Still Need to Pay Alimony When You Close Your Business?

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The whole concept of permanent alimony may absolutely blow your mind. By the same token, you might accept it as a matter of course. When you married for better or worse, you hoped things would work out. You acknowledge that your former spouse contributed to your successes. Nonetheless, you’re concerned. Will you still need to pay alimony when you close your business?

In the first place, it should never be an issue of “cutting off your nose to spite your face.”  No doubt some contemplate closing up shop for spiteful reasons.  Even if it wasn’t your intention, your former spouse might claim you were trying to avoid paying alimony.

Meanwhile, your health or some other factor might cause you to end your business. It could be as simple as you’re ready to stop working altogether and collect your retirement benefits.

So, what happens next? Do you just arbitrarily stop making spousal support payments? Do you go back to court citing a change in circumstances?

As you might guess, you can’t just stop paying alimony unless your divorce decree gives you an end date. Your best bet is to meet with an experienced family law attorney and return to court seeking a modification of the existing judgment.

In the meantime, you should know what New Jersey law says about alimony and the prospective or actual retirement of the person obligated to pay it. According to NJSA 2A:34-23(j)(3), it may be a reason to modify or terminate alimony.

Of course, if you’re the recipient of spousal support, you may have legitimate concerns about your financial survival. If your ex-husband or ex-wife closes a business and retires, what happens?

Business Owner Said He Could No Longer Pay Alimony

Last month, the New Jersey Appellate Division shared its legal decision in the matter of Imposimato v. Imposimato.  The court’s opinion states that it shall not "constitute precedent or be binding upon any court." That said, the ruling as it applies to the named parties represents an interesting read.

In 2004, Bonne Imposimato and Biagio Imposimato divorced after 23 years of marriage. At the time, Bonnie was 57, and Biagio was 64. Child support did not represent an issue as their two children were adults when the Imposimato marriage ended.

Both Bonnie and Biagio had full-time jobs when they negotiated the property settlement agreement (PSA) ultimately incorporated into the final divorce decree. Among other things, the PSA required that Biagio "pay permanent alimony to ... plaintiff in the amount of $40,000[] per year, in monthly installments ... of $3333.33."

The case history does not reflect Bonnie’s earnings at the time of the divorce. However, she worked as a planning board secretary for a local municipality. One of the provisions of the PSA permitted Bonnie to keep pension without splitting it with her former husband.

 Biagio was the sole shareholder of a corporation whose business appeared to be limited to contracts with two large companies.  The final divorce included a determination setting the business value of Biago’s corporation at $500K.  The PSA allowed the company owner to keep his business. Additionally, Biagio retained all of his investment accounts.

Of course, the paperwork filed when the couple divorced provides more details concerning equitable distribution in this matter.  However, it is silent on one issue pertaining to alimony. According to the case history, it fails to address what should happen as far as retirement.

Forced to Close the Business

It is unknown how long Biagio’s company did business with multiple clients. However, in July 2015, the corporation unexpectedly lost what was reportedly its last client. As a result, Biagio closed the business. He laid off staff, including family members.

Forced to close the business, Biagio decided to stop paying alimony. In September 2015, Biagio’s lawyers filed for modification of the permanent alimony award. The court did not hear the motion until March of 2016. At that time, the judge ordered Biagio to pay Bonnie four months of alimony arrears.

During the March 2016 hearing, the judge also ordered the couple to attend mediation. However, that never occurred. Four months later, Bonnie’s lawyers filed a motion on her behalf. One of the key issues requested the court to compel Biagio to pay alimony and arrears.

The Family Part judge ultimately conducted a plenary hearing on October 25, 2017. At that time, Biago presented his logic concerning the termination of his alimony obligations. Summed up, they included the following:

  • Biagio’s income dropped to $46K annually when he closed the business
  • Age represented a factor, as Biagio was 77 at the time of the hearing
  • Health problems prevented Biagio from physical labor

That said, Biagio’s savings and investments amounted to over four million dollars, much of what amounted to liquid assets. Meanwhile, Bonnie claimed her financial situation paled in comparison.

Former Spouse Demonstrated Need

When the court conducted the plenary hearing, Bonnie was still working and earned $70K annually. She also collected social security benefits. However, Bonnie relied on the alimony payments for her financial obligations.

Bonnie received the marital home during the divorce. However, she had to refinance the mortgage to pay off a home equity loan and give money to her ex-husband.

During the hearing, Bonnie testified that the couple’s younger daughter had drug problems. Bonnie attempted to find her daughter treatment and expended over $100K in various facilities. In the meantime, the daughter and her child continued to live with Bonnie.  She took care of them financially and used her credit cards to cover many of their expenses.

At some point, Biagio’s mother moved in with her as well. She lived there for two and a half years. Apparently, this added to Bonnie’s obligations as well.

While Bonnie admitted that she was not good at managing money, she also testified that all of her expenses were related to the needs of her family. Additionally, she did not plan for any of the events that put her in a financial crisis.

Bonnie was in over her head and even faced the prospect of foreclosure. She also had loans against her retirement account.

Notably, Biagio objected and blamed Bonnie for her money problems. He said that her uncontrollable spending was one of the reasons they divorced in the first place.

What the Court Ruled

The trial court did not dispute that Biagio’s “retirement was done in good faith.” However, it found that Biagio had resources that enabled him to continue making alimony payments. In fact, it would be of little consequence to Biagio’s circumstances but would create “great hardship” to Bonnie if the payments stopped.

Although Biagio appealed the trial court’s decision compelling continuation of permanent alimony, the Appellate Division affirmed the ruling. 

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At the Law Offices of Sam Stoia, we assist clients with family law matters. Concerned about modifications to an existing court order? We can help and offer prospective clients a one-hour complimentary consultation. Call and set up an appointment to meet with us.