Retirement and Alimony

In the recent decision in Sowell-Zak v. Zak, the court was presented with a multitude of issues which underscore the need for a party to have a family-law attorney, well-versed in all areas of family law, especially the law surrounding alimony, during all phases of the case. In Sowell-Zak v. Zak, the parties were divorced in 2009 and had entered into an agreement which required the husband to pay to wife alimony of $7,600 per month based upon husband’s employment with a company in which he had an ownership interest, together with $270,000 for wife’s waiver of any claim to his interest in that company, as well as $5,000 in legal fees. Seven years later, when the husband, at the age of sixty-five, was  terminated from his employment from that company due to disputes with the controlling shareholder, husband commenced litigation against the company, but also sought to end his alimony obligation to the wife due to the termination and his decision to retire based upon his age.

The wife opposed husband’s application, claiming the wording of the agreement only permitted husband to seek to end alimony upon death or remarriage, and also claimed the husband failed to pay the $5000 in legal fees in 2009 and payments for the business that were due in 2014. Due to husband’s pending litigation with the company, as the Court determined a plenary hearing would be necessary due to this and other unresolved issues, the parties agreed to engage in mediation to try to resolve the disputes. When the pending litigation between husband and the company was settled wherein husband would receive one-year of severance and a buyout of husband’s interest in the company, with payments being made over ten years, wife sought to have the court deny Husband’s request to terminate the alimony.

The court found that the wife’s arguments were misplaced, as the New Jersey Supreme Court determined in 1980 in the case of Lepis v. Lepis, that absent wording in an agreement  that specifically waived the right to seek a termination of alimony, “changed circumstances” such as retirement, would always permit a party to seek a modification of termination of alimony. While the Court agreed to continue the alimony for the one year while severance was to be paid, the alimony would thereafter end as Husband had the right to retire at the retirement age and the payouts from the company were not “income” to the husband, but payments for his interest in that company (wife having received payments for her interest under the 2009 Judgment of Divorce). Wife’s additional claims were denied, in part due to her seven-year delay in claiming the legal fees were unpaid.

As this case demonstrates, issues can arise during various phases of representation in family-law cases, such as: 1) In the drafting of the Marital Settlement Agreement; 2) during the time period after the agreement is signed/Judgment is entered when obligations are not met; and 3) during the time when a post-judgment strategy is crafted for a return to Court and in post-judgment litigation. At each and every stage of the representation, the client makes critical decisions – decisions which should only be made by a client that is fully aware of the rights and obligations under the law based upon the issues presented.  Only a knowledgeable, family-law attorney can address the unique circumstances of one’s case, protect the client’s interests and assure the client the best chance for success before the Court.