Why Florida High Net Worth Divorces Tend to be Complicated

Orlando Divorce Attorney

While all couples going through a divorce will undoubtedly find the process stressful, high net worth individuals run into several issues that the average person usually does not need to consider. 

Division of Large Assets in Florida Divorces

One of the things that complicates high net worth divorces more than others is the presence of numerous large assets. High net worth individuals tend to have more than one home, land, multiple vehicles, and one or more businesses to consider when dividing their assets. Florida follows the law of equitable distribution, meaning courts will divide martial property (as opposed to nonmarital property) in the fairest — but not necessarily completely equal — way. 

Marital homes and vehicles will be divided in the same fashion as other divorces, but businesses take more time and require more work to resolve. Before you can start dividing a business, you have to place a value on it. The leading method for valuing a Florida business during a divorce is hiring a specialist. Most often, this task will be performed by a forensic certified public accountant (CPA), who will appraise the value of the business by examining a number of factors, including:

  1. Nature of the business
  2. Size of the business
  3. Properties owned by the business
  4. Financial records
  5. Business accounts
  6. Business reputation and good will

After examining all the relevant aspects of the business, the CPA can use a fair market valuation (based on what an everyday buyer might offer in a sale) or an investment valuation (based on what a knowledgeable industry buyer might offer in a sale). The CPA can rely predominately on the business’ present income, its potential for future earnings, the value of comparable business, and/or a straight calculation of the business’ assets minus its liabilities. 

Once the value has been assigned, the court overseeing your divorce will order a division of the business by liquidating it, awarded it solely to one spouse with a possible cash or property offset to the other spouse, or awarded an interest in the business to both spouses. Especially when a couple has multiple businesses to tackle in their divorce, this whole process can be extremely contentious. 

Payment of Alimony

High net worth individuals have a greater likelihood of having orders to paying alimony in their divorce agreements. Florida law provides for four different types of alimony, which the court will order based on the particular circumstances of the marriage. 

  1. Bridge-the-gap alimony – Bridge-the-gap alimony is awarded to assist one spouse by providing support to allow him or her to make a transition from being married to being single. It is paid for the purpose of legitimate, identifiable short-term needs and may not exceed two years in duration.
  • Rehabilitative alimony – Rehabilitative alimony is awarded to assist one spouse in establishing the capacity for self-support through redevelopment of skills, education, training, or work experience. It must be part of a specific and defined plan and is intended to be short-term in nature.
  • Durational alimony – Durational alimony is awarded when permanent alimony might not be appropriate. It is paid to provide a spouse with economic assistance for a set period of time following a marriage. 
  • Permanent alimony – Permanent alimony is awarded to provide for the needs and necessities of life as they were established during the marriage of the parties for a spouse who lacks the financial ability to meet his or her needs and necessities of life following a divorce. Permanent alimony is generally reserved for long-term marriages (17 years or longer) and will be awarded for short-term marriages (less than 7 years) only in exceptional circumstances. 

In considering whether one spouse needs to pay alimony to the other, the court will look at several aspects of the marriage, including:

  1. The duration of the marriage;
  2. The standard of living established during the marriage;
  3. Any infidelity in the marriage;
  4. The age and physical/emotional condition of each spouse;
  5. The financial resources of each party, including BOTH marital and nonmarital assets;
  6. The earning capacity, education, vocational skills, and employability of each spouse;
  7. The contribution of each spouse to the marriage, including homemaking services, child care, education, and career building of the other spouse;
  8. The responsibilities each spouse will bear with regard to any minor children;
  9. The tax treatment and consequences to both spouses of any alimony;
  10. All sources of income available to both spouses, including income from investments and assets.

Payment of Child Support

Any couple with minor children will have to consider payment of child support upon their divorce. But in high net worth divorces, support and custody agreements can become a more complicated issue because of the parents’ substantial resources and the unique opportunities present to the children. 

Child support is ordered for minor children based on the needs of the children, including any special needs a child might have, the resources of parents, and the standard of living the children would have enjoyed if the marriage remained in tact. Courts do not want children to experience an economic disadvantage because of their parents’ decision to divorce.

