Husband, 48, and Wife, 44, have been married for 17 years as of 2011. In 1998, the Husband started his own insurance sales business (John Doe Insurance, or JDI), which he continues to be the sole owner and proprietor as well as an employee. Since 2004, the Husband has paid himself an annual gross salary of $125,000. JDI continues to be profitable selling all types of insurances such as health, life and disability.

As of the date of marriage, the Wife was working as an LPN while pursuing her RN certification on a part-time basis. The Wife obtained her RN license within 18 months of the date of marriage (1996). The parties’ first (of two) children was born soon thereafter (1998) at which point the Wife no longer pursued her RN career on a full time basis even after the parties’ youngest child attained school. This arrangement was by agreement of the parties. Although the Wife thereafter served primarily a homemaker, she did assist her Husband with furthering his insurance career by marketing JDI and working as a secretary between the time period of approximately 2000 through 2009.

In 2010, the Wife went back to nursing school so as to renew her nursing career. The Husband filed for divorce just as the Wife obtained re-licensing as a nurse in early 2011. The Wife is currently earning $40,000 per year as a full time nurse at a local hospital. The Wife has counter-petitioned for divorce seeking both an unequal distribution of the marital assets and permanent periodic alimony as well as a contribution towards her attorney fees.

As the parties’ Marriage went south in early 2010, JDI suddenly experienced a decrease in sales. The Husband contends that he (as the sole owner of JDI) cut his salary in 2010 and again in 2011 by 50% as a result of JDI’s significant losses. The Husband denies the Wife’s entitlement to an “unequal distribution” and that the parties currently have comparable earning capacities and, therefore, the Wife should not be awarded any alimony.

Unequal vs. Equal Distribution

The starting point under Florida’s equitable distribution statutes is a 50/50 division of the “marital” assets and liabilities. However, Florida statute section 61.075 does provide for an unequal distribution in certain instances. Under this fact pattern, if the Wife made extraordinary contributions towards the Husband’s business and his insurance career all the while foregoing her nursing career and serving primarily as homemaker raising the parties’ two minor children, one may argue that the Wife is entitled to an “unequal distribution” of the marital assets. In order to effectuate an “unequal distribution”, the Wife may seek the sole and exclusive use and possession of the parties’ marital home during the remainder of the children’s minority and/ or a greater share of other marital assets including any interest she may have in JDI. Would the Wife be awarded the Husband’s business, JDI?

Highly unlikely, since the Wife is not knowledgeable of insurance(s) and holds no such licensing. Her vocation is nursing. The Wife would want the Husband to keep JDI as his sole property so as to earn income to pay both alimony and child support (and contribute towards her attorney fees). So does the Wife have a marital interest in the Husband’s business? Yes! The Husband would either buyout the Wife’s marital interest by lump sum or offset against other marital assets in which the Husband has an interest. The first step would be to valuate the Husband’s business, JDI.

In valuating JDI, the Husband would want to insure that he is not the victim of double dipping. For example, if the Husband is ordered to pay alimony, then same would be payable out of his business income. The business income, however, is also a factor in valuating the business, the value of which the Wife is seeking at least her one-half share (as a marital claim). If she receives one-half or more of the value of the business and then it’s income in the form of alimony, this is double dipping. To avoid this, the Husband would want to subtract out the yearly alimony payment from JDI’s net income and then valuate JDI on a lower net income. A CPA or other qualified professional would need to be retained for purposes of the valuation and avoidance of any double dipping.

Alimony

Prior to establishing alimony, the marital assets and liabilities will first need to be distributed. Once this is accomplished, we would then have a more accurate depiction of the parties’ relative financial resources for purposes of determining need and ability for alimony. Further, in this fact pattern, a presumption of entitlement arises in favor of alimony since the parties’ Marriage is “long” term (17 years or more).

The Wife would argue that the parties have a disparate earning potential; that she contributed towards her Husband’s business career while foregoing her nursing career and serving primarily as homemaker by agreement of the parties; and that she cannot be self-supporting in the lifestyle established during the parties’ long-term marriage without contribution from the Husband. The Husband may rebut the presumption of entitlement by seeking to prove that JDI is no longer profitable and the parties have equally divided all of the major assets (or that Wife received a greater share as part of an unequal distribution); that the Husband’s income has declined by 50% through no fault of his own since 2010 and that the parties, therefore, have comparable earning potential; and that the parties either lived beyond their means during the marriage or that their lifestyle was modest (and the Wife, therefore, can support herself on $40,000 per year).

