Tag: divorce alimony

A Slice of Equitable Distribution and Alimony

The wife of Papa John’s founder John Schnatter filed for divorce, claiming her marriage with the unemployed pizza executive is “irretrievably broken,” according to court papers filed in Kentucky. If there is no prenuptial agreement, how big a slice of equitable distribution of the stock and any alimony is Annette entitled to?

Slice of Equitable Distribution

When the Moon Hits Your Eye

Papa John’s is an American pizza restaurant franchise. It runs the fourth largest pizza delivery restaurant chain in the United States, with headquarters in Jeffersontown, Kentucky, a suburb of Louisville.

Papa John’s was founded in 1984 when “Papa” John Schnatter knocked out a broom closet in the back of his father’s tavern, Mick’s Lounge, in Jeffersonville, Indiana. He then sold his 1971 Camaro Z28 to purchase US$1,600 worth of used pizza equipment and began selling pizzas to the tavern’s customers out of the converted closet.

John’s pizzas became so popular he moved into the adjoining space. The company went public in 1993 and a year later it had 500 stores. By 1997 it had 1,500 stores. And in 2009, John got his Camaro Z28 back after offering a $250,000 reward.

Schnatter and Annette Cox, 59, had been married since April 11, 1987, and separated on April 1 of this year, the wife’s attorney Melanie Straw-Boone writer in papers filed in Oldham Circuit Court. Cox called Schnatter a 57-year-old Louisville resident who “is not employed,” according to the boilerplate, three-page petition.

“The marriage between petitioner and respondent is irretrievably broken”.

The couple have two children and share unspecified real estate holdings, the filing said. Schnatter stepped down as CEO in late 2017 after reports surfaced that he uttered a racial slur during a conference call.

Alimony, Equitable Distribution, and the Length of Marriage

In Florida, the duration of marriage is an important topping in divorce cases. I’ve written about the types of alimony awards available in Florida before. For instance, Florida Statutes dealing with alimony specifically limit the type of alimony awards based on the duration of the marriage.

So, for determining alimony, there is a rebuttable presumption that a short-term marriage is a marriage less than 7-years, a moderate-term marriage is greater than 7-years but less than 17-years, and long-term marriage is 17-years or greater.

Florida defines the duration of marriage as the period of time from the date of marriage until the date of filing of an action for dissolution of marriage.

The duration of marriage can also be a large slice of the property division. When a court distributes the marital assets and liabilities between the parties, the court begins with the premise of an equal split.

However, there are times and cases which justify an unequal distribution based on several relevant factors. One of the factors a court can consider is the duration of marriage, in addition to other factors.

Dividing assets between spouses – especially large companies such as Papa John’s – is not as simple as taking a pizza cutter to a hot pie; even with agreements. Very often assets have appreciated over the course of several years. The longer the marriage is, the more a business interest can appreciate. When property appreciates, you need to distinguish between passive and active appreciation. A passive asset could be an investment account which is never traded.

A business, on the other hand, is an active investment, and the percentage a spouse is entitled to may depend on different things. Even with the most sophisticated couples, such as the Schnatter/Cox family, unless you clairvoyant, issues will arise that no one considered in earlier agreements, and are prime for negotiation.

Pizza Ready?

Separate from the divorce case, Schnatter filed a lawsuit Thursday against an advertising firm which was at the center of the racial slur incident.

Schnatter allegedly uttered the slur during a call with advertising firm Laundry Service, which the pizza executive accused of recording him without his consent. The lawsuit claims that Laundry Service leaked excerpts of the conference call, which broke a nondisclosure agreement.

Two weeks ago, Schnatter accused his former company of making substandard pizza. He said his former company has failed in keeping up with its long-time slogan: “Better Ingredients, Better Pizza.”

“I’ve had over 40 pizzas in the last 30 days, and it’s not the same pizza,” Schnatter told WDRB, a Fox affiliate in Louisville, Kentucky. “It’s not the same product. It just doesn’t taste as good.

The NBC News article is here.

 

Divorce Tax Strategies

As the New York Times reports, divorce can be a business negotiation. Harsh as that may sound — especially if there are children being fought over — when a couple gets to a final hearing or mediation, numbers matter. There are some divorce tax strategies you should know about involving the home, alimony, and even the time allotted with children.

divorce tax strategies

New Tax Code

Divorce negotiations are never easy, but they became even more complicated this year after the sweeping overhaul of our tax code changed many of the calculations that factor into the logistics of divorce.

The most sweeping tax legislation since 1986 was signed into law in 2017 and are only now taking effect. The Tax Cuts and Jobs Act makes reductions to income tax rates, reduces the income tax rate for corporations and pass-through entities like Sub-S corps and LLCs.

The revised tax code has brought some surprises to couples going through a divorce too, and many lawyers are suggesting that clients bring accountants into the divorce team to lay out the tax implications of age-old strategies.

Nothing is Certain: Divorce and Taxes

I’ve written about divorce and taxes before. The new tax code changes will impact your divorce, but the alimony deduction change may not be the only tax change which you should take into consideration in your divorce.

