ECONOMIC ISSUES SURROUNDING DISSOLUTION OF MARRIAGE Flashcards
Property Division
Florida is an equitable distribution state. Courts often tend to use a 50/50 formula for dividing value of marital property between divorced couples.
*Equitable does not mean equal. 50/50 is only a presumption, not a hard and fast rule.
Separate Property
- Anything owned prior to the date of the marriage is the separate property of the spouse who owned it.
- Any gift or inheritance in the sole name of one spouse is separate.
- Anything in exchange for categories 1 or 2 (profits from either situation, trace back to the original)
- Passive income/passive appreciation received from assets (dividends, accumulated income, etc.)
- Pain and suffering recovery in a lawsuit is separate property
- Anything parties agree in writing to call separate
Dad gifts his son a Rolex watch after marriage. The son does not like watches so he trades it in for a motorcycle. What is the motorcycle considered relating to property distribution?
Separate Property. Because the watch was a gift, it would be considered separate property. The fact that the son traded the watch for a motorcycle causes the motorcycle to relate back to the original (watch), and thus is treated as separate property.
Common Property
*Court uses equitable distribution when splitting marital property.
- Any appreciation of an asset that is due to the work, effort, and time, invested by either spouse.
- Marital money used to pay a debt, even of a separate property asset.
- Debt incurred after marriage-marital asset with negative value (means it is counted against parties)
Factors considered when justifying deviation from 50/50 equitable distribution formula
- **Anything the court considers just and appropriate
- Age
- Physical Health
- Mental Health
- Current income
- Educational Level
- Job skills
- whether either will be a custodian of minor children
- Contributions each have made-including value added by women being a homemaker
- Whether either spouse has dissipated marital assets (eg. gambling).
Distribution in Kind
*Not the Florida Way
Distribute assets whole to each party.
During Common Property Distribution: John gets the boat. Mary gets the home (Homestead)…(etc. until all assets have been equitably distributed).
What form of distribution is this?
Distribution in Kind
Distribution by Valuing the Assets
*Florida Way
Order one party to make case payment to the other so that the value is distributed equally or according to the court’s adjudged ration.
Court decides a split of 60/40 is appropriate. John’s assets equal $1 mil. The court can order John to make a cash payment of $600,000 to Mary.
What method of distribution is this?
Value the Assets (Florida Way). Payments can be either all at once or in installments.
Alimony
Predicated on the idea that one who is married owes reciprocal duties to the other. The duty may terminate upon the termination of marriage, but it would be inequitable to deny the other spouse of support immediately after the termination of marriage.
*The purpose is to have a smooth transition from dependency (marriage) to independence.
*Normally not based on fault, rather it is based on need.
Alimony: Considerations of Fault
The only time where fault plays into the consideration of alimony is in the instance of an extra-marital affair, as it will take into consideration whether the marital property was dissipated because of the affair (lavish trips, expensive habits, etc.)
Termination of Alimony
Alimony terminates either:
(1) upon the death of either party, or
(2) remarriage of the recipient (cohabitation does not automatically terminate alimony, however it is within the discretion of the court to so terminate)
5 Types of Alimony
- Bridge the Gap
- Rehabilitative
- Permanent Alimony
- Durational Alimony
- Alimony Pendente Lite (Suit Money)
Bridge the Gap Alimony
Designed to provide some economic help as one transitions from dependency to independency.
(1) Must be for a period not exceeding 2 years
(2) Cannot be modified
Rehabilitative Alimony
Granted for a limited period of time to support party’s education or economic support plan.
*Is subject to modification
Permanent Alimony
Stream of monthly payments that continues indefinitely. Duration of marriage determines right to permanent alimony. Each duration period carries a different standard of proof, with shorter durations having heightened standards of proof.
Long Duration: more than 17 years-Preponderance of Evidence
Moderate Duration: more than 7 years, less than 17-Clear and Convincing
Short Duration: less than 7 years-Exceptional Circumstances
*Can be modified (if payor got fired; injured; decline in ability to pay; recipient got fired; injured; needs more resources; recipient has come into wealth-lottery or inheritance).
Durational Alimony
Awarded if one is in a marriage in short or moderate duration and is unable to meet standard of proof justification for alimony. A party is only entitled to alimony for a duration equal to the same length/duration of the marriage.
Alimony Pendente Lite
Suit Money. Temporary alimony available during the pendency of litigation for dissolution of marriage.
Factors to Consider When Determining Matters Concerning Alimony
- Age
- Health (physical and mental)
- Assets owned by both parties (assets can be liquidated to provide money)
- Custody of minor children
- Standard of living couple enjoyed during course of marriage (because court wants a smooth transition).
- Duration of marriage (determines the validity and/or duration of alimony)
- Anything the court deems just and appropriate.
Tax Implications to Alimony
Prior to 2019: the payor of alimony could take a tax deduction because the payee would claim it on taxes. This justified higher alimony awards because the courts realized parties involved were subjected to tax implications.
After tax law changes 2019: Payor can no longer deduct on taxes, and it is no longer taxable on recipient. This justifies a lower award of alimony.
Disobeying Court Order to Pay Alimony
If payor disobeys a court order, the receiver has the following options to enforce:
- Wage reduction order: instructs the payor’s employer to take money out of paycheck to pay alimony
- Seize Assets: seize liquid assets or personal/real property, have it sold at auction, and use proceeds to pay recipient.
- Contempt of Court Order
