Alimony Reform?

Happy New Year! With the new year comes the annual discussion of whether or not there is a need to reform our Florida alimony laws. There is legislation currently pending that is trying to radically reform our current alimony laws. A link to the pending legislation can be found by clicking on the "Alimony Reform?" title above.

All of us in the family law community have been discussing whether or not this particular bill has a chance of being passed and the general consensus is that it doesn't. These are the major points that are contained in the bill that would have the greatest effect on our current alimony laws:

1. Limitations on Awards of Attorneys' Fees- May not exceed the greater of $7,000.00 or the reasonable value of the representation of the party paying the fee.

2. Termination of Permanent Alimony and Creation of Long Term Alimony- This would be for marriages lasting more than 20 years in most cases and an obligor reaching the normal age of retirement is considered a substantial and permanent change of circumstances. There would be a rebuttal presumption that alimony terminates upon retirement of the obligor.

3. Requirement to Look at the Earning Capacity of Obligee Spouse- This would require an obligee to maximize their earning capacity and allows the court to impute all income to the obligee that could be reasonably earned after achieving maximum rehabilitation.

4. Supportive Relationship- This would require a refund of alimony paid and an award of costs and fees if the recipient of alimony denies the existence of a supportive relationship that is later found to be true and would prohibit the Court from reserving jurisdiction to reinstate alimony if the supportive relationship terminates.

5. Determination of Income- This would state that that the income and assets of the obligor's spouse or person with whom the obligor resides may not be considered in modification of alimony. Additionally, in initial proceedings, when determining the financial resources of each party, it would only include the marital assets and liabilities distributed to each.

6. Standard of Living of Parties- There would be a rebuttal presumption that both parties will necessarily have a lower standard of living after the dissolution of marriage than the standard of living they enjoyed during the marriage. Additionally, an award of alimony may not leave the payor with less net income or with a lower standard of living than the recipient.

7. Life Insurance- If the court awards life insurance, the cost of the life insurance or a bond would be deducted from an alimony award.

8. Long Term Marriage- Would be defined as a marriage lasting 20 or more years.

While many of the things that are stated above, I do believe the Judges take into consideration when determining an award of alimony, if this legislation were to pass, the courts would be REQUIRED to follow these rules. Its already quite difficult for someone to receive a permanent alimony award, and its even more difficult to obtain awards of lengthy alimony if the recipient spouse is educated and capable of being self-supporting. It will be interesting to see whether this legislation passes. Please let me know your opinion on this issue by posting your comments here.

Cohabitation and Alimony Payments

When one party is awarded permanent alimony, generally speaking those alimony payments will continue until death of either party or remarriage. Some people put language in their marital settlement agreements that states that alimony will conclude when the recipient of the alimony cohabits with a member of the opposite sex. The question then becomes what is the definition of "cohabitation". In Florida, I believe that most of the courts have stated that cohabitation would have to include a sharing of finances. The New York courts are dealing with this issue, and I'm sure its just a matter of time before all courts in all states set forth a clear definition of "cohabitation" so that people are not litigating this issue in the future.

To read about New York's take on this issue, see: http://www.newsday.com/news/local/wire/newyork/ny-bc-ny--definingcohabitat1021oct21,0,5977746.story

Long Term Marriage and Equitable Distribution

I recently received a comment from a reader with some questions about equitable distribution and alimony in a long term marriage in Florida. I thought I would respond in this blog, because I think her worries were consistent with some other worries that I have heard before.

When a couple has been married for 20 years or more, this is considered a long term marriage. If there is a large discrepancy in incomes you can expect an alimony award, however, the amount of that alimony is something that is left up to judicial discretion and in some circumstances, there are judges that rarely award large amounts of alimony. If a party hasn't worked outside the home, there is a good chance that a judge would require you to be partially responsible for your own financial needs, and the judge will also look to see what type of equitable distribution you received in the divorce to determine what your actual need is. Alimony is an area of law where judges have broad discretion and you are going to get different outcomes depending on what judge you are in front of. There are some judges where I know that they will award descent, if not overly generous, alimony to a spouse and then again there are other judges who may not award any alimony at all. Therefore, equitable division of property becomes very important and therefore, it is equally important to insure that you have competent legal representation who knows all of the discovery tricks to uncover all assets that are held jointly or individually in one parties name. This process can sometimes be tedious, but if there is an asset out there that is partially yours, you should leave no stone unturned.

