Articles Posted in Divorce

Equitable distribution of assets in Florida divorces can be a complex and divisive issue.  Regarding trusts and divorces, you can walk a fine line between a marital asset and a non-marital asset.  Enhancement in value and appreciation can be a marital asset in certain situations.

Oxley v. Oxley, 695 So.2d 364 (Fla. 4th DCA 1997) is a case that is especially relevant regarding a person placing their property in a revocable trust with themselves as trustee, hiring a financial manager to make the daily investment decisions, and thereby protecting themselves from the Florida Statute § 61.075(6)(a)(1).  This section provides marital assets and liabilities to include the enhancement in value and appreciation of non-marital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.  Meaning, technically, a non-marital trust’s appreciation of value could be considered marital property unless specific requirements are followed.  Oxley spells out how to avoid appreciation being considered in the dissolution of marriage.Tightrope distribution

In Oxley, the parties’ marital income was primarily from trust distributions to the husband which he supplemented with a salary taken as president of a family holding company.  The trust is revocable and was established prior to the marriage by the husband that provides that all income is payable to husband.  The investment decisions for the trust was made for the husband’s exclusive benefit by the trustee based on the advice of the husband’s father and brother.  It had multiple, active investments such as several working oil wells.  On one occasion the husband invested $400,000 of trust funds through a separate money manager.  At the time of the marriage, the trust was valued at $2 million and then increased to $7 million at the time of dissolution; and the increase was attributable to undistributed income that has accumulated during the marriage and upon which he paid personal income tax.  The trust also owned and paid the expenses on the marital home.  The husband also owned 50% of a corporation found to be a gift (technically purchased for a nominal amount) from his father.  As company president, the husband’s activities were largely ministerial and ceremonial, and he left the management and investment decisions to others.  The trial court in Oxley ruled that the trust, including the undistributed income, were non-marital assets, which significantly limited the wife’s equitable distribution.

Equitable distribution in Florida during a divorce can be a frightening prospect.  What are the rules regarding distribution of assets of a trust in a divorce?  Does the divorce court have the authority to distribute trust assets?

AssetsThe appellate courts in Florida have addressed this issue.  The appellate court held that without consent from all beneficiaries to the trust, the trial court did not have the authority to distribute any asset of the trust.  See Sylvester v. Sylvester, 557 So.2d 599, 600 (Fla. 4th DCA 1990).  In Sylvester, the court held that the trial court’s finding that the irrevocable trust, which was the only source from which the husband could comply with the judgment, could be terminated by husband at any time, was erroneous due to the court’s failure to have all indispensable parties before it.  The trust would have to be before the court joined with the trustee and beneficiaries.

Similarly, in Minsky v. Minsky, 779 So.2d 375 (Fla. 2nd DCA 2000), the appellate court reversed the determination that trust funds are a marital asset and the resulting equitable distribution in a dissolution action.  The trial court incorrectly determined that because the parties had used the trust accounts as marital funds, the funds had “taken on the nature of a marital asset” and awarded the trust funds to the wife.  The appellate court indicated that, in effect, the trial court dissolved the trust created for the children’s benefit and the husband as trustee and declared it a marital asset.  The court held that the trial court does not have jurisdiction to adjudicate property rights of nonparties.

In a Florida divorce case, sometimes, a marital asset can become non-marital property of one spouse by contract.  Or one spouse can become the beneficial owner of marital property by transferring it to an irrevocable trust.

PropertyIn Nelson v. Nelson, 206 So.3d 818 (Fla. 2nd DCA 2016), a husband and wife transferred an out-of-state home to an irrevocable trust that had the wife as sole trustee.  The appellate court ruled that because the husband waived all right to alter, amend, modify, revoke, or terminate the trust, and the trust instrument did not contain a provision dissolving the trust upon divorce, the trust was irrevocable.  The court ruled that the out-of-state home was not marital property subject to equitable distribution in a divorce.  Neither the wife nor the beneficiary daughter had applied for modification or revocation of the trust, so the court could not dissolve the trust.

This case illustrates an example of how property can be classified in a divorce.  When the husband bought the out-of-state property and jointly titled it with his wife, the home became marital property.  When the husband transferred the home to the trust, it ceased being marital property and became non-marital.  In addition, the Nelson court cites to Hansen v. Bothe, 10 So.3d 213 (Fla. 2nd DCA 2009) regarding the Former Husband’s Trust instrument not containing a provision dissolving the Trust upon divorce.  In Hansen, the court held that divorce of husband and wife who were co-settlors and co-trustees of a revocable trust, did not terminate the trust even though wife relinquished any rights she had under the trust as part of the divorce.  The trust in Hansen contained no provision terminating it upon divorce of co-settlors, and the trust explicitly provided for replacement trustees in the event the original trustees ceased to serve.

alimony taxesThe Tax Cuts and Jobs Act “TCJA” has a definite effect on alimony payments.  Prior to the new law, alimony payments could be deducted by the payer for federal income tax purposes and recipients had to report the payments as taxable income.  Any divorces finalized before December 31, 2018 will continue under the old tax law.  Any divorces finalized after December 32, 2018 apply under the TCJA eliminates the deduction for alimony payments and recipients no longer have to include them as taxable income.  In addition, any modification of alimony payments after December 31, 2018 shall be affected by the TCJA if the modification specifically states that the TCJA applies; meaning if the TCJA is ordered applicable by the Court.

