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Overbay v. Overbay

July 21, 2009


On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, Docket No. FM-18-1083-01.

Per curiam.


Argued October 28, 2008

Before Judges Graves and Grall.

This case returns to us after remand proceedings directed by our previous opinion. See Overbay v. Overbay, 376 N.J. Super. 99 (App. Div. 2005). Following an eight-day evidentiary hearing, the remand court reduced the imputed rate of return on defendant's inheritance from 7.4 percent to 4.5 percent, decreased defendant's monthly budget from $8000 to $7000, and increased plaintiff's alimony payment from $3000 per month to $3750 per month retroactive to the date of the trial court's initial decision on September 1, 2002. Both parties have appealed, claiming that the court erred. After reviewing the record in light of the contentions advanced on appeal, we affirm in part, reverse in part, and remand.

In our initial decision, we noted the parties were divorced on September 17, 2002, after approximately thirty-one years of marriage. At the time of trial, plaintiff W. Bruce Overbay "was in good health earning $132,000 per annum plus a significant benefits package as a result of his employment at ExxonMobil." Id. at 102. Defendant, on the other hand, had "significant medical problems," including heart problems, which resulted in two hospitalizations. Id. at 103. Defendant was teaching two classes at a local university, earning $12,000 annually, and she had investment income from an inheritance valued at $1,143,695. Id. at 103-04.

Although plaintiff agreed that defendant's inheritance was exempt from equitable distribution, the income that defendant received from the investments she inherited was a critical factor in assessing defendant's need for alimony. The rate of return on defendant's investments at the time of trial was approximately two percent. Citing Miller v. Miller, 160 N.J. 408 (1999), the court ruled that "the entire inheritance except for $60,000 would be subject to investment with an imputed yield of 7.4%." Based on this imputed rate of return, which decreased defendant's need for alimony, the court determined that plaintiff should pay alimony in the amount of $3000 per month:

[G]iven the present circumstances of the parties, I find that the plaintiff should pay the defendant $3,000 per month permanent alimony. As I previously stated, I determined that the defendant's reasonable expenses amount to $8,000 a month. In order to obtain this amount, the defendant would have to have a gross income of approximately $128,000 a year. To achieve that total the defendant should receive approximately $80,000 a year from her assets, $12,000 from her employment and $36,000 alimony. The defendant in her letter memorandum suggests that a tax reserve amounting to 25% being set aside. Taking 25% from $128,000 amounts to $32,000 which would leave the defendant with $96,000 annum or $8,000 per month.

In our earlier decision, we noted that Mr. Miller was an experienced investor with a high tolerance for risk. Therefore, he was comfortable with a more aggressive investment strategy than Mrs. Overbay, whose goal was "to maintain the principal and not let anything happen to it." Overbay v. Overbay, supra, 376 N.J. Super. at 108. Accordingly, we found that the trial court erred when it attributed additional investment income to defendant based on a 7.4 percent imputed rate of return, and we directed the court to redetermine the amount of alimony to be paid by plaintiff to defendant. Id. at 113.

During the remand hearing, both parties presented expert testimony regarding the rate of return to be imputed to defendant's investments, and the court heard testimony from its own expert, Ronald W. Subber, a certified financial planner and chartered financial consultant. The remand court's findings of fact and conclusions of law on this point included the following:

I find in view of the blue print laid down by the Appellate Division and after considering the testimony of all witnesses and having reviewed the evidence submitted that it is appropriate to impute additional earnings from the defendant's inheritance comparable to a prudent use of her investments. I find a reasonable imputation in 2000 to be 4.5 percent. These are my reasons: 1) Mr. Subber suggests a number between 4 and 5 percent. I agree with his analysis and with his conclusions; 2) the defendant's own expert admitted in his testimony that 4 percent would be a reasonable number; 3) the historical rate of return from 1997 to 2001 was about 3.2 percent. That's more than the lowest yield of 1.9 percent in 2001 and less than the return of 4.4 percent in 2000; [4] at age 55 in 2002 the defendant was still a relatively young individual; [5] as to health issues, while they're significant, I don't find those to be so serious that the defendant can't demonstrate more flexibility in her portfolio mix. Her condition has been relatively stable for 15 years and her employment status has not been impacted; [6]

I find the plaintiff's expert's assessment of 6.64 percent to be too high considering the defendant's circumstances that were borne out by the testimony and the evidence.

In my decision I utilized the gross number of $1,083,695 available for investment.

Based on a yield of 4.5 percent, this would result in income of $48,766.27 in 2002 or about $26,766.27 more than what she earned in 2001. It's also $31,233.73 less than ...

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