Is Good Faith Retirement Enough to Terminate your Alimony Obligation? Banner Image


Is Good Faith Retirement Enough to Terminate your Alimony Obligation?

July 20, 2017

Not necessarily. In the recent case Henneberry v. Henneberry, the Appellate Division addressed whether an alimony obligor’s good faith retirement was sufficient to terminate or reduce his alimony obligation to his ex-wife.  Considering other factors such as the ex-husband’s assets and his lack of candor to the court, the court found that despite the fact that his retirement was made in good faith and his income would drastically decrease, the circumstances warranted maintaining his alimony at the original amount and continuing his obligation to maintain the full amount of life insurance coverage required by their settlement agreement.

In Henneberry, the ex-husband/alimony obligor appealed a July, 2015 Order which denied his request to eliminate alimony or, in the alternative, to conduct a plenary hearing to determine how much his obligation should be reduced.  The parties in the matter were married for 37 years and had two adult children. They divorced in 2007 and, as part of their settlement agreement, the ex-husband agreed to pay $1,750 in monthly alimony on a permanent basis.  He also agreed to maintain $300,000 in life insurance coverage as security for the alimony. If the alimony terminated, his insurance obligation would be reduced to $225,000 until either party died, per the terms of the agreement. The agreement further addressed retirement, and designated 63 as the agreed-upon “good faith retirement age” for the parties.

At the time of the divorce, the ex-husband, a fireman, was making $95,000 per year.  The ex-wife, a teacher, made $52,000.  Upon retirement at 65, he was making $125,000 and the ex-wife, who retired later that same year, was making $63,000.  Though 63 was designated in the agreement as a “good faith retirement age,” the ex-husband waited until he was 65 years old to stop working, which was the mandatory retirement age in the fire department at which he was employed.

Upon retirement, the ex-husband unilaterally reduced his life insurance coverage to $225,000 on the erroneous belief that alimony would automatically terminate upon his retirement.  He thereafter filed a motion to terminate his alimony.  As the ex-husband failed to provide prior and current Case Information Statements, the motion was denied without prejudice.  On a second attempt, the ex-husband supplied a current CIS, but failed to provide the prior ones.  Instead, the ex-wife attached them to her motion papers.

The Case Information Statements supplied by the ex-wife demonstrated that the ex-husband was not forthcoming with his full portfolio of assets.  For example, it showed that he had additional undisclosed properties and other assets, as well as additional streams of income from pension and Social Security benefits.

In denying the ex-husband’s motion, the trial court looked at the “central issue” of the obligor’s ability to pay.  Moreover, the trial court found that the ex-wife would not be able to meet her expenses, absent receipt of alimony.  Finding the ex-wife to be more credible, the court denied the ex-husband’s motion without ordering a plenary hearing.

On appeal, the ex-husband argued that the court erroneously considered his equitable distribution assets, that he demonstrated a good faith basis for his retirement and that, at a minimum, the trial court should have conducted a plenary hearing. In affirming the trial court’s ruling, the Appellate Division found there was no abuse of discretion.  The court further stated that a plenary hearing is not always required in the case of a good faith retirement, but only where the circumstances warrant one. Applying the Lepis v. Lepis standard, the court found that where there is a prima facie showing of changed circumstances, the court has the discretion to order a plenary hearing, but is not required to do so.  Moreover, the court found that the statute does not mandate a plenary hearing in all instances, further buttressing its conclusion.

In light of the court’s decision not to modify alimony based on good faith retirement, the court upheld the ex-husband’s obligation to maintain at least $300,000 in life insurance coverage. The court also affirmed the award of counsel fees, in part due to the ex-husband’s lack of candor to the court.

Had the ex-husband been forthcoming about his assets and income and supplied his Case Information Statements, would this case have had a different result? It is hard to say. What is clear is that even a retirement made in good faith may be insufficient to eliminate your alimony obligation.  The alimony statute provides a rebuttable presumption that good faith retirement shall terminate an alimony obligation, but that presumption was evidently rebutted here by the ex-husband’s extensive other assets. Surprisingly, the ex-husband’s presence in the workforce for 2 years beyond the agreed-upon “good faith retirement age” did not save his application.  Moreover, an applicant is not automatically entitled to a plenary hearing. This may be frustrating for applicants who are denied their “day in court” to demonstrate why alimony should be modified. The uncertainty produced by the case law on this issue can, however, be mitigated with a carefully crafted settlement agreement. Divorcing parties who are approaching retirement age should be especially cognizant of these issues.


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