The Husband’s sudden decline in earnings is suspect. If the Wife contends that the Husband is “voluntarily under-employed” and not using his best faith efforts to earn his customary $125,000 per year, then the Wife may seek to impute a higher level of income to the Husband. The Wife would have the burden of showing that the Husband is capable of earning more than he is in light of his work history, qualifications and the prevailing earnings in the local community. If the Husband is able to prove that he is doing the best he can to earn at his prior level and the decline in JDI’s receipts is due to an economic downturn, the Court may still award permanent periodic but in the form of “nominal” alimony.

Nominal alimony may be awarded in instances where, as here, the prospect remains that the Husband may realize his full earning potential in the future (leaving the door open for the Wife to pursue a higher amount of alimony).

Can the Court put a lien on a spouse’s non-marital asset(s) in order to secure a child support or alimony obligation?

Question:    My Wife and I are divorcing.  We were married for twelve (12) years and she was pretty much a stay-at-home mom.  She is seeking both child support and alimony.  I was recently laid off and I remain unemployed.  At the time I was laid off, I was making about $ 50,000.00 per year with benefits.  Although I am hopeful I will find a job, I do not have any certifications or other marketable skills such as computer technology or an ability to speak a foreign language.  I was with my former employer for 12 years and my only skills were acquired on that job.    In order to secure the child support and whatever alimony may be awarded by the court, my Wife is seeking a lien on my non-marital asset (a home that my brother and I inherited about three years ago).    I was told that she has no claim to my share of this Property since it is not a marital asset.  Can the court impose a lien on my share of the Property or any other non-marital asset to secure a support obligation?

Answer:   Under certain circumstances, a court may impose a lien on a spouse’s non-marital property to secure a child support or alimony obligation.   Simply because your Wife was a stay-at-home and you were making $ 50,000 does not automatically result in a lien.  In order for a lien to be imposed on your non-marital asset(s), there must be “special circumstances”.   For example, your Wife may argue that she has limited earning capacities inasmuch as she stayed home to raise the children; that the children are primarily residing with her and are in need of your support; and that you have limited marketable skills and were recent laid off.     In this regard, a lien does not give your Wife an ownership interest but security in the event you are not able to obtain employment any time soon and/ or she is unable to financially provide for the household without your assistance.   

I recommend that you perform a diligent job search, which amounts to at least one job application or interview per day.  As part of the search, I would also recommend that you keep a Journal consisting of the name/ contact information for each prospective employer; the position applied for and rate of pay/ benefits; and any follow up information.   This information may prove useful if you are unable to obtain comparable employment to the $ 50,000 previously earned and to minimize any support obligation.   Let’s say you do find a job but are only able to earn $ 30,000.   If you performed a diligent job search and the highest rate of pay for any one job was approximately $ 30,000, then  you will be able to defend against any claim that you are voluntarily under-employed.  Further, your $ 30,000 level of pay would be applied to the child support guidelines in arriving at your child support obligation (not the rate of $ 50,000).  If you have no available income after you pay your own fixed living expenses and the child support, then I would further argue that you have no ability to pay any alimony.  This may obviate the need for any lien on your non-marital asset(s).

A court has the authority to enforce it’s support orders albeit child support or spousal support (alimony).  One way to enforce such an order is via the court’s contempt powers.   If an obligor (party which owes the support) fails to pay the support as court-ordered, the one owed the support (obligee) may file a Motion For Civil Contempt.  At the hearing on the Motion, the Court will follow a two-step procedure for establishing civil contempt.  First, the court will determine whether the obligor has willfully violated the court order(s); and, if so, the court must then determine an appropriate remedy, which may include incarceration.  If incarceration is the remedy, then the court must make a separate, affirmative finding that the obligor has the present ability to pay a purge.  Bowen v. Bowen, 471 So.2d 1274, 1278- 1279 (Fla. 1985).

