Lawyers did it. Judges did it too. Mediators did it. And so did arbitrators.They did it even though the NJ Appellate Courts have consistently said "don't do it!"
What were they doing?
They were using a formula to try to determine what the supporting spouse's financial obligation would be to the supported spouse (i.e., usually the husband's obligation to the wife).
Unlike child support, there is no "formula" for determining alimony in New Jersey.
And so, a creative group of professionals came up with their own formula that had been used, both formally and informally, for at least a decade by judges, lawyers, mediators, and arbitrators.
This "formula" was as follows: husband's income minus wife's income divided by three equals alimony.
Thus, for example, if the husband earns $200,000 per year and the wife earns $20,000 per year, then the wife would have been entitled to $60,000 per year as alimony using "the one third formula."
Was this good? Was it bad?
I don't know…
I do know that what is supposed to happen is that we are supposed to look at the NJ alimony laws, apply the listed dozen or so factors to the particular facts of a given case, and then we are supposed to estimate what a particular judge in that case will do when applying those facts to the NJ alimony laws in an effort to come up with a fair alimony award.
That is a pretty complicated exercise for anyone to engage in.
The one third alimony rule was whole lot simpler, and perhaps that is why it had been an informal guide to the resolution of most alimony issues that I had seen during the past decade, even though the Appellate Division of the Superior Court keeps saying "don't do it."
I am just telling you the way it was, even though it was not supposed to be like that.
There were exceptions, however. For example, take a look at how NJ alimony laws are applied to a disabled person.
But all of that changed on January 1, 2019 when the new federal tax laws became operative.
The "1/3 formula" is now history.
While it is not certain yet, the "1/3 formula" appears to be in the process of being replaced with a "26% formula."
How will that work? My best guess is right here (click here)