Who has to pay the transfer cost of a retirement fund?

In the case of Seawell v. Hargarten, 28 So.3d 152 (Fla. 1st DCA 2010) the Court ruled that it is the responsibility of the spouse in possession of the asset to effectuate the transfer.

            The parties entered into a Consent Final Judgment which, in pertinent part, required the Husband to pay to the Wife a total of $65,470 in cash and to also transfer to the Wife 50% of the shares of an Oppenheimer Mutual Fund. The Husband was required to do so by August 1st. Prior to the deadline, the Husband sent the Wife two checks totaling $24,700 and $24,327, thus leaving a balance owed of $16,443 as to the cash payment. On July 31st, the Husband sent a letter authorizing his broker to transfer 100% of the shares in the mutual fund to the Wife. At the time, the Fund had a value of $29,477.84. In other words, the Husband was attempting to apply the cash value of his 50% of the Fund ($14,738.92) toward the outstanding balance due on the required cash payment. Before he authorized the transfer of the Fund, the Husband had advised his counsel that he did not have enough cash to pay the $16,443 owed to the Wife. An exchange of emails then took place between the parties' counsel. The Husband's attorney asked the Wife's attorney if she would accept stock from the Fund toward the outstanding balance and the Wife's attorney replied that it did not matter how the Wife got her money "as long as she got all of it." On August 1st, the Wife wrote to the broker of the Fund accepting only her 50% of the Fund. Since the two authorization letters did not match, the broker did not transfer any shares of the Fund to the Wife. The Wife then filed an enforcement motion which the trial court denied, finding that the Wife could have accepted the Husband's offer to transfer the entire Fund to her. The District Court reversed:

1. "First, the authorization letter sent by the Husband, unlike the one sent by the Wife, did not comply with the terms of the Final Judgment. Second, the Husband made no further effort to assure the Fund assets were transferred."

2. "Clearly, to avoid responsibility, an individual must be able to demonstrate that the failure of the transfer to occur was due to factors beyond their control. In essence, the Husband would be able to show, that in spite of his efforts, it was impossible to transfer the assets. Certainly, this is not the case here."

Is a pre-nup valid if signed 10 days before a marriage?

In the case of Gordon v. Gordon, 25 So.3d 615 (Fla. 4th DCA 2009) the parties entered into a prenuptial agreement ten days prior to their marriage. Neither party had legal counsel but had discussed the agreement for several months. The wife was "an individual with a high level of education and business acumen who, having twice married, understood the significance of the document she was about to sign and chose not to seek the advice of a lawyer." The agreement essentially provided that each party's property at the time of the marriage would remain his or her separate property.  In his financial disclosure, the husband listed various pension accounts but did not specify the pension he would receive from his employer. The court affirmed:

1. "We first address whether the agreement was reached under duress, coercion or overreaching. The record before us presents the former wife as an individual with a high level of education and business acumen who, having twice married, understood the significance of the document she was about to sign and chose not to seek the advice of a lawyer. And, while the parties disagreed over the amount of time the former wife had to contemplate the agreement, we hold that a trial court does not abuse its discretion by declaring that a period of ten days prior to the marriage is sufficient time for one to exercise the opportunity to review the agreement, and, if one so chooses, to seek the advice of legal counsel." 

2. "We next address whether the former husband's failure to specifically disclose his airline pension plan constitutes fraud, deceit, or misrepresentation. The agreement specifically provided that each party shall retain as separate property all retirement accounts and property listed on the attached schedules."

3. "Additionally, the agreement included a provision specifically addressing pension benefits under its own section heading. The former husband's schedule of property referenced "Retirement Plans (Keogh, 401(k), etc)" and specifically listed the former husband's 401(k) plan through his employer; however, no mention was made of the airline pension plan of which the former husband was a beneficiary."

When can lump sum alimony be awarded?

In the case of Buoniconti v. Buoniconti, 36 So.3d 154 (Fla. 2nd DCA 2010):

TRIAL COURT'S AWARD OF PERMANENT ALIMONY BY WAY OF A LUMP SUM AWARD TO THE WIFE WAS NOT "UNFAIR" SIMPLY BECAUSE LUMP SUM ALIMONY IS A VESTED RIGHT THAT WOULD SURVIVE REMARRIAGE.