Florida has guidelines set out in Statute 61.30 that determine a presumptive amount of child support based on the combined income of the parents. The scale ranges from a combined income of $800 per month to $10,000 per month, and courts have some leeway in stepping outside these guidelines (usually only by 5 percent), depending on the circumstances. For parents whose income exceeds the guidelines, the court will have to calculate child support based on a statutory formula, which makes things a little trickier. 

Potential Media Involvement

When high net worth individuals divorce, another thing that tends to complicate matters is the media following these people might have. Celebrities, athletes, and high-profile business owners will have to try to resolve their marital disputes under a camera lens, dodging articles that try to shed light on what happened and who is getting what.

In a media-intense divorce, it is more important than ever to maintain transparency between the spouses and confidentiality as to the rest of the world. The last thing you need during this time is to read on the internet that your spouse has more assets than you thought, or your spouse was unfaithful during the marriage. Being honest and proactive will help you avoid a frustrating run with the media. 

The Importance of Hiring Counsel 

The best thing you can do for yourself during this stressful time is hiring an experienced attorney who will protect you, your assets, your family, and your privacy. This is not a time to go it alone, especially if you end up requiring a trial to completely sort things out. 

If you are contemplating a divorce in Florida involving high-value assets, you need a skilled lawyer who knows the system. Attorney Beryl Thompson-McClary has 28 years of litigation experience and is extremely dedicated to achieving the best results for her clients. Schedule a confidential consultation today at no cost to you by calling our Orlando office at (888) 640-2999. 

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Special Considerations for a High Net Worth Divorce in Florida

High net worth divorce attorney in Orlando, Florida

Going through a divorce as a high net worth individual, you have a number of things to consider in trying to divide your life into two households. Businesses, houses, retirement plans, stocks, alimony, and support all come into play and present complicated circumstances the average person might not have to encounter. One of the best ways to prepare is to understand what to expect. 

How Does Florida Divide Assets in a Divorce? 

Florida follows the law of “equitable distribution,” meaning divorce courts in the state will sort out which property is marital and nonmarital and then divide the marital property according to what is most fair for both spouses. Generally, marital property is that which you acquired during the marriage, while nonmarital property you acquired before the marriage.  

In deciding what is most fair for each spouse to receive from the marital property, the court overseeing your divorce will consider many aspects of your marriage, including:

  1. The contribution to the marriage by each spouse, including contributions to the care and education of the children and services as a homemaker.
  2. The economic circumstances of the parties.
  3. The duration of the marriage.
  4. Any interruption of personal careers or education opportunities of either party.
  5. The contribution of one spouse to the personal career or education opportunity of the other spouse.
  6. The desirability of retaining any asset, including an interest in a business, corporation, or professional practice, intact and free from any claim or interference by the other party.
  7. The contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties. 
  8. The desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so, it is in the best interest of the child or that party, and it is financially feasible for the parties to maintain the resident until the child is emancipated or until exclusive possession is otherwise terminated by a court of competent jurisdiction. In making this determination, the court shall first determine if it would be in the best interest of the dependent child to remain in the marital home; and, if not, whether other equities would be served by giving any other party exclusive use and possession of the marital home. 
  9. The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within 2 years prior to the filing of the petition. 
  10. Any other factors necessary to do equity and justice between the parties. 

What Will Happen to My Business? 

One of the biggest considerations for a person going through a high net worth divorce is his or her business. Like other property, you first need to decide whether the business is marital property then figure out how to divide it if so. 

In order to attempt to divide a business, it must first be valued. The leading method for valuing a Florida business during a divorce is hiring a forensic certified public accountant (CPA), who will appraise the value of the business by examining all the relevant aspects of the business, including the nature of the business, the size of the business, the business’ financial records, and the good will and reputation of the business. 

Once the value has been assigned, assuming neither spouse wants to liquidate the business, the court overseeing your divorce will order a division of the business through one of the following means:

  1. Giving the business entirely to one spouse and offsetting the value by giving the other spouse other marital assets or alimony; or
  2. Giving a portion of the business to both spouses. 

Do I Have to Split My Retirement Benefits? 

