MARGARITA ROMANOVA reports on a recent published decision from the Superior Court of New Jersey, Appellate Division.
In a recent published New Jersey Appellate Division decision, the Court determined that, despite the divorced parties’ mutual and permanent waiver of alimony at the time of their divorce, a former spouse’s voluntary pension waiver can constitute a change in circumstances that warrants an award of alimony to the other spouse after the divorce.
The parties divorced in 1997 when they were both fifty-five years of age following a thirty-five-year marriage. They mutually waived alimony “now and in the future” and agreed, among other things, to equally divide the marital coverture portion of their respective accumulated pensions. While the Wife’s pension was modest, the Husband was serving in the Army National Guard on a full-time basis at the time of the divorce and had accumulated a significant pension during his tenure.
The Husband became disabled in 2002 and elected to waive his retirement pay in favor of receiving non-taxable disability payments. In 2010, when the Wife inquired as to the reason her share of the Husband’s pension had not been provided to her, she was advised that federal law prohibited the division of the Husband’s pension as a result of his voluntary election to convert his military pension to VA non-taxable disability payments after the divorce. The Wife filed a motion to compel the Husband to compensate her for her share of the military pension, which was equitably distributed in their divorce, arguing that her permanent waiver of alimony was valuable consideration for the promise of sharing in the Husband’s military pension.
After conducting a plenary hearing, the trial judge ordered the Husband to make a monthly lump sum payment to the Wife “as equitable distribution payment” to compensate her for the lost share of the Husband’s military pension. The Husband appealed and argued that such indemnification was expressly preempted by federal law and a decision of the United States Supreme Court.
Although the Appellate Division agreed with the Husband on the issues of indemnification and direct compensation for the Wife’s lost share of equitable distribution, the Court found the Wife’s loss of the bargained-for pension benefit as a substantial and permanent change in circumstances that warranted consideration of an alimony award notwithstanding the parties’ mutual waiver of alimony in their divorce decree. The Appellate Division specifically noted that it would be neither fair nor equitable to enforce the mutual waiver of alimony under the factual circumstances presented, reversed and remanded the matter for further proceedings at the trial court.
The decision is an excellent reminder of the broad discretionary powers of Family Part judges in adjudicating fairness of matrimonial agreements and of the basic matrimonial law tenet that spousal duties, including the responsibility of fairness between spouses, extend well beyond the day of the divorce.
Please contact Margarita Romanova if you have any questions or need assistance in connection with this subject.