One of the most common questions I hear from clients regarding alimony is “What happens when I retire?” The answer is, “It depends.” Retirement does not automatically terminate alimony. If no agreement is reached between the parties at the time of retirement, the obligor must make an application to the Court close to the retirement date to reduce and/or terminate his or her alimony obligation.
In a recent unpublished Decision, the Appellate Division reversed a Trial Court Decision wherein the Trial Judge ordered that future retirement of the obligor would automatically terminate his alimony obligation.
In that case, the obligor was 46 years old at the time of Trial. After an eight day trial, the Judge awarded permanent alimony to the Wife. However, the Judge included a provision in the Decision that the obligor’s retirement shall be a change of circumstances in regard to permanent alimony, and alimony would automatically cease at that time.
The Wife appealed. On Appeal, the Appellate Division held that prospective termination provisions are inappropriate, and this determination should be made at the time of the retirement.
It is worthwhile to note that this case is unpublished (i.e., non-precedential). It is also notable that the Court did not address the issue of termination provisions that appear in Property Settlement Agreements that have been agreed upon by the parties. The courts have typically upheld the parties’ freedom to contract between themselves.
If you have an alimony obligation and are contemplating alimony, you should consult with a divorce attorney as soon as possible to determine how best to proceed.
For a more in-depth look at alimony and retirement, please see my article entitled Does an Alimony Obligation Terminate Upon Retirement.