Spouses will usually be entitled to a share of each other’s retirement benefits, even where one spouse has a larger account balance or where one spouse did not work outside of the home during the marriage. The court will also consider the nature of the retirement accounts, whether traditional, defined contribution, or defined benefit, and how much of the account balances is fully vested. 

Defined-Contribution Plan

A defined-contribution plan is what ordinarily comes to mind first when people talk about retirement accounts. This includes 401k plans, IRAs, and Roth IRAs, where the employee sets aside money every pay period to be invested and eventually grown into a retirement fund. These set asides are also usually added to by the employer through some kind of profit sharing. 

Defined-contribution plans are divided between the spouses based on what portion of the account balance is fully vested. For instance, if at the time of the divorce, a spouse’s 401k is 50 percent vested, and all of the money in the account was contributed during the marriage, the court will divide 50 percent of the balance. Importantly, the non-account holding spouse will not be entitled to additional money accrued in the account after completion of the divorce. 

Defined-Benefit Plan 

Defined-benefit plans usually involve pensions that require certain criteria to be met. The employee can expect to receive a set sum, often in regular payments, upon putting in a certain number of years with the employer. In dividing defined-benefit plans, the non-account holding spouse can take a monetary offset or can elect to receive payments from the account upon reaching retirement age. 

Stock Options

High net worth individuals will often have stock options they need to consider dividing with their spouses. These options allow corporate employees to buy stock at a set price or receive a cash sum equal to stock shares after working a set amount of time, all while avoiding the regulatory caps placed on standard retirement plans. Employees thereby have the opportunity to make and save a great sum of money. Depending on when the stock options were bought or offered, they could be considered marital property that will need to be divided.

It is very important to remember the tax implications of retirement accounts and stock options, especially where the non-account holding spouse is accepting a money offset instead of a portion of the account. Retirement accounts are often tax delayed, meaning taxes have not been withheld from the money before it is placed in the account. When the account is eventually withdrawn, taxes will be taken out. For this reason, $100,000 in a 401k is not the same as $100,000 in cash. The court and spouses need to consider this when configuring how to divide any relevant retirement benefits. 

Contact Our Orlando Divorce Law Firm Today

As a high net worth individual, you have unique circumstances, and you need an experienced lawyer who understands them. Attorney Beryl Thompson-McClary has been in the business for nearly 30 years and will work diligently to achieve the results you need while keeping your costs in mind. The seasoned legal team at Law Office of Beryl Thompson-McClary, P.A., can start protecting your assets today. Schedule a confidential consultation at no cost to you by calling our Orlando office at (888) 640-2999. 

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What to Consider in a Florida High Net Worth Divorce

Orlando Female Attorney Beryl Thompson-McClary

No matter your income or assets, divorce is a stressful event. But having a high net worth can make the proceedings more complicated, as you try to divide large assets and decide how to settle potential alimony. Knowing Florida’s laws will help you understand the things you need to consider.

Florida’s General Rules During Divorce

Florida follows the law of “equitable distribution,” meaning divorce courts in the state will sort out which property is marital and nonmarital and then divide the marital property according to what is most fair for both spouses. Understanding which property is marital will go a long way in helping you determine what you will need to divide with your spouse.

According to Florida law, marital property includes: 

  1. Assets acquired during the marriage, individually by either spouse or jointly by them;
  2. The enhancement in value and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both;
  3. Interspousal gifts during the marriage; and 
  4. All vested and nonvested benefits, rights, and funds accrued during the marriage in retirement, pension, profit-sharing, annuity, deferred compensation, and insurance plans and programs. 

Conversely, nonmarital assets are those acquired by either spouse prior to the marriage or as the result of a gift or inheritance to only one spouse. Income derived from nonmarital assets is likewise a nonmarital asset. In addition to these rules, spouses can agree in writing to what assets are marital and nonmarital, usually through a prenuptial agreement.

Division of Assets in Florida Divorces

Once you have figured out which assets are marital and thus subject to division, you need to consider the kinds of assets you will have to divide. It is very important for both spouses to be completely forthcoming and transparent during this phase, identifying all their various assets to which the other might be entitled. You do not want to hide anything or find out you have been fooled. 

