Divorcing couples in Florida often rely on the services of a forensic accountant to help resolve their hotly debated financial issues. When spouses are unable to reach financial agreements, Florida’s domestic relations courts have a duty to determine spousal support and divide the marital assets, which often include the valuation of a business. The forensic accountant provides business valuation services to assist the court with the proper division of assets and liabilities. Following is an overview of how equitable distribution and alimony support payments work for divorcing couples in Florida.
What is equitable distribution?
As the title implies, equitable distribution contemplates the fair division of property acquired during a marriage. Marital property includes assets such as bank accounts, investments, retirement accounts, real estate, and business interests. It also encompasses liabilities such as outstanding loans, credit card debts, and mortgages. Whether categorized as a liability or an asset, all marital property must be divided fairly between the parties. When a spouse owns a business, the forensic accountant performs a business valuation to determine the value of this asset. Since the courts often award the business to the business-owner-spouse, the other spouse is awarded with other marital assets of roughly equal value to that of the business.
Florida Statute, Chapter 61, governs property division in divorce cases. Chapter 61 mandates that the court first award non-marital property owned prior to and retained during the marriage. After awarding non-marital assets and liabilities, the court then decides how to distribute marital property accumulated during the marriage.
After equitably dividing marital assets and liabilities between the parties, the court must decide the issue of alimony. The courts consider several issues when establishing spousal support awards; these may include the current income potential of the parties, the standard of living during the marriage, and the non-breadwinning spouse’s need. Alimony awards may be based upon one of the spouse’s child rearing or homemaking responsibilities and efforts. For long-term marriages, this type of spousal support has traditionally been permanent in nature. Courts may even award alimony to a spouse who desires to further his or her education in order to enhance their future earning potential. This type of alimony is called “rehabilitative alimony” and is temporary in nature.
New trend in Florida divorce law:
Florida Legislature recently introduced Senate Bill 718. This proposed legislation was designed to modify current alimony laws by eliminating permanent alimony awards. Instead, a limit on spousal support awards would be established based on each spouse’s current income and the length of the marriage. Marriages lasting fewer than 10 years would be considered “short term” and any alimony award would be limited to 25 percent of the payor’s income. “Medium length” marriages, lasting between 11 and 21 years, would be limited to 35 percent of income. Marriages over 21 years in duration would be classified as “long term” and have an alimony limit of 38 percent of gross income.
Florida governor Rick Scott vetoed Senate Bill 718 on May 1, 2013. Scott cited its retroactive application to existing alimony arrangements as his primary reason for doing so. Scott said the proposed law “tampers with … settled economic expectations of … Floridians who [are already divorced].”
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Although Senate Bill 718 was vetoed by the governor, this bill potentially foreshadows major changes to Florida’s existing divorce laws. These changes would have profound implications for those wishing to end their marriage. Those considering or currently involved in a divorce in Florida should consult a qualified Florida divorce lawyer immediately. For more information about how we might be able to help, please give us a call: 727-726-3600.