Divorce can do strange things to otherwise rational people. When someone has spent months fighting with a spouse and desperately wants the divorce to be over, it can become tempting to agree to almost anything just to move on.
One of the most painful alimony cases I handled involved exactly that situation. It concerned a highly successful accountant, his younger secretary with whom he was having an affair, and his understandably angry wife.
The accountant and his wife had been married for approximately 30 years and had three children, all of whom had finished college. By the time the divorce began, his wife knew about the affair, and the accountant and his secretary were anxious for the divorce to be completed.
Knowing how badly her husband wanted the divorce over, the wife took an extremely aggressive position on alimony and refused to budge. Month after month went by without a settlement, and the accountant became increasingly worried that he was going to lose his girlfriend as well.
Eventually, he told his initial divorce attorney, essentially, "Just give her whatever she wants. I'll have enough money left, and I don't care that much about money anyway." His lawyer strongly advised against it. The accountant insisted.
At the time, the accountant was earning approximately $300,000 per year. His wife demanded $200,000 per year in alimony, leaving him with $100,000 of his gross annual income. He agreed, and the divorce was finalized. It was a terrible deal, but it was one he voluntarily made.
The accountant was the founder and senior partner of a ten-accountant firm. About six months after the divorce, he stopped paying the agreed-upon alimony and claimed that the other partners had forced him out of the firm he had founded approximately 30 years earlier.
He found another job in a corporate accounting department earning approximately $150,000 per year, half of what he had previously earned. He believed he had a fair solution: since his former wife had originally received approximately two-thirds of his $300,000 income, he offered to continue paying her the same proportion of his new income, or approximately $100,000 per year.
His former wife didn't agree. She returned to court seeking enforcement of the original $200,000 annual alimony obligation. At that point, the accountant hired me.
We asked the court to modify his alimony obligation based upon his new financial circumstances. His position was that his income had fallen from $300,000 to $150,000 and that continuing to pay $200,000 per year was mathematically impossible.
The problem was that the judge did not believe his explanation for the reduction in income. The judge concluded that the accountant had deliberately created the situation: that he had agreed to the extraordinarily high alimony amount to get his divorce finished and then left his accounting practice expecting that he could return to court and reduce the obligation afterward.
The judge refused to reward what the court viewed as bad-faith conduct and ordered him to continue paying the agreed-upon alimony. The accountant argued that his entire gross income was now less than his annual support obligation. The court nevertheless required him to comply and indicated that assets could be used to satisfy the obligation.
Whether you agree with the result or not, there is an important lesson in this case.
New Jersey law allows an alimony obligation to be modified when circumstances change, but a reduction in income does not automatically produce a reduction in alimony. When someone asks the court to modify alimony because his or her income has fallen, the court can examine why the income changed, whether the reduction was voluntary or involuntary, efforts to obtain replacement employment, the parties' current financial circumstances, and other relevant facts.
Most importantly, you don't get to decide for yourself that your alimony obligation should change. If there is an existing court order or enforceable agreement requiring you to pay alimony, you generally need to obtain a modification through the appropriate legal process.
That distinction mattered enormously in this case.
I've seen people become so exhausted by divorce litigation that they reach the point where they'll agree to almost anything just to make it stop. I understand the impulse, but an alimony agreement can affect your finances for years.
Slow down before you make a decision you may regret. Understand exactly what you're agreeing to, what the obligation could mean for your future finances, and what could happen if your circumstances later change. Most importantly, listen carefully when an experienced divorce attorney tells you that the deal you're considering may create serious problems later.
The accountant in this case wanted his divorce over quickly. He got what he wanted, but the financial consequences followed him long after the divorce was finished.
If you're considering divorce and want to better understand alimony, settlement, property division, custody, and the other decisions you'll face along the way, my free Divorce Smarter Course explains the New Jersey divorce process in straightforward terms so you can make informed decisions before agreeing to something you may later regret.
Until next time,
Steve