Prior to the dissolution hearing, husband and wife resolved the majority of issues between them. The trial court was asked to consider only the wife's claim for permanent and retroactive alimony and her claim that the liquid marital assets should be distributed unequally due to the husband's dissipation of certain marital assets during the marriage. At the close of the dissolution proceedings, the trial court awarded the wife permanent alimony payable as lump sum as well as retroactive alimony. It also found that the husband had dissipated marital assets, and it charged those dissipated assets to the Husband in its equitable distribution scheme. The husband first contended that the trial court abused its discretion by awarding the wife $261,240 in permanent alimony payable as a lump sum. The argument has two components: first, whether the wife was entitled to permanent alimony, payable as a lump sum; and second, whether the amount of the award was supported by evidence. With regard to the Husband's argument that the award was "unfair," the District Court held:

1. "At oral argument, counsel for the Husband argued that it was 'unfair' to award permanent alimony as a lump sum because the Wife would get to keep the entire award even if she chooses to remarry or cohabit." 

2. "We reject this 'unfairness' argument for three reasons. First, there was no evidence that the Wife sought permanent alimony payable as a lump sum because she was planning to remarry or cohabit…. Second, there is nothing 'unfair' about a court of equity exercising its discretion to select from the range of available options, provided that the option chosen is supported by the evidence and can withstand the applicable standard of review. Third, the Husband cannot be heard to complain simply because his chosen financial strategy did not produce the desired result. The Husband's course of conduct forced the trial court to choose between awarding the Wife nominal permanent periodic alimony or a reasonable amount of permanent alimony payable as a lump sum. The fact that the Husband's apparent strategy to avoid paying permanent alimony backfired is the risk he took when he chose that course of action. Absent legal error, a party's failed strategy is not rectifiable on appeal."

When computing alimony do you use "reported" IRS income?

In the case of McQuaig v. McQuaig, 36 So.3d 801 (Fla. 1st DCA 2010), the court found:  

TRIAL COURT DID NOT ERR IN REFUSING TO REDUCE HUSBAND'S INCOME FOR CERTAIN CLAIMED "BUSINESS EXPENSES"; THE FACT THAT HUSBAND CAN DEDUCT EXPENSES FOR TAX PURPOSES DOES NOT MAKE THEM "ORDINARY AND NECESSARY" FOR CHAPTER 61 INCOME CALCULATION PURPOSES.

The Husband sought a modification of alimony based on his asserted decrease in income. The court ultimately reduced the alimony from $8,000 per month to $5,000 (on a temporary basis for two years) and further ordered the Husband to pay $8,500 toward the $17,200 attorney's fees incurred by the Wife during the modification proceedings. On appeal, the Husband contended that the trial court erred by failing to deduct business expenses when computing his income, specifically, that the trial court was required to deduct his "ordinary and necessary business expenses" in calculating his gross income. The District Court held:

1. "In 2008, the Former Husband earned $119,949 from his distributorship…. On his 2008 tax return, he deducted $30,028 in business expenses for an unadjusted gross taxable income of $89,921. The deducted expenses included: car and truck expenses; office expenses; repairs and maintenance; travel; deductible meals and entertainment; and 'other expenses' (telephone, internet/phone/fax; software; passport; clothing; freight; [publications]; entertainment; parking)." 

2. "Citing section 61.30, Florida Statutes, and cases interpreting that statute, the Former Husband argues the trial court was required to deduct his 'ordinary and necessary' business expenses in calculating his gross income. The statute he relies on governs child support determinations and provides that in determining a parent's monthly income for that purpose, gross income includes 'business income,' which in turn 'means gross receipts minus ordinary and necessary expenses required to produce income.'"

3. "We are not persuaded section 61.30 should be applied in this case where the relevant statute is section 61.08 governing alimony awards, and that statute speaks only in terms of 'financial resources' and 'all sources of income.' But even assuming the definition of 'business income' in section 61.30 is properly applied here, the trial court did not act unreasonably in declining to accept the Former Husband's representations. Except for a $500 monthly car allowance the Former Husband received as a sales representative, there is no evidence in the record showing he incurs expenses in selling surgical equipment as a distributor that differ from those he incurred as a salesman or that previously were paid or reimbursed by his former employer. That the Former Husband can now deduct those expenses for tax purposes does not make them ipso facto 'ordinary and necessary' for Chapter 61 income calculation purposes and he has presented no authority - nor have we found any - to support such a proposition."

4. "Absent such authority or any competent, substantial evidence of what expenses are 'ordinary and necessary' to running the Former Husband's distributorship, the trial court did not abuse its discretion in finding that his 2008 gross income was $120,000."

What is required in a Divorce decree for an order of life insurance?

In the case of Rashid v. Rashid, 35 So.3d 992 (Fla. 5th DCA 2010) the court found:

ERROR TO REQUIRE HUSBAND TO OBTAIN LIFE INSURANCE TO SECURE ALIMONY AND CHILD SUPPORT OBLIGATIONS WITHOUT FINDINGS REGARDING AVAILABILITY AND COST OF INSURANCE, ABILITY TO PAY, OR APPROPRIATE CIRCUMSTANCES TO JUSTIFY THE REQUIREMENT.

