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:
- Assets acquired during the marriage, individually by either spouse or jointly by them;
- 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;
- Interspousal gifts during the marriage; and
- 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:
- Size of the business
- Nature of the business
- Properties owned by the business
- Financial records
- Business accounts
- 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:
- 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:
- The duration of the marriage;
- The standard of living established during the marriage;
- Any infidelity in the marriage;
- The age and physical/emotional condition of each spouse;
- The financial resources of each party, including bothmarital and nonmarital assets;
- The earning capacity, education, vocational skills, and employability of each spouse;
- The contribution of each spouse to the marriage, including homemaking services, child care, education, and career building of the other spouse;
- The responsibilities each spouse will bear with regard to any minor children;
- The tax treatment and consequences to both spouses of any alimony;
- 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.