Tag: alimony update

Florida Alimony Reform Sausage

It’s been said laws are like sausages, it is better not to see them being made. If true, then it’s best you not read the two new Florida alimony reform bills recently introduced into the Florida House and Senate. For the unafraid, below are a few provisions of the House bill worth watching.

Alimony Reform

The Current Chorizo

In Florida, alimony is awarded to a spouse when there is a need for it, and the other spouse has the ability to pay for alimony. As I have written before, alimony can take various forms.

For example, alimony can be awarded to “bridge the gap” between married and single life. This is usually a short-term form of alimony, and in fact, can’t exceed two years.

Alimony can be rehabilitative – to help a party in establishing the capacity for self-support by developing skills or credentials; or acquiring education, training, or work experience.

Durational Alimony is awarded when permanent periodic alimony is inappropriate. The purpose of durational alimony is to provide you with economic assistance for a time after a short or moderate term marriage, or even long marriages, if there is no ongoing need for support on a permanent basis.

Permanent Alimony is awarded to provide for your needs and necessities of life as they were established during your marriage, if you lack the financial ability to meet your needs and necessities of life following a divorce.

The House Hot Dog

Alimony reform is a nationwide phenomenon.

Currently, there are two bills in Florida trying to be passed to amend our alimony statute and impact other statutes. However, many state bills, like Florida’s, are in progress, or are constantly evolving.

This year’s two bills fundamentally change many family law statutes and cases. Briefly, what we consider to be long and short marriages would change. This is an important measuring stick, because the types of alimony granted can change depending on the duration of a marriage.

Right now, for purposes of determining alimony, there is a presumption that a short-term marriage is less than 7 years, a moderate-term marriage is greater than 7 years but less than 17 years, and a long-term marriage is 17 years or more.

Under the new House bill, a long-term marriage would be 20 years or more, a mid-term marriage would be more than 11 years but less than 20 years, and a short-term marriage would be a marriage of less than 11 years.

Another proposed change concerns the type of alimony. Right now, when a court determines the type and amount of alimony, the court weighs several factors, including, the standard of living, the age and the physical and emotional condition of the parties and sources of income available to pay alimony.

Under the new House bill, a trial court awarding alimony would have to prioritize an award of bridge-the-gap alimony, followed by rehabilitative alimony, over any other forms of alimony. Additionally, the new bill eliminates permanent alimony.

The Equal Time-Sharing Bratwurst

Florida has a public policy that each child has frequent and continuing contact with both parents after the parents separate or divorce and tries to encourage parents to share the rights and responsibilities, and joys, of childrearing.

However, there is no presumption for or against the father or mother of the child or for or against any specific time-sharing schedule when creating or modifying a parenting plan of the child.

The new House bill would dramatically alter the law. The proposed bill would make it Florida law that equal time-sharing with a minor child by both parents is in the best interest of the child unless the court finds one of the stated reasons not to.

The House bill is available here.

 

The Alimony Race

Yet another news outlet is reporting on the 2018 Alimony Race. NPR weighs in on why people are rushing to finalize divorces this year: so they can deduct alimony payments before the new tax law kicks in.

alimony race

On Your Mark

As NPR reports, divorce lawyers and accountants have been advising many of their wealthier clients to hurry up and get divorced, like, now or at least before the end of the year because under the new tax law starting in 2019, a generous tax break for alimony payments will be gone.

The New York Times’, Jim Tankersley, who covers tax and economics stories, had a few things to say:

TANKERSLEY: So right now, if you get divorced – let’s say you’re a husband who is paying alimony to your ex-wife. You can deduct that, if you so agree with your spouse in the divorce settlement, from your taxes. But what’s going to happen is you won’t be able to anymore.

CHANG: OK, so spouses who will be on the hook for alimony payments will be eager to get their divorce settlements finalized this year but also, I can imagine, spouses who will be receiving the alimony payments because I would think that my soon-to-be ex would have more of a reason to give me more alimony if he or she gets a bigger deduction out of it this year.

TANKERSLEY: Yes, but it affects different couples differently. For couples who make essentially the same amount of money, if they’re in the same tax bracket, this is just an accounting shift. The same total amount of money changes hands.

TANKERSLEY: But for couples who make different amounts of money and are in different tax brackets, what they basically got before was a subsidy from the government for their divorce…

CHANG: What do you mean?

TANKERSLEY: …Because the higher-earning spouse was able to pass on income that would have been taxed at a really high rate but then instead was getting taxed at a low rate.

TANKERSLEY: So that difference between the tax rates was just free money from the government. Now that goes away. So, if you’re the husband, for example, who earned more and is paying that alimony to a wife, now you have to pay the taxes at the higher rate. That free money disappears, and so you are probably going to say to your ex-wife, sorry, there’s no more money; I’m not going to give you even more than I was originally thinking I was going to have to pay. And so, you the ex-wife end up with less money overall. And in between, the government gets more money.