The Wife filed a petition to end her 22-year marriage and requested, among other things, alimony, child support, attorney's fees, and shared parental responsibility. The lower court granted attorney's fees and awarded the wife alimony and child support; requiring husband to secure those obligations with life insurance. The court further awarded the wife, sole parental custody, an award well beyond the shared parental responsibility actually requested by the Wife. As to the insurance requirements, the District Court held:

1. "The courts are statutorily authorized to order the obligor to maintain life insurance to protect alimony awards and child support allegations… when "appropriate circumstances" exist to justify the award."

2. "Appropriate circumstances may include the dire impact that the sudden death of the obligated party would have on the receiving party."

3. "In order this protection, the court should consider the 'availability and costs of such insurance and the financial impact it will have on the former husband…. The final judgment should include appropriate findings regarding the availability and cost of insurance, the ability of the obligor to pay, and the appropriate circumstances that justify the insurance requirement."

4. "Here, the trial court made no findings to support the order of life insurance, and Wife concedes the error." 

It is always a good idea to get life insurance to secure payments of alimony and child support.

Can a judge order liens on pre-marital property to secure payments?

In the case of Mackoul v. Mackoul, 32 So.3d 741 (Fla. 1st DCA 2010) the court stated: 

PROPERTY TO SECURE ALIMONY AND CHILD SUPPORT, COURT ERRED IN FAILING TO MAKE SPECIFIC FINDINGS CONCERNING WHETHER THE LIEN ONLY SECURES ARREARAGES AT THE TIME OF HUSBAND'S DEATH OR IF IT WAS ALSO INTENDED TO SECURE FUTURE PAYMENTS IN ORDER TO MINIMIZE FUTURE ECONOMIC HARM TO THE FAMILY. 

The Husband appealed from a final judgment of dissolution of marriage which imposed a lien on his premarital real property to secure the payment of child support and permanent periodic alimony, because the order did not specify whether the lien was to secure arrearages at the time of his death or if it is also intended to secure future payments to minimize economic harm to the surviving family. The District Court held:

1. "Here, the record supports the trial court's imposition of a lien to secure the payment of alimony and child support. The Former Husband is 77 years old and in poor health. The Former Husband is uninsurable but has significant unencumbered assets that he uses to support himself. The Former Wife would potentially be left in dire straits after the Former Husband's death because she is not capable of full-time employment. The Former Wife has significant medical history resulting in some medical disability, and both parties agreed that the Former Wife needs to be home on afternoons and weekends to care for their youngest child, who has been diagnosed with a form of autism and cannot be left alone. The child also may remain dependant even after he reaches majority."

2. "Although the trial court did not abuse discretion in imposing a lien, the trial court failed to make any specific findings concerning whether, in the context of alimony, the lien only secures arrearages at the time of the Former Husband's death or if it was also intended to secure future payments in order to minimize economic harm to the family."

3. "Without such findings we are unable to determine whether the amount of the lien was appropriately tailored to the obligation being secured."

It is always a good idea to have a lien to secure future payments if there are available assets. 

How does a judge compute income for a self-employed person?

In the case of Sallaberry v. Sallaberry, 27 So.3d 234 (Fla. 4th DCA 2010), the court overruled the trial court's basis for imputing income.  The court stated:  FINDING THAT HUSBAND , WHO OWNED A COPY MACHINE REPAIR BUSINESS , COULD BILL HIS CLIENT TWENTY HOURS PER WEEK AMOUNTED TO SPECULATION, AND REVIEW OF HUSBAND'S BUSINESS ACCOUNTS BY WIFE'S FORENSIC ACCOUNTANT FAILED TO CONSIDER THE HUSBAND'S BUSINESS EXPENSES.

At trial, the husband, who owns a copy machine repair business, stated he could bill an average of only one hour per day (at $95 an hour) to his clients. The trial court found that the husband could bill his clients twenty hours per week. On appeal, the Fourth District found the trial court's ruling amount to speculation and the account's review of the husband's business accounts failed to consider business expenses.

1. "The court believed the husband could bill at least twenty hours per week, raising his gross corporate revenues to roughly $95,000 per year."

2. "The court then subtracted $15,000 to be retained by the corporation to meet expenses, leaving $80,000 in imputed gross income. This calculation was supported by the opinion of the wife's forensic accountant."

3. "Nevertheless, the trial court's finding that the husband could bill his clients twenty hours per week amounts to speculation, and the accountant's review of the husband's business bank accounts failed to consider the husband's business expenses."

4. "The only competent evidence regarding the husband's income was his ability to fund household expenses amounting to $5,000 per month. A spouse's ability to maintain a standard of living at a certain financial level is probative evidence of the spouse's income."

5. "Nevertheless, a trial court may not impute income to a party based solely on past earning power because past income may not reflect a present ability to pay."