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Alimony Changes in Florida

The Tampa Bay Times reported that on May 1, 2013, Governor Rick Scott vetoed a controversial bill to end permanent alimony related to divorce cases in the state of Florida.  In his veto letter to President Don Gaetz of the Florida Senate, Scott explained that he opposed modification of existing alimony law because it would have caused disruption for families.  Scott also indicated that he opposed this legislation since it would be applied retroactively and could lead to “unfair, unanticipated results.”

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Quick Divorce Facts

Divorce rates remain about 50 percent for first-time marriages in the United States, with approximately 3.5 to 5 percent of all marriages ending every year.  Additionally, as reported in divorcestatistics.org, the divorce rate increases to over 60% for second marriages and over 70% for third marriages.  Sadly, two out of three marriages ending in divorce in the United States include families with minor children in the home. (Source: divorceguide.com)

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Divorce Valuation: Active vs. Passive Appreciation

In divorce cases, attorneys will often call upon a business valuation expert to distinguish between “active” and “passive” appreciation when deciding how certain spousal assets should be divided and allocated.  The difference is crucial.  A spouse’s interest in a closely-held business often represents the most valuable asset he or she owns and is also often the most complex to value for dissolution purposes, particularly if the spouse owned the business interest prior to marriage.   In most states (including Florida), the active appreciation of a pre-marital asset is includible in the marital estate while passive appreciation is not.  This means that the appreciation in value of the owner-spouse’s active involvement in the business during the marriage is included as a marital asset subject to equitable distribution.  On the other hand, if a pre-marital asset increases in value during the marriage due to external market conditions (passive appreciation), it is excluded from the marital estate and remains the sole property of the owner-spouse.

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Role of the Forensic Accountant in Divorce

The forensic accountant in divorce cases is charged with requesting, gathering, analyzing and evaluating financial data provided by the spouses and their attorneys and then communicating his or her findings.  Specifically, forensic accounting assignments may include the following:

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Divorce Forensics: The Search for Hidden Income

When going through a divorce, in is not uncommon for the parties to hire a valuation expert, often at the direction of their attorneys, to assist them with the process of dividing marital assets.  This is especially true when one or both of the individuals involved have business ownership interests.  As emotions can lead people to act “out of character”, doing things that they normally would not do, hidden income can become a major issue in these cases.  In many cases, if one of the spouses owns a business, the other spouse might accuse them of earning more money than the financial records indicate.

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