Many people are criticizing the new tax law in general. For example the decision to end the alimony deduction receives a lot of criticism. Many are saying it made divorce worse.

People won’t be willing to pay as much in alimony, which will disproportionately hurt women who tend to earn less and are more likely to be on the receiving end of alimony payments.

On the other hand, the alimony deduction itself has also been criticized. For example, the government argues the deduction is a burden on the IRS because, if the alimony amounts ex-spouses report paying and receiving don’t match, it can force the agency to audit two people who may already be feuding.

So, what are some of the new divorce ax strategies to consider with the changes to the tax code?

Alimony

Everyone involved in divorce has been talking about what happened to alimony and taxes. Last year I was warning clients in the midst of their divorces to hurry things up because of the new tax law changes which made alimony not deductible anymore. But like love, divorce cannot be rushed.

For divorces completed this year, and in the future, the spouse paying alimony can no longer deduct the alimony from taxes while the spouse receiving the money no longer has to claim it as income.

The loss has made alimony payments more costly to the paying spouse because it eliminated a tax break that often served as a reason to bring about an agreement by taking off the sting of alimony payments.

Family Home

The new tax law’s restrictions on deducting state and local taxes (the so-called “SALT” deductions) surprised many who saw their tax bill go up. When it comes to divorce, that limitation on deducting your real estate taxes can turn your home into a hot potato.

Usually, the spouse with less money would often want to keep the marital home for the children, but doing so now has become more costly.

In high-property-tax states, some divorcing couples are looking to get rid of second homes as well. Some states further complicate the process by having a set of standards that were created when alimony and state and local taxes were deductible on federal tax returns. While the SALT deductions have changed, the standards have not.

Dependents

The tax value of children in a divorce was also changed in the tax overhaul. In financial terms, children have become a smaller deduction.

The exemption for each dependent — $4,050 per person — was eliminated, but the child tax credit was increased to $2,000.

That credit starts to phase out at $200,000 of income for an individual and disappears at $240,000. This can impact you because the credit can be given to the spouse with lower income in exchange for a break elsewhere in the negotiations.

The New York Times article is here.

 

Short Term Alimony for a Three-Minute Marriage

In Kuwait, a newly married woman demanded a divorce within three minutes of signing her marriage contract. The Kuwaiti marriage is one of the shortest on record. But here’s an interesting question: what if she asked for short term alimony?

Short Term Alimony

Sands of Time

What lead to such an abrupt change of mind about nuptials? According to Kuwaiti news sources, the newly married woman tripped before exiting the courthouse with her husband after the judge married them.

Her newly minted husband made the “classic” new husband mistake: he started laughing at her for tripping and then called her “stupid”.

The bride became so infuriated with her new husband’s naïve mistake, she returned to the courthouse and demanded a divorce from the judge who just married them.

The Kuwaiti judge agreed and served an annulment just three-minutes after he originally married them. The couple, who live in Kuwait, never even left the courthouse as husband and wife.

So, is she entitled to any form of alimony?

Florida Alimony

I’ve written about divorce and the length of a marriage before. Florida Statutes actually define what the length of your marriage means. For example, in order to determine alimony, there is a rebuttable presumption in Florida that a short-term marriage is a marriage having a duration of less than 7 years.

Florida Statutes define a moderate-term marriage as a marriage having a duration of greater than 7 years but less than 17 years. And, a long-term marriage is a marriage having a duration of 17 years or greater.

How do you measure the marriage term? In Florida, the length of your marriage is the period of time measured from the date of your marriage until the date of filing of an action to dissolve your marriage.

In the Kuwaiti case, a three-minute marriage would be considered “short-term” under Florida law. Is there short term alimony for a short term marriage? The Length of the marriage is very important when it comes to determining the kind of duration of alimony payments. For example, permanent alimony is generally for longer term marriages if the statutory criteria are met. In shorter term marriages and for moderate term marriages, permanent alimony may be considered, but the burden of proof is much higher.

Conversely, bridge-the-gap alimony is generally awarded to allow a person to transition from being married to being single. So, bridge-the-gap alimony is designed for short-term needs. In fact, the length of an award bridge-the-gap alimony may not exceed 2 years.

Durational alimony helps provide a person with economic help for a set period of time after short or moderate length marriages or following a marriage of long duration if there is no ongoing need for support on a permanent basis.

The length of your marriage also factors in to property divisions. When a court divides the marital assets and debts, the court begin with the premise that the distribution should be equal. One of the factors a court can look to in justifying an unequal distribution includes the duration of the marriage.

Are congratulations in order?

Many on the internet who heard about the case responded in support of her choice, lauding her decision because, as one put it, “If this is how he acts in the beginning of their lives together, then its best she leaves now.”

Another responded, “Marriage without respect is a failed one from the start.”

A Twitter user commented: “This woman is a queen” In another case a bride who insulted her husband-to-be when she arrived at the altar and demanded the groom change his outfit. It’s believed to be the shortest marriage in Kuwait’s history.

The Khaleej Times article is here.

