Voluntary Retirement and its Effects on a Child Support Obligation and Alimony

In New Jersey, a person seeking to modify a child support or alimony obligation must show that a significant change in circumstance has occurred since the time the award was entered.  It is the party who is seeking the modification that has the burden of proving that they have incurred a change in circumstances sufficiently substantial to warrant a modification of support.  Court’s have held that a decrease in the obligor’s income may constitute a substantial change in circumstances.  However, a reduction in income due to a voluntary retirement may not be sufficient. 

In regard to alimony, the Courts have held that the pivotal issue is whether the advantage to the retiring spouse substantially outweighs the disadvantage to the receiving spouse.  For instance, a situation where the obligor is retiring due to health concerns where the effect of the termination of the alimony would be minimal to the receiving spouse favors the payor.  However, if the obligor simply does not want to work, and the termination of alimony would substantially effect the receiving spouse, a Court would be less likely to grant the application to modify alimony.  In determining this issue, New Jersey Courts have set forth a number of factors that the deciding Court should consider, including:

• the ages of the parties
• the health of the parties
• the motivation which led to the decision to retire
• the timing of the retirement
• whether the retirement was mandatory or voluntary
• the financial impact of the retirement upon the financial positions of the     parties
• the expectations of the parties   

The right to receive alimony belongs to the receiving spouse.  Therefore, that spouse may agree to the retirement and effectively waive their right to support.  However, the right to receive child support belongs to the child, and may not be waived by the receiving spouse.  Therefore, when an obligor seeks a modification of child support due to voluntary retirement, the Court must determine whether the modification is in the best interests of the child.  The Court must again weigh the advantages to the retiring parent and disadvantages to the child.  Specifically, the Court must consider similar factors, as set forth above, such as the retiring parent’s age, health, finances, assets, and reason for retiring.  The Court must also consider the impact of the reduced support on the child, such as the child’s needs, age, health, assets, and standard of living.  Finally, the Court must determine the fairness of the decision, taking into account the obligor’s motivation for retirement, good faith, and voluntariness of the retirement. 

Full post as published by New Jersey Law Blog on October 08, 2008 (boomark / email).