Some basic questions to ask yourself are: Do you have a business or are you a shareholder in a business? Do you have primary and secondary residences and vehicles? Do you have retirement benefits, a pension, stock options? 

All of these things, if acquired or accumulated during the marriage, will need to be sorted out. The first step you will need to take in accomplishing that is obtaining a valuation on each asset. This is most commonly accomplished by hiring a forensic certified public accountant or appraiser to analyze your assets and assign values to them. 

For instance, in valuing a business, a forensic CPA would examine the following aspects of the business:

  1. Size of the business
  2. Nature of the business
  3. Properties owned by the business
  4. Financial records
  5. Business accounts
  6. Business reputation and good will

After investigating all relevant business information, the CPA will arrive at the value of the business by using either a fair market valuation (based on what an everyday buyer might offer in a sale) or an investment valuation (based on what a knowledgeable industry buyer might offer in a sale). The CPA can rely predominately on the business’ present income, its potential for future earnings, the value of comparable business, and/or a straight calculation of the business’ assets minus its liabilities. 

When you have values assigned to your assets, you will then need to decide whether to split your interests in the assets, liquidate the assets, or arrange for one spouse to take the assets with some kind of cash or property offset going to the other spouse. 

Payment of Alimony

In the absence of a prenuptial agreement as to maintenance upon divorce, high net worth individuals need to consider the potential for paying alimony to their spouses. Florida has a statute specifically devoted to the subject of alimony (61.08) that states a court can award either spouse to pay any of four kinds of alimony:

  1. Bridge-the-gap alimony – Bridge-the-gap alimony is awarded to assist one spouse by providing support to allow him or her to make a transition from being married to being single. It is paid for the purpose of legitimate, identifiable short-term needs and may not exceed two years in duration.
  • Rehabilitative alimony – Rehabilitative alimony is awarded to assist one spouse in establishing the capacity for self-support through redevelopment of skills, education, training, or work experience. It must be part of a specific and defined plan and is intended to be short-term in nature.
  • Durational alimony – Durational alimony is awarded when permanent alimony might not be appropriate. It is paid to provide one spouse with economic assistance for a set period of time following a marriage. 
  • Permanent alimony – Permanent alimony is awarded to provide for the needs and necessities of life as they were established during the marriage of the parties for a spouse who lacks the financial ability to meet his or her needs and necessities of life following a divorce. Permanent alimony is generally reserved for long-term marriages (17 years or longer) and will be awarded for short-term marriages (less than 7 years) only in exceptional circumstances. 

In considering whether one spouse needs to pay alimony to the other, the court will look at several aspects of the marriage, including:

  1. The duration of the marriage;
  2. The standard of living established during the marriage;
  3. Any infidelity in the marriage;
  4. The age and physical/emotional condition of each spouse;
  5. The financial resources of each party, including bothmarital and nonmarital assets;
  6. The earning capacity, education, vocational skills, and employability of each spouse;
  7. The contribution of each spouse to the marriage, including homemaking services, child care, education, and career building of the other spouse;
  8. The responsibilities each spouse will bear with regard to any minor children;
  9. The tax treatment and consequences to both spouses of any alimony;
  10. All sources of income available to both spouses, including income from investments and assets.

In most circumstances, alimony payments are modifiable. However, bridge-the-gap alimony is never modifiable. Other types of alimony can be modified by the court based on changes in circumstances and whether the payments are being made according to the agreement. There are also tax implications to consider, both payments and deductions.

The Importance of Hiring Aggressive Counsel 

Because of all the complicated considerations involved in a high net worth divorce, it is critically important to retain a competent lawyer to help you arrive at the most favorable result. A skilled lawyer will be able to hire experts, conduct depositions, perform written discovery, and go to trial if necessary. You have worked hard for your assets, and you need the right attorney to help you protect them. 

If you are contemplating a divorce in Florida involving high-value assets, you need a knowledgeable divorce attorney like Beryl Thompson-McClary on your side. She has 28 years of litigation experience and is steadfastly dedicated to protecting what matters to her clients. Schedule a confidential consultation today at no cost to you by calling our Orlando office at (888) 640-2999. 

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