Are My Alimony Payments Taxable?

I recently received a phone call from an individual wondering whether alimony payments are taxable when there is no language in the Marital Settlement Agreement that states that the payments are to be taxable to the recipient. If you are having questions about whether your alimony payments are taxable or whether you can deduct the payments you make from your gross income, I suggest you speak with independent tax counsel who may be better versed in this area. However, if you are wondering what the rule is with respect to whether or not your alimony is taxable, I have the following information for you.

Rykiel v. Rykiel, 838 So.2d 508 (Fla. 2003). This case stated that gross income is taxable and that gross income includes alimony, therefore, alimony is taxable. Alimony is defined as "monetary payments made to a spouse pursuant to a divorce instrument, unless that instrument says that the payments are not includible in gross income and not allowable as a deduction". Further, it stated that if a divorce instrument stated the payments are not deductible and not includible in gross income, then the payments are not alimony and not included in gross income.

The usual treatment of alimony is for it to be taxable to the recipient and deductible to the payor. Based on the Rykiel case above, it seems absent language stating that the payments are not taxable or deductible, any payments received pursuant to a divorce instrument will be considered alimony and therefore taxable to the recipient. Therefore, it seems that if you are trying to avoid a tax liability on your alimony payments, you must specifically spell out that the payments are not taxable or deductible.

If any of my readers is an expert on this subject and has a different interpretation of the law, I welcome any comments or clarifications on this issue.

Should Killer Get Alimony?

A state appeals court in New Jersey recently held that a woman could not be automatically barred from receiving alimony despite the fact that she had killed the parties' 14 year old son and is currently serving a sentence for beating the child to death. The reasoning was that there was nothing in the current statute that specifically barred alimony for a person who had committed murder, manslaughter or any other crime involving taking the life of another human being. In a nutshell, this just goes to show you that the Judiciary can only do so much and cannot legislate from the bench. If there are certain laws that you would like to see changed, you have to bring the issue before your legislature, because a court cannot and should not change laws, they are only there to interpret them.

To read the story upon which this blog is based, see: http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkzJmZnYmVsN2Y3dnFlZUVFeXk3MjI0NzQzJnlyaXJ5N2Y3MTdmN3ZxZWVFRXl5Mg==

Divorce and Bankruptcy

Unfortunately, especially with the way that the real estate market is at this time, bankruptcy and divorce go hand in hand. Many people wonder what type of debts get canceled out in a bankruptcy and which liabilities they will continue to be responsible for. The main thing to remember is that child support and alimony payments, including any arrears are not dischargeable in bankruptcy. If you are trying to get out of having to pay arrears on either of those things, bankruptcy is not the way to go.

For a more thorough article on bankruptcy and divorce, see the following:

http://www.divorceinfo.com/bkrcybankruptcy.htm

Interesting Divorce War Stories

The headlines are sparse right now with new and interesting divorce stories. I hope that everyone has gotten their issue straightened out in order to enjoy their Thanksgiving holiday with their families. No matter how difficult your divorce is right now, you can perhaps take a little bit of refuge in the fact that there are some people who are going through a difficult time as well ans may be in a worse place than you. The following story is interesting and is proof that sometimes the truth is stranger than fiction.

http://www.sptimes.com/2007/11/18/Hillsborough/1_man__4_women__many_.shtml

Shacking Up

More and more couples are deciding to "shack up" rather than remarry when they are fifty years old or older. This is for a number of different reasons, including protecting your children's inheritance and to avoid termination of alimony. Many states have adopted the rule that alimony terminates upon "cohabitation with a member of the opposite sex", but in those states that only have termination of alimony upon death or remarriage, shacking up is a viable and sometimes more lucrative deal.

The following article addresses why a couple would choose to live together rather than marry:

http://members.forbes.com/forbes/2007/1112/DONOTTOUCH086.html