17 Jun Why Did (S)he (Seemingly) Receive More than I did in our Florida Divorce?
Dividing Assets in Divorce: More on Equitable Division in Florida
Florida law states that parties going through a divorce must equitably divide assets and liabilities. The Florida Statutes do not use “equal” distribution of assets and liabilities when a couple cannot agree on who should get what and as we’ve discussed in prior posts, “equitable division” (which is the method used in Florida family law courts) does not always mean an “equal division”.
This means that should the matter not be settled, your finances will be carefully scrutinized by the Florida family courts in order to determine the appropriate division of the marital estate. In order for the court to make a proper division determination, each party must provide disclosures (which are mandated under Florida law) to the other party. This includes the completion of a family law financial affidavit and the distribution of copies of all invoices and account statements for retirement accounts, credit accounts, bank accounts and any other financial account. The parties must also provide titles to cars, boats, houses and any other item in their possession that requires a title or deed.
One method that is used in order to make an “equitable division” of the assets is to add the gross incomes of each party and then divide that number by each party’s gross income. For example, if the husband makes $100,000 per year and the wife makes $60,000 per year, the total is $160,000. Divide 160 by 100 for 62.5 percent. Divide 60 by 160 for 37.5 percent. If you subtract the two numbers, you get 25. That is going to be the equitable factor. This is added to the smaller of the two percentages and subtracted from the larger. While it doesn’t seem fair, in this case, the wife makes less, so she will get more of the assets to make up for the difference in income that she will be losing through the divorce. The husband in this case makes more money so he will get less of the assets. This makes things “more equal” in the eyes of the court since the wife may never meet or exceed the same earning potential as the husband.
What if the Couple Decides to Keep Certain Assets?
In many cases, the couple agrees that they want to retain certain assets for themselves. For example, if a husband has an IRA account worth $100,000 and the wife has a 401(k) account worth $150,000, they can “balance” the two assets by having the wife make a cash payment for the difference. Use the same math on these accounts, keeping them separate. When you figure the equitable distribution for everything else, add the difference to the husband’s column and subtract it from the wife’s column. (100/250 and 150/250 equals 40 and 60 percent respectively. The equitable distribution number is 20).
A small sample without separating any accounts would look like this:
Asset Total Owed Equity Husband Wife
House 250k 150k 100k 100k 0
W 401 150k 0 150k 0 150k
H IRA 100k 0 100k 100k 0
H Savings 100k 0 100k 100k 0
W Savings 50k 0 50k 0 50k
Totals 500k 300k 200k
Remember, the husband will be getting 37.5 percent and the wife will be getting 62.5 percent to make up for the disparity in income. As it stands, he is getting 60 percent and the wife is getting 40 percent. If you multiply the total assets of 500k by 37.5 percent, that means the husband should be getting $187,500 in assets. The wife’s share would be $312,500.
The husband would have to move $112,500 to the wife either by making a cash payment or by moving one of this assets over to the wife’s column. He could move his savings over and pay a lump sum of $12,500 to the wife. The parties could also agree on payments. There are many ways to create an equitable split and these ways should be discussed with the parties to see what best suits them. If the parties cannot agree, the court will make that decision and it may be a decision that neither party is happy with.
Questions?
In Florida divorces, separating income and property accumulated over the course of your marriage can become complicated. If you have any questions about the process, as always, feel free to give us call.
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