CHANG: And I can imagine most couples that have severely disparate incomes – it’s usually the woman who earns less. So, this tax law change will probably have women bearing most of the cost.

TANKERSLEY: That’s what divorce lawyers and tax professionals and financial planners have been telling me – is that, yeah, it’s largely women who receive alimony. And particularly with wealthy couples, it’s largely women who leave the labor force to take care of kids or for whatever reason. And women earn less in the economy for the same work than men do. This is a potentially big loss for women…

Why it Matters

Spouses negotiating alimony payments may try to pay less when the change takes effect because there will be no tax savings.

The deduction is a big deal to couples negotiating their divorce because if someone who earns, say, $250,000 agrees to pay $4,000 per month in alimony, it really costs the person about $3,000 after taking the deduction into account.

Without the break, many people will agree to pay only what would have been their after-tax amount. It is feared that more couples will end up fighting in court because they won’t be able to agree on alimony.

2019 Deadline

The alimony deduction repeal doesn’t take effect immediately and won’t kick in until 2019. That is why lawyers are advising clients to file for divorce now.

However, meeting the 2019 deadline won’t be easy.

Some states have mandatory “cooling-off” periods, others states have residency requirements. So, you can’t just file for a divorce today, and expect that you’re going to be divorced tomorrow.

The NPR interview is here.

 

Alimony for Him

Score another win for the women’s rights movement, but I’m guessing it’s not a win women will celebrate. In a surprise twist in the age of #equalpay, more women in divorce are having to pay alimony to their ex-husbands.

Hear Me Roar!

As MarketWatch reports, an increasing number of women are paying alimony and child support when their marriages break up, according to a recent survey by the American Academy of Matrimonial Lawyers.

Some 54% of the attorneys surveyed have seen an increase in women paying child support in the last three years, and 45% noticed an uptick in women paying alimony.

Despite complaints about the women’s pay gap, the trend of women paying alimony is being seen as a sign of women’s growing earning power. But experience is also showing that having to pay a man alimony is a bitter pill to swallow for women.

Florida Alimony

I’ve written about alimony, and alimony reform in Florida, many times. In every dissolution of marriage case, the court can grant alimony to either party – husband or wife.

Not many people realize there are several types of alimony in Florida: bridge-the-gap, rehabilitative, durational, or permanent alimony.

Florida courts can also award a combination of alimony types in a divorce. Alimony awards are normally paid in periodic payments, but sometimes the payments can be in a lump sum or both lump sum and periodic payments.

In determining whether to award alimony or not, the court has to first make a determination as to whether a wife or a husband, has an actual need for alimony, and whether the other party has the ability to pay alimony.

Once a court determines there is a need and ability to pay alimony, it has to decide the proper type and amount of alimony. In doing so, the court considers several factors, some of which can include:

  • The standard of living established during the marriage.
  • The duration of the marriage.
  • The age and the physical and emotional condition of each party.
  • The financial resources of each party, including the nonmarital and the marital assets and liabilities distributed to each.
  • The earning capacities, educational levels, vocational skills, and employability of the parties and, when applicable, the time necessary for either party to acquire sufficient education or training to enable such party to find appropriate.

But, the gender of the recipient is not a statutory basis for granting or denying alimony. Courts are supposed to be blind to gender in alimony awards.

The Future is Female!

Many women, no matter how educated, how professional, how modern they are, are surprised to learn that they might have to pay alimony. In the past, maybe mom was a kindergarten teacher and dad was working on Wall Street. For example:

  • In 1960, just 11% of households with children under 18 had mothers who were the breadwinner.
  • In 2013, moms were the primary provider in a record 40% of families, a 2013 Pew Research Center report found.
  • Some 31.4% of single dads who have custody of their kids received spousal support in 2016, and 52.3% of moms did.

The average amount of child support was $5,774 per year, or about $329 a month, but only 68.5% of that money was actually received, according to Census data.

Equality Includes Both Genders!

Paying alimony is something Sarah Gilbert never thought she would have to do, but the 44-year-old mom of three boys now sends $349 a month to her ex-husband. The Portland, Ore. resident says the experience has made her never want to get married again, even though she’s now in a happy relationship.

Her husband was a stockbroker when they first met, then he left the financial world to join the U.S. Army. After the military, he struggled to find work and was unemployed when they split. She was shocked when a judge gave her ex-husband primary custody and ordered Gilbert to pay monthly support.

The jaw dropped out of my mouth. I literally could not believe it. Had I been working a corporate job, I would have expected to pay spousal support to him, but I was a tour guide.

As a defense to paying alimony, working women going through a divorce will sometimes argue that their husbands are underemployed and could have earned much more than if he worked harder.

