Can A ‘Savings’ Component Be Added to Alimony?

Typically when a court is determining whether to order a spouse to pay alimony and how much that spouse should have to pay, it will consider factors like the age, physical condition and financial condition of each spouse, the recipient spouse’s needs, the length of the marriage, the standard of living the couple enjoyed during the marriage and the ability of the paying spouse to support himself or herself while helping support the recipient.

But what if a couple had a uniquely frugal lifestyle during marriage because it was important for them to build savings? Does this mean the payor spouse pays less alimony because the recipient is used to getting by on less? Or will the recipient’s saving habit be considered as a factor in an alimony order? A recent decision from New Jersey suggests that courts can include a “savings” component in an alimony award.

The New Jersey couple at issue generated more than $8 million worth of assets over the course of their marriage. Meanwhile, the husband’s income as a pharmaceuticals executive had fluctuated between $1 million and $600,000 per year over the seven years leading up to their split. Throughout the marriage, the couple maintained a frugal lifestyle where  the wife sewed their drapes and bought clothes for herself at the Salvation Army. They vacationed off-season or in connection with the husband’s work travel and drove either company cars or modest Fords bought with the husband’s father’s executive discount.

When the couple divorced, the trial judge determined that their lifestyle averaged out to about $10,500 in spending per month with savings of approximately $19,000 each month.

In his alimony award, the judge accounted for this part of the couple’s lifestyle by including $5,000 per month as a savings component in his 11-year, limited duration alimony award.

The husband appealed, challenging the inclusion of a savings component. But the New Jersey Appellate Division affirmed the award, calling it “reasonable under the circumstances,” given how the couple’s savings were integrated into their lifestyle.

Of course, this decision only applies in New Jersey. Every state has their own alimony laws and the law could be different where you live. Consult with a local family lawyer to learn more.