Financial problems are one of the leading causes of divorce.
Spouses often disagree as to how much they should spend, how much they should save, and how they should handle financial emergencies. Let’s elaborate on the challenges of divorce from the financial perspective.
Do you pinch your pennies while your spouse makes it rain wherever she goes? Do you spend more
than you earn? Do you argue with your spouse, at least once a month, over your finances? Have you discovered that your spouse is hiding purchases, accounts, or expenses? Does she rush to get the mail so that you won’t see it? Does she constantly have new belongings and often buys gifts for you, as well? Does she become defensive when you try to discuss money with her? These are some early warning signs that may indicate that you may be heading for divorce.
If divorce is on the horizon, what can you expect? What happens legally? What do you need to do to be prepared? Start gathering your financial documents now, and be on the lookout for statements from unfamiliar accounts. In a Florida divorce, parties are expected to exchange “mandatory discovery,” which includes financial documents like paystubs, tax returns, and bank, investment account, and credit card statements. You’ll want to start compiling these documents early so you can get a better idea of your financial circumstance.
Start compiling those of your spouse, as well, in case s/he “can’t find them,” when the time comes.
In Florida, marital assets and liabilities are “equitably distributed” between the spouses. A marital asset or liability is one that was accrued or incurred during the marriage, regardless of whose name is on it. A judge usually splits the marital assets and liabilities somewhat equally, so that each party leaves the marriage with a relatively similar marital net worth. Non-marital or pre-marital assets and liabilities are not part of this distribution and remain with the spouse who brought them into the marriage, unless they’ve become marital.
The judge is allowed to do equity between the parties, meaning that the judge can award more assets to a party, for example if one party accrued far less debt than the other. Parties are also able to negotiate their marital settlement agreements rather than having a judge decide. If so, parties can negotiate for more unequal distributions that a judge would likely order.
Another financial consideration in a divorce is alimony. Yes, it is still something that a judge can order, although large permanent alimony awards are less common these days. Florida judges can order different types of alimony, including bridge-the-gap, rehabilitative, durational, permanent, lump sum, or a combination.
Most of these types of support are based on one spouse’s need and the other’s ability to pay, so not only must a spouse prove that she has a need for alimony, but also that the other spouse has the ability to pay it.
When it comes to durational or permanent alimony, the length of the marriage is also important. In marriages under seven years, there is a presumption against alimony. In “grey area” marriages (from seven to seventeen years long), there is no presumption for or against alimony. In marriages over seventeen years, there is a presumption for alimony.
While a judge can determine a divorce case, the vast majority of divorces are settled outside of the courtroom, giving the parties much more flexibility in their options for settlement. If you are settling your case out of court, good for you! You are taking a positive step in controlling your own future, and you and your ex will be much more likely to avoid post-judgment litigation. A good divorce settlement is one in which neither party feels that they have won or lost. Each party should feel content with the result. That typically means that the settlement is fair and something with which the parties will be able to abide going forward.
The financial aspects of divorce are stressful, but with the proper preparation and knowledge, an equitable result can be reached for both parties.
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About this week’s author Joryn Jenkins.
Joryn, attorney and Open Palm Founder, began her own firm here in Tampa after a 14-year career in law, two of which she served as a professor of law at Stetson University. She is a recipient of the prestigious A. Sherman Christensen Award, an honor bestowed upon those who have provided exceptional leadership in the American Inns of Court Movement. For more information on Joryn’s professional experience, take a look at her resume.