Hypothetical # 1:  Husband is ordered to pay to Wife the amount of $ 1,000.00 per month as permanent periodic alimony.  At the time of the court order, the Husband’s net income is approximately $ 4,000.00 per month; the Wife’s net income is about $ 1,000.00 per month.   Two years later, the now Former Husband loses his job through no fault of his own and undergoes a diligent job search to find comparable employment (for approximately 90 days).  During the 90 day period, the Former Husband pays his Former Wife the amount of $ 600 per month out of his savings and his unemployment compensation.   Is the Former Husband in contempt?  Answer, he may be in technical contempt since he has failed to pay the court ordered amount but may not be in “willful” contempt since he has made a best faith effort to pay his obligation out of his available financial resources.  

Hypothetical # 2:   What if the Former Husband in hypothetical # 1, above, voluntarily resigned from his position.  Let’s further assume that the Former Husband is also currently residing with his paramour and he is assisting her with her expenses, such as her mortgage and car payment.  Let’s further add that the Former Husband’s parent(s) have historically assisted him with all of his obligations such as his car payments, mortgage payments, and additional amounts for legal fees, all of which are significantly greater than his support obligation to his Former Wife.  The Former Husband refuses to pay his support obligation since he is unemployed and has no income.  Further, the Former Husband has a house and a car, both of which are worth less than is owed.   Is the Former Husband in contempt?   Answer, under this fact pattern and assuming the Former Husband has not made any effort to obtain employment or pay any of his obligation, then the court may hold that the Former Husband is in ‘willful’ contempt of court and may order his incarceration.  

In the forgoing hypothetical, the court may order incarceration in order to obtain compliance of the Former Husband with it’s prior court order (of spousal support).  In so doing, let’s say the court finds that the Former Husband’s paramour and parent(s) have the ability to assist him with a “purge” amount in the amount of $ 10,000.00.    The Court did not make any findings that the Former Husband, himself, has the income or assets in which to pay a purge amount.  Can the court do this?   The general rule is that the court cannot base one’s present ability to pay a purge on the prior assistance and/ or available resources of family or friends.  However, certain case law does set out circumstances justifying an exception to this rule.   The “exception” usually involves assistance by third persons in amounts much greater than the amount owed by the obligor to the other spouse and/ or the obligor was perpetrating a fraud on the court by concealing, dissipating or transfering assets to avoid payment not to mention his or her voluntary resignation from a job to avoid paying the support obligation.  

In any event, prior to any hearing on such a Motion (for civil contempt), I would recommend that the party seeking enforcement use “discovery” in order to obtain information as to the obligor’s present ability to pay a purge amount.   Such discovery tools may include interrogatories or requests to produce (financial information such as bank records, income information, etc.).  You may also take the obligor’s deposition to learn further about non-exempt assets and/or any transfers of property since the date of the subject court order.

*** The foregoing is not intended as legal advice.  If you have any additional questions or comments, feel free to either post a comment/ response or contact my Office for a free, initial consultation to discuss the particulars of your situation.

Florida law provides that a presumption of entitlement to alimony arises in long term marriages. This presumption does not mean that the spouse purporting to be in need automatically receives alimony in a long term marriage.  Even in long term marriages (which are defined by the 2nd District Court of Appeal, including Pinellas/ Paso, Hillsborough and Manatee Counties, as one of at least 15 years’ duration), the Court will evaluate both the ”need” (for the support) and the “ability” (to contribute towards same). In so doing, the Court will evaluate a variety of factors which are set out in section 61.08, Florida Statutes, including:  (a) the standard of living;  (b) duration of the parties’ marriage;  (c) the age and health of the parties;  (d) the financial resources of the parties (including non-marital assets);  (e) in certain instances, the time necessary for either party to acquire sufficient education or training to enable him or her to find appropriate employment; (f) the contribution of each party to the marriage, including considerations of homemaking and child rearing; and (g) all sources of income available to either party. Section 61.08(2)(a)- (g), F.S. 