But the reality is, if during the course of the marriage, you and your husband agreed he’d earn less, work less, and you took on the role of the primary breadwinner, you’re going to pay that support.

The MarketWatch article is here.

 

New Alimony Penalty

The GOP proposed tax plan has something for everyone. Including a huge surprise for divorcing couples: a tax penalty for divorce. The new law may dramatically change how we treat alimony for taxes, and whether your case will settle.

As Business Insider reports, the tax bill released last week could drastically change the tax treatment of alimony. Currently, alimony is tax-deductible for the paying spouse and taxable to the receiving spouse.

But if you get divorced after the plan is enacted, that would change: Alimony would be paid out of after-tax dollars and would be tax-free to the recipient.

This change would tend to increase the total amount of tax paid by divorced couples, since the ex-spouse who pays alimony is typically the one with the higher income and who faces a higher tax bracket.

Florida Alimony

In Florida a court can grant alimony to either party. There are different types of alimony a court can order: bridge-the-gap, rehabilitative, durational, or permanent, or any combination of these forms of alimony. In any award of alimony, the court may order periodic payments or payments in lump sum or both.

The court can even consider the adultery of either spouse and the circumstances in determining the amount of alimony, if any, to be awarded.

But the very first finding the court has to make in determining whether to award alimony is whether either party has an actual need for alimony or maintenance and whether either party has the ability to pay alimony or maintenance.

If so, the court must consider all relevant factors, including, the standard of living established during the marriage; the duration of the marriage, the age and the physical and emotional condition of each party, and the financial resources of each party, among other factors.

Alimony Tax Reform

I have written about alimony and taxes, and alimony reform proposals for many years. This time the proposal comes from Congress, no the Florida Legislature.

All told, the proposed change under the tax proposal would lead to the federal government collecting an additional $8.3 billion in taxes from divorced couples over the next 10 years, according to the bill summary.

Arguably, imposing such a substantial tax penalty on divorce could encourage people to stick it out and make their marriages work. But it could also financially trap people in unhappy marriages.

One argument for this change is that it would be easier for the IRS to administer, and IRS data shows that alimony sometimes shows up deducted on one ex-spouse’s return but is not reported as income by the other ex-spouse.

The Impact on Divorces

There are many ways to settle a divorce case and render a judgment. And, one of the most important facts to consider in any divorce is the tax deduction for alimony payments.

Overwhelmingly, divorces include some sort of alimony payment provision. The problem for the new tax bill is that if couples are less likely to reach an agreement on alimony, divorce proceedings could become more gridlocked, time consuming and expensive.

The Business Insider article is here.

 

Pet Alimony?

Sarah Bronilla is suing her ex-husband, Joshua Rosen, for over $32,000 in alimony. No, not alimony for herself, but for their pampered English bulldog, Lola. The case arising out of New York may be one of the first “dogimony” cases.

As the New York Daily News reports, when Sarah Bronilla and Joshua Rosen separated in 2012 – after six years of marriage – Rosen agreed he would pay Bronilla $200 in monthly “dogimony”, she says in her Manhattan Supreme Court lawsuit against him for pet alimony.

Florida Alimony

In Florida, alimony is governed by the Florida Statutes and relevant case law. The starting point in any alimony case is whether there is an actual need for alimony by a spouse, and the ability of the paying spouse to pay for alimony.

However, Florida Statutes are silent as to pet alimony.

I have written about divorce and pet issues several times. Pet custody, or who gets the pet dog, is a frequent problem. Alaska became the first state to enact a pet custody law.

A bill was introduced in the House of Representatives in Rhode Island which is very similar to the law of Alaska which was enacted this year. The Rhode Island bill requires judges to “consider the best interest of the animal” in a divorce or separation. Currently, there is no such provision in the works in Florida.

Florida does not have any pet specific custody or divorce laws. In fact, the alimony law is written in such a way that the court can only grant alimony to a party, not a pet of the parties.

Just because there is no specific law authorizing pet alimony does not mean: ‘that dog won’t hunt!’ People are free to enter into marital settlement agreements which make provision for support, such as pet alimony, that the law does not.

Those contracts could be enforceable as Mr. Rosen in New York may find out.

New York Pet Alimony

According to the New York complaint, Rosen not only agreed he would pay $200 in monthly pet alimony, or “dogimony”, Rosen also agreed to cover total food costs and half of the vet bills for the pet dog.

But the ‘deadbeat dog dad’ has skipped out on his financial obligations for pet alimony, Bronilla alleges in the lawsuit filed in Manhattan Supreme Court.

Bronilla says she has had to cover $12,000 for upkeep, $18,000 for food and $2,335 for health costs for the pooch, described as “fawn-colored” in the lawsuit.

In addition to the unpaid pet alimony, Bronilla claims Rosen owes her around another $100,000 related to their settlement agreement, including money from a portion of a business he sold.

The New York Daily News article is here.