The Alimony Obligation that Refused to Die
Generally, an obligation to pay alimony ceases to exist after either former spouse dies. However, as illustrated in the recent Appellate Division case Smith v. Smith, if you fail to make monthly alimony payments while you’re alive, you might just end up being obligated to pay them… from the grave.
Wayne and Alicia Smith had been married for 28 years when they divorced in 1999. The divorce settlement the Smiths reached didn’t divide Wayne’s military pension or survivor benefits; instead, Alicia received an equivalent credit against other marital assets. The family part judge imposed an alimony obligation of $200 a week, payable either until one of the spouses died, or Alicia remarried or moved in with a romantic partner. Wayne soon fell deeply into arrears, and Alicia received a judgment in 2002 for over $14,000 in back alimony.
In 2006, continuing to face an outstanding judgment against him, Wayne agreed to name Alicia as the beneficiary to his pension and survivor benefit plan, to be removed only after he had successfully paid her the alimony arrears, and Alicia agreed to remove the judgment from the probate department. However, Wayne married Judi in 2011 and changed the beneficiary for his pension and survivor benefit plan to Judi in March of that year without notifying Alicia or the court.
That August, Wayne returned to court to receive permission to change the pension beneficiary (despite already changing the beneficiary and not having paid the arrearage), and to cease alimony payments altogether, arguing that Alicia had moved in with a romantic partner. The court denied Wayne’s motions in late 2011, ordering instead that Alicia remain the pension beneficiary, and putting a lien on Wayne’s pension for the arrears due.
Wayne died in January of 2012, and Judi began receiving annuity payments in February. When Alicia determined what was happening, she returned to court to have Judi submit to Alicia any benefit payments she had thus far received. The court ordered that Judi turn over these payments, and that she submit future benefit payments she received to Alicia’s attorney. However, after that order was issued, Judi elected to receive a disability benefit from the VA that would cease payment of the pension annuity, which she asserted was not payable as part of a divorce judgment.
When Alicia’s attorney tried to determine why he had ceased receiving pension payments from Judi and her attorney, he was notified that Judi had made the election to receive a different benefit. Alicia returned to court months later to enforce the court’s previous orders, and the court responded by awarding Alicia a constructive trust over the benefit payments received by Judi, as well as attorneys’ fees, which Judi appealed. The court found that Judi had exhibited bad faith when she elected a VA benefit without disclosing this to the court, and that Wayne had changed his pension beneficiary fraudulently when replacing Alicia with Judi, as he should have requested a court order to do so.
The court found that there is case law saying that, if military retirement pay is awarded to an ex-spouse in a divorce judgment, that ex-spouse can be denied those payments where the recipient waived retirement benefits to receive disability benefits. However, the court found that law didn’t apply to Alicia, since she was awarded the pension annuity to satisfy a judgment for alimony arrears, not as part of a divorce judgment. The court cited instead a case ruling that, if a benefit recipient made an election to receive a different type of benefit which diminished payments owed to a former spouse, they had to make up the difference to the former spouse somehow. The court found that Judi’s bad faith behavior and fraudulent conduct that forced Alicia back into court time and time again warranted the imposition of Alicia’s attorneys’ fees.
For assistance with divorce matters, including compelling alimony payments and enforcing judgments, contact the Edgewater family law firm Herbert & Weiss LLP at 201-440-6300 for a free telephone consultation.