Pre-2019 divorce orders for alimony still qualify under the old federal income tax law for a deduction benefit without having to itemize if all requirements are met.  Requirements include: 1) a written document is required the alimony payment; 2) payment must be to or on behalf of a spouse or ex-spouse; 3) the divorce decree or separation document cannot state the payment is not alimony; 4) ex-spouses cannot live in the same household or file jointly; 5) a payment must be made in cash or by cash equivalent; 6) cannot be deemed to be child support; 7) the taxpayer’s social security number must be included on the tax return; 8) the obligation to make payments ceases upon the recipient’s death.  See IRS Tax Topic No. 452.

Depending on your situation, you need to speak with an experienced Jacksonville family law attorney now.  If you will be making alimony payments, it is in your best interest to get a divorce wrapped up before December 31, 2018 so payments will be deductible.  If you will be receiving payments, it is in your best interest to put off finalizing your divorce until next year, so the payments will be tax free to you.  Contact the Law Office of David M. Goldman, PLLC for a consultation.

For sale signWhat happens to real estate or property that you jointly own when you get a divorce in Florida?  How does the Court handle your property when you and your spouse can’t agree on what to do?  How can it be distributed between you and your spouse?  In divorces, the court will partition your property absent an agreement as to the contrary.  Partition means simply “to divide into parts.”

The Court cannot order partition of your property without it being alleged in your dissolution of marriage petition.  Florida courts have long held that a judge may partition the jointly-owned property of the parties in a divorce action only if the due process requirements of Chapter 64, Florida Statutes, relating to partition are met.  See Sanders v. Sanders, 351 So.2d 1156 (Fla. 2nd DCA 1977).  The complaint for partition can be incorporated into a divorce petition and no separate filing is needed.  F.S. § 64.041 specifies that the complaint must allege a description of the property, the names and places of residence of the owners, and the share held by each owner.  The partition complaint must be filed in the county where the property is located.

Typically, the parties will agree on a real estate broker to list the property for sale at current fair market price and the parties will split the proceeds according to the parties’ interest in the property (taking into account the costs and expenses put into the property) unless an agreement is made for one party to refinance the home and pay the opposing party their share.  After a divorce, property automatically converts into a tenancy in common and each owner has the right to sell, lease, or mortgage their interest in property.  See F.S. § 689.15.

You may be tired of receiving child support or alimony payments late or not at all, and you would like to be paid directly from the employer of your ex-spouse or child’s father/mother.  Florida Statutes 61.1301 provides that an income deduction order can be entered once there is an order of alimony or child support by the court.  The income deduction order must be issued by separate order.

There is a federally approved and required Income Withholding Order “IWO” that will allow you to garnish income for child support and alimony.  See 42 U.S.C. 666, Social Security Act.  Arrearage of child support can be withheld also and the employer/income withholder is given instructions on how much to withhold until full payment is made.

moneyThere are very clear rules about the IWO, and an IWO may be rejected and delay payment if not completed properly.  The employer must reject the IWO and return to the sender if the IWO instructs the employer/income withholder to send a payment to an entity other than a state disbursement unit, which is a centralized facility for collections and disbursement of child support payments.  Another reason the IWO must be rejected is if the form does not contain all the necessary information to comply with the withholding.  The IWO must include a dollar amount as the amount to withhold and must include a copy of the underlying order.  In addition, the correct Office of Management and Budget “OMB” approved form must be used or it will be rejected.

travel service passportWhat do you do when you want a divorce but your spouse has left to go to a foreign country?  How do you serve your spouse with divorce papers?  It can be a very complex and scary process; even to a lot of lawyers.

To commence a divorce action, there must be personal service on a spouse, meaning that a copy of the petition may be served on your spouse by sheriff or certified process server at their usual place of abode with any person residing therein who is 15 years of age or older and informing the person of their contents.  The spouse may also be served at their employment in a private area designated by the employer after contacting the employer.  Service may also be made on a spouse doing business as a sole proprietorship at their place of business by serving the person in charge of the business at the time of service if 2 attempts to serve the owner have been made at the place of business.

International service of process is governed by the Hague Convention on the Service of Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters and the Inter-American Service Convention “IASC,” with an Additional Protocol.  There are some countries who are not a part of the Hague Convention and special rules apply for these countries.