 

My Big Fat Gray Divorce

Nia Vardalos has filed for divorce from husband Ian Gomez. Her 1993 nuptials inspired the hit movie “My Big Fat Greek Wedding,” and the marriage lasted for nearly 25 years. Nia’s is another example of the recent phenomenon of “gray divorce.”

Not Zorba the Greek

As PEOPLE magazine reports, after the couple’s 1993 wedding, Vardolos wrote the one-woman play “My Big Fat Greek Wedding,” partially based on her own experiences. She starred in the 2002 hit movie playing Toula Portokalos, who falls in love with non-Greek Ian Miller. Gomez played Corbett’s best man, Mike.

The actress, 55, filed on Tuesday in Los Angeles County, citing irreconcilable differences as the reason for their split, according to court documents obtained by The Blast.

Vardalos said she separated from her husband over a year ago on June 29, 2017, almost 24 years after they said, “I Do.”

Florida Gray Divorce

I’ve written about gray divorces before. The legal nuances of gray divorce can be different than what other couples might encounter. In a gray divorce, the financial considerations take on more importance than the children’s issues – because the children are emancipated or nearly so.

When couples choose to divorce in their 30s or 40s, they still have time to recover financially, because adults at that age have several years, if not decades, left in their careers.

But when divorce occurs when a couple is in their 50s or later, the so-called “gray divorce”, careers may either be coming to a close or are completed, and spouses are often living on fixed incomes provided through Social Security or retirement benefits.

Here are some things to consider:

  • By the time a couple enters the golden years, there may be gold to divide, including businesses, retirement funds, and vacation homes. Valuing these assets can be difficult. A financial advisor may be an important component in the divorce.
  • Health insurance is often tied to the employment of a spouse. Courts may need to intervene if one party has dwindling capacity to handle their own affairs.
  • Wills and trusts need to be reviewed to make sure they reflect post-divorce wishes. The same is true for long-term care, such as medical directives, living wills and trusts.
  • Retirement plans can be substantial and complex. Retirement plans vary, and they all have different restrictions, tax consequences, distribution and vesting rules.

There are special concerns involved in a gray divorce. As always, information is power, so make a point to seek out experts for guidance.

Most gray divorces involve marriages that have lasted for several decades, which makes it difficult to disentangle the spouses from each other. However, couples who divorce after many years together should receive a close-to-even split of assets, legally putting each spouse on an equal playing field for the future.

A Woman’s Way

In a joint statement obtained by PEOPLE, the couple said:

“We’ve been respectfully separated for a lengthy period of time. Our relationship became a friendship so the decision to end the marriage is completely mutual and amicable. It is our hope that decency will prevail on the reporting of this story which will soon be yesterday’s news. Thank you for respecting our privacy.”

Unlike many gray divorces, the couple share an 11-year-old daughter whom they adopted in 2008. She is asking for joint legal and physical custody of their daughter. The actress also asked that spousal support to be “determined in mediation.”

She and Gomez received the news that they had been matched with their then 3-year-old daughter in 2008 after more than nine years of struggling to become parents.

The PEOPLE article is here.

 

Fast Break Alimony

According to various reports, former NBA lottery pick, Shelden Williams, may get a massive, lump sum, $400,000 alimony check from his WNBA star wife, Candace Parker. This post is about lump sum alimony.

Slam Dunk

That is the reported marital settlement agreement between Williams, and his wife, WNBA Los Angeles Sparks star, Candace Parker. Parker, one of the biggest stars in WNBA history, married Williams two years after he was selected 5th overall in the 2006 NBA Draft.

Despite the fact that her husband reportedly made more than $12m during his 6-year NBA career, Parker has apparently done better, and agreed to shell out the $400,000 alimony payment. In exchange, she won’t have to pay ongoing spousal support.

Florida Lump Sum Alimony

Lump sum alimony is not a form of alimony, but really a method of payment of alimony or equitable distribution.

I’ve written about various types of alimony before. Any form of alimony, durational, bridge the gap, etc., may be paid as lump sum alimony. Lump sum alimony can also be paid in installments.

Lump sum alimony is available where special circumstances exist to pay other forms of alimony in a lump sum. It may be comprised of real property too. A lump sum payment establishes a fixed monetary obligation which vests immediately, is non-modifiable, and does not terminate upon death or remarriage.

So, if the need for alimony exists, there must be some special circumstances to explain why non-modifiable award is appropriate.

Special circumstances may include a payor who has a history of non-payments. It may also be appropriate if the parties are of advanced age and close to retirement.

Full Court Press

Drafted No. 1 overall by the Sparks in 2008, Parker led the franchise to a championship during the 2016 season and was named MVP of the WNBA Finals. She has also played overseas for professional teams in Europe and China.

Williams was the fifth overall pick in the 2006 NBA draft by the Atlanta Hawks. The former Duke star played six seasons in the NBA before playing in France and China until 2015.

Parker and Williams married in 2008. They also have an 8-year-old daughter. According to reports, the couple agreed to joint legal and physical custody over their daughter. Child support is also interesting. According to reports, neither party will pay child support to the other. Instead, they both agreed to equally fund her education and split any major costs associated with her care.

The Bleacher Report article is here.