Generally, in a long term marriage, if the spouse with the perceived ability to pay does not rebut the presumption (of entitlement), and the other spouse has a demonstrable need for support , then the court may award permanent periodic alimony (there are other types of alimony but this post will deal primarily with “permanent periodic”).  The amount of support will be based primarily on the receiving spouse’s need, which takes into consideration such expenses as household and living expenes (rent or mortgage, utilities, phone, food, gas); insurances (car, health); and even items based on standard of living considerations (vacations, entertainment, grooming, clothing).   However, the court must also evaluate the other spouse’s ability to so contrnot award support in an amount that leaves the other spouse without an ability to meet his or her own reasonable living and household expenses or otherwise destitute. Case law also states that the courts must not simply “equalize” the parties’ incomes but must consider the factors set out in section 61.08(2), F.S. and the other spouse’s true need for the amount of support.  

Determining need and ability gets murky in situations in which one party (or both) is (are) voluntarily under- or un-employed. Let’s say that the Wife worked during the parties’ long term marriage except for two brief periods of maternity leave.  During the Marriage, and as recent as two years ago, the Wife was earning upwards to $50,000 gross annual salary with benefits. This is the most she ever earned during the Marriage. She is 42 years of age, good health and has a college degree. The Husband is currently earning approximately $75,000 gross annual with benefits. The parties’ two children are minors but both are in school. Two years ago, the Wife decided to pursue a business opportunity which would provide her flexibility of scheduling so she could spend more time with the children.  Unfortunately, during the past two years, the Wife has not generated enough gross receipts in order to pay herself a salary from this business. The Husband is now the sole source of support for the family. A divorce proceeding is instituted and the Wife requests, among other claims, permanent periodic alimony. Will she prevail?  What can the Husband do to mitigate? Assuming the parties’ marriage is long term, the Wife has a present need and the Husband has some ability to so contribute, I believe the Wife can legitimately claim permanent periodic alimony. However, the Husband may argue that the Wife is (and remains) voluntarily under-employed and has a comparable earning capacity to him. In this instance, the Husband would have the burden of proving that the Wife has a recent work history and job qualifications to obtain comparable employment with comparable pay in the local community. One way to prove up that the Wife is voluntary under-employed is to enlist the services of an expert vocational rehabilitation specialist/ evaluator.

All sources of income are to be considered in determining one’s ability to contribute towards the other spouse’s support and/ or the other spouse’s need for support. For example, if the spouse with a perceived ability to pay owns a closely held corporation (let’s say, he or she is the only owner), and an approximate $ 10,000 of ordinary income is in the business’ account at the end of the quarter, is this amount to be considered in determining that spouse’s ability to pay? What if the spouse who is seeking permanent periodic alimony is earning interest and/ or receiving dividends on his or her investments or is receiving other income of a recurring nature, such as from a family member? These are facts that must be explored by the attorney as part of the mandatory disclosure requirement (namely, both parties must provide financial information in the form of pay stubs or other evidence of income; bank records; statements of account; etc.).  Sometimes, an expert CPA may be enlisted to perform a forensic accounting, which would include a determination of the sources of income, any concealment of income, transfers of assets for less than fair market value, and the nature of expenditures (for example, is one’s business paying for personal expenses). 

Alimony may be subject to modification, up or down.  In order to obtain a modification, the one requesting same must prove that a substantial change(s) in circumstance has (have) arisen warranting a modification.   What constitutes a substantial change in circumstance warranting modification?  Each case is unique and is dependent on it’s own particulars. Simply being let go from a job is a change but may not prove to be a “substantial” change if same is not a permanent loss of employment or income potential. Being injured on the job and temporarily unable to work may also not be a permanent loss warranting a modification. Let’s say the obligor spouse loses his job through no fault of his own (the company he worked for downsized due to bad economic times).   He was making $ 60,000 per year at the time he was let go.  Subsequent to termination, the former husband undertakes a diligent job search looking for a position with comparable pay but is only able to find work within the range of $ 32,000 to $ 40,000 per year without benefits. If, arguendo, the former husband was diligent in his pursuit of a job, then this fact pattern may warrant a downward modification of his support obligation.   On the flip side, what if the former wife enters into a “supportive relationship” and is less in need.  This, too, may amount to a situation in which the obligor may seek a downward modification. The case law defining what constitutes a “supportive relationship” is across the board but Florida law does provide for a downward modification (or termination, if applicable) in such instances.  

For more information, please feel free to inquire. The foregoing IS NOT intended as legal advice or a representation. If you are in need of legal advice, please feel free to inquire by calling 727-895-5858. I do provide a free initial consultation.