You may wonder how Florida courts make a decision on what is income and what is not in divorce cases.  In addition, you may wonder how business income is considered in divorce cases by the courts.  The case of Marchek v. Marchek, 159 So.3d 1025 (2nd DCA 2015) gives a great example of what can be considered income, especially when it comes to business income.  In this case, the husband appeals a final judgment of dissolution of marriage to his wife.  The court reversed an equalizer payment of $35,777 to the wife because there was not competent, substantial evidence supporting the court’s valuation of the business income.

business caculateThe husband was an electrician that owned an electrical contracting business where the wife worked handling much of the administration such as bookkeeping, payroll, and accounts receivable for a time.  As of the trial date, the business had a pending job for which it billed $100,000 and accounts receivable of $40,000, some of which stemmed from the pending job.

The problem was the $100,000 for the pending job was the gross amount for the job, NOT a net amount.  The $40,000 accounts receivable figure was the amount the business had already received including the $100,000 job and any others from that same year, and the figure was still only a gross amount, not a net amount.

military weddingThe Uniformed Services Former Spouses’ Protection Act (USFSPA) allows Florida courts to distribute military retired pay to a spouse or former spouse and provides a method of enforcing these orders through the Department of Defense. The marriage does not need to have lasted 10 years for the spouse to acquire a share of or interest in the military spouse’s retired pay.  However, the military couple must have been married to each other for 10 years or more during which to the military spouse performed at least 10 years of military service creditable towards retirement eligibility (the 10/10 Rule) to receive a direct payment from the DFAS (Defense Finance and Accounting Services).

The USFSPA does not automatically entitle a former spouse to a portion of the military spouse’s retired pay. A former spouse must have been awarded a portion of the military spouse’s retired pay as property in their final court order (which can be a final decree of divorce, dissolution, annulment, and legal separation, and court-ordered property settlements incident to such decrees). The USFSPA also provides a method of enforcing alimony and child support arrears awarded in the court order. See 10 U.S.C. § 1408. Section 1408(h) of the USFSPA provides benefits to a former spouse of a member who, as a result of the abuse of a spouse or dependent child, loses the right to retired pay after becoming retirement-eligible due to years of service. A former spouse may enforce an order dividing retired pay as property under this Section if the special requirements of Section 1408(h) are satisfied in addition to all the regular requirements of the USFSPA. The right to payments under this Section terminates upon the remarriage of the former spouse, or upon the death of either party.  Section 1408(h) also provides for the enforcement of a court order awarding child support to a member’s dependent child, where the dependent child’s other parent died as a result of the member’s misconduct.

A property award of retired pay must be expressed as a fixed dollar amount or a percentage of disposable retired pay (gross retired pay less allowable deductions). If the parties are divorced while the member is still on active duty, the former spouse’s award may be expressed by an acceptable formula or hypothetical retired pay award. An award of a percentage of a member’s retired pay is automatically construed under the USFSPA as a percentage of disposable retired pay. A Qualified Domestic Relations Order is not required to divide retired pay as long as the former spouse’s award is set forth in the pertinent court order. The National Defense Authorization Act (NDAA) of 2017, in Section 641, signed by the President on December 23, 2016, amended the definition of disposable pay in the USFSPA, 10 U.S.C. § 1408. For Divorces entered after December 23, 2016, (in a case where the order becomes final prior to the member’s retirement) the military member’s disposable income is limited to “the amount of basic pay payable to the member for the member’s pay grade and years of service at the time of the court order” and increased by the cost-of-living amounts granted to military retirees from the time of the divorce to the date the member retires.

Divorcing a husband you can’t find or a wife you can’t find can be challenging.  It is a maze that requires you to know where to start before you can get through it.  As a Jacksonville divorce lawyer, I sometimes have people that come to our firm wanting a divorce, but he or she has no idea of where the husband or wife is located. In some instances, the spouse he or she desires to divorce is believed to be somewhere in the State of Florida. Jacksonville divorce lawyers can find the average person inside the State of Florida. Even finding someone outside the State and extending the search nationwide is normally doable. However, finding a person suspected of being outside the United States is another question.

Divorce when your spouse cannot be foundStarting with a person’s last know address: A person filing a Florida divorce must start with the last know address of his or her spouse.  Assuming that the spouse to be served with divorce papers cannot be found at his or her last known address, there must be a diligent search to ensure that he or she receives notice regarding the case. Florida law sets out certain efforts that have to be made when trying to find your spouse in order to serve him or her.  Once a diligent search has been completed, you may serve your spouse by publishing notice of the divorce in the local paper in the areas where your spouse may be living.  This is called service by publication.  It is also referred to as constructive service.  Trustify.info suggests eight steps when trying to find a missing person in their article, “How to Find a Missing Person: 8 Critical Steps.  This could be helpful in trying to locate your spouse.

If the proper diligent search is not performed, service by publication can be invalidated.  The reason for this is that “due process” requires that a genuine good-faith attempt is made to give your spouse an opportunity to be heard on the issues surrounding the case.  Due process is a major part of justice in the United States and in Florida divorce cases.  A Jacksonville family lawyer or jacksonville divorce lawyer can help you make sure that your case moves forward properly.  At the Law Office of David M. Goldman, PLLC, our experienced Jacksonville divorce lawyers have dealt with these types of issues and can help guide you.  Call us today to schedule a free thirty minute consultation!  We will help you find the best solution for you and your circumstances.

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