Welcome to part 11 of our continuing New Jersey Divorce Chronicles case study series that tracks two different couples throughout the divorce process. In this latest installment, Jason and Melissa seem to be getting close to a settlement, but will first need to get past some disagreements over alimony and child support negotiations. Let’s take a look at their latest mediation session…
Subject No. 2—Jason:
Jason and Melissa arrive at their fourth mediation session ready to talk about alimony and child support. Since their last session, Melissa has looked into refinancing the house to buy out Jason’s share of the equity. She discovered that to borrow enough to do that at current interest rates she would end up with a monthly mortgage payment not much different from the current payment—about $1,000 per month including property taxes. She also learned that she would need to demonstrate ongoing income of about $2,700 per month to qualify for the refinance.
Jason doesn’t like the sound of this. “$2,700 per month is almost half my take-home pay! If Melissa needs that much she’s going to have to start contributing herself!
“Well,” begins Mr. Calm, “Let’s take a look at the revised New Jersey alimony statute.” He hands copies of the statute to both of them. “The first thing I want to point out here is that since you were married for 11 years, ordinarily you would not be required to pay alimony for more than 11 years.”
“That’s a long time!” Jason responds. “There’s no way Melissa is staying home without a job for 11 years!”
“I’m not suggesting that,” answers Mr. Calm. “Eleven years is a maximum. It may or may not be fair for you to pay alimony for that long. From what I’ve heard so far, you both agree that Melissa could go back to work right now, but that it might not be cost-effective for her to do that until Brianna is going to school full-time.”
“Well, says Jason, “I think she could find something part-time right now, and then move to something full-time next year.”
“Jason,” Melissa offers, “It’s going to take me awhile to find the right thing. Why don’t I just start looking now with the idea that I’ll start full-time next year? That’s really only 10 months away anyway.”
“How do I know that you’ll stick to that?” asks Jason. “You always seem to find a way to put this off!”
“One thing you could do,” suggests Mr. Calm, “is agree on some length of time that would be reasonable to allow Melissa to find full-time work, and then build in a step-down for the alimony payments after that date. You’ve both acknowledged that she would probably have to start at minimum wage, or something close to that, so it wouldn’t be too hard to come up with an estimated salary. Of course, you’ll also have to figure out how much child-care is going to cost.”
“I think there should be more than one step-down then,” says Jason. She won’t be making minimum wage forever. She has a college degree and experience as an administrative assistant. I know it’s been a while since she worked, but she’s smart. She should do well.”
“Well, there are a few different ways you can handle this,” Mr. Calm continues. “Some people decide to get a vocational evaluation from a professional. You could go that route, or you could each do some research on your own on administrative assistant salaries over time. Then maybe you can reach an agreement on how long the alimony payments should last and what kind of step-downs would be fair. You could also just wait and see how Melissa does, and then renegotiate your agreement later.”
“I don’t want to just wait and see what happens. I don’t trust Melissa to stay motivated if she’s getting a lot of money from me every month. I want to try to build in the step-downs over time.”
“I like the idea of looking at salary information on our own rather than paying someone else to help us,” answers Melissa, “but I also want to talk to my lawyer before I agree to any step-downs.”
“You should definitely do that,” agrees Mr. Calm. “So maybe today we can try to determine a fair starting amount. We already know that Melissa needs a certain amount to refinance the house, but whether or not that’s a reasonable goal depends on your overall budgets. So let’s look at your Case Information Statements.”
“My housing expenses might actually be higher if I didn’t try to keep the house,” Melissa points out. “I couldn’t get a one bedroom apartment around here for less than $1,200 per month. Then if you consider the numbers I’ve come up—$2,700 a month total wouldn’t even cover my own expenses let alone the kids’ expenses. Even for just me that would be pretty bare bones.”
“Are you saying I should have to pay you child support on top of $2,700 a month alimony?” Jason protests. “My budget is bare bones too!”
“Okay, remember though that she is agreeing to start contributing soon. Also, we’re still just looking at possibilities here. Nothing is set in stone. Another thing to consider is that alimony and child support are interdependent.” Mr. Calm then hands each of them a copy of the New Jersey Shared Parenting Worksheet. “As you can see, alimony payments would decrease Jason’s taxable income and increase Melissa’s taxable income. We could run through the calculations under the assumption that each of you needs at least $2,700 per month before taking the kids’ expenses into account. We’ll have to estimate taxes, but I can show you a few different ways to do that.”
Jason and Melissa agree to try this, and Mr. Calm walks them through the child support calculations as follows:
L.1-3: Parent of Primary Residence (PPR/Melissa) has weekly gross taxable income (alimony received—L.1c.) of $628 minus $40 income tax withholding (simplified-L.2a.), leaving her a net taxable income (L.3) of $548.
L.1-3: Parent of Alternate Residence (PAR/Jason) has weekly gross taxable income (L.1) of $1635 minus $628 alimony paid (L.1b.) and $125 income tax withholding (simplified-L.2a.), leaving him a net taxable income (L.3) of $882.
L.6: Total weekly net income for both parents is $1,430.
L.7: Jason has approximately 62% of the available income and Melissa has approximately 38%.
L.8: The basic child support amount for two children from the Appendix IX-F Schedule is $317 per week.
L.9-10: Melissa and Jason have a 57%/43% time share (L.10), or 208 overnights for Melissa and 157 overnights for Jason (L.9).
L.11: The PAR shared parenting fixed expenses are equal to the basic child support amount ($317) x Jason’s percentage share of overnights (43%) x 38%, x 2, or $104.
L.12: The PAR share of fixed expenses increases the shared parenting basic child support amount by $104, to $421.
L.13: Jason’s share of the shared parenting basic child support amount is 62% of $421, or $261. Melissa’s share is 38%, or $160.
L.14: The PAR share of variable expenses is Jason’s percentage of overnights (43%) x the basic child support amount of $317 x 37%, or $50.
L.15: The PAR adjusted shared parenting basic child support amount is Jason’s share ($261) minus the L.11 PAR share of fixed expenses ($104) minus the L.14 PAR share of variable expenses ($50), or $107.
L.16-20: There are currently no work-related child care expenses and the children’s health insurance premiums are fully paid through Jason’s employment. There are therefore no adjustments for supplemental expenses.
L.29: Jason’s net child support obligation is $107 per week (L.15).
Jason does not looked pleased. “So in addition to $2,700 per month alimony, I would also have to pay her another $460 per month in child support?”
“If you do it like this, yes—but if you look at the weekly after-tax amounts each of you would have available after both alimony and child support, that still leaves you with a bit more money. You would have about $775 per week as compared to Melissa’s $655.”
“Okay, I do see why I need to find work soon,” sighs Melissa. “Neither of us will have anything to spare otherwise.”
“Why don’t you both take some time to think this over? Do some research on Melissa’s salary prospects and take all of this information to your attorneys along with your ideas about the alimony schedule. We’ll plan on one more meeting, and if you’re able to reach an agreement on alimony, we should be able to wrap things up pretty quickly.”
Jason and Melissa both look relieved. It hasn’t been easy, but they feel as though they are finally close to the finish line!
To follow Jason and Melissa’s divorce mediation journey from the beginning, start reading here.
Join us next month to see how Sharon and Robert are faring in litigation.
Are you interested in mediating your divorce or your child custody and support issues? Contact us to schedule a joint mediation consultation with one of our experienced divorce and family law mediators. If you already have a mediator, we can serve as consulting attorneys for one spouse.