New Florida Law Ends Permanent Alimony

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While marriage has changed over the years, so have presumptions about alimony. Permanent alimony was previously allotted when a marriage dissolved after a long partnership, traditionally when the man left a woman who had been a housewife and mother and not earned an income outside of the home.  

Many couples still prefer that arrangement, but women have increasingly sought their own income, independence, and economic stability.

In July, Florida Governor Ron DeSantis signed into law SB 1416, which essentially does away with permanent alimony, making a traditional stay-at-home mom role a less viable option following a Florida divorce.  

The “First Wives Advocacy Group,” made up mostly of older women, was the first to speak publicly about the new law, claiming their lives would be disrupted without permanent alimony.

The group’s founder Jan Killilea, 63, told the News Service of Florida, “We believe by signing it, he (the governor) has put older women in a situation which will cause financial devastation.”

Killilea says she has a severe medical condition and cannot afford a lawyer to fight over alimony. She calls the law “a death sentence for me.”

On the other side of the argument, Florida Family Fairness applauded Gov. DeSantis and the Florida legislature for adding clarity and eliminating permanent alimony.  

A similar bill before the governor one year ago also tried to eliminate permanent alimony. Still, it set up an alternate formula for alimony linked to the years of marriage. Gov. DeSantis rejected that proposal.

Former Florida Gov. Rick Scott vetoed similar bills twice.  

Florida was one of only seven states that allowed permanent alimony, according to the Pensacola News Journal.

Dissolution of Marriage- SB 1416 

Four types of alimony are now considered temporary:

  • Permanent – Now considered temporary, alimony has been awarded when one spouse was court-ordered to continue support of their ex-partner. That continued until the recipient died, remarried, or had some other form of support. That is now temporary at best, while the payor’s ability to pay will be considered, as will the recipient’s ability to obtain skills or education and the mental health of the parties.  

It authorizes to court to consider whether either spouse committed adultery, allowing that to impact the amount of alimony awarded.

  • Bridge-the-Gap – Allows for transitioning from a married partner to being single and, therefore, financially independent. It is now limited to two years.
  • Rehabilitative – Rehabilitative alimony can be awarded, allowing the soon-to-be ex-spouse to receive job training, for example, but that alimony will be limited to five years.
  • Durational – Awards alimony for a specific period. Defining a short-term marriage as less than ten years and long term of 20 years or more. The new law will cap durational alimony to three years or less and may not exceed 35 percent of the difference between the spouses’ income. A marriage of 20 years or more will receive a payment of up to 75 percent of the marriage term. The new statute in Florida allows for the modification of durational alimony.
  • Those married for less than three years will not be eligible for alimony.

Burden of Proof

A spouse seeking alimony or some support or maintenance now has the burden of proof to argue that they need the help and that the other party can pay.

As for existing alimony agreements, they should not be affected but are still modifiable. In some cases, women accepted alimony instead of a division of assets following a divorce. Those agreements could now be the subject of a petition for modification.

The court can consider the age and health of the person making the payments, the traditional retirement age, and the impact a reduction will have on the recipient of the payments.

Your Florida Family Lawyer

Florida family lawyer Crystal Collins Spencer is prepared to tackle the new law’s challenges facing divorcing spouses. Largely uncharted, the law will leave many parties seeking modification of their alimony payments and others needing to return to a more permanent form of alimony, particularly involving high net-worth individuals. The change will also allow the state to explore the “fault” behind an irretrievably broken marriage, a departure from Florida’s traditional “no-fault” status.

There are many new avenues to explore, and Ms. Spencer will be your advocate, delving into all of the variables to seek adequate compensation and fairness. This is not the time to delay. Call our Pensacola office at 850-795-4910 to explore your options and the road ahead.   

Sources:

Fl SB 1416
https://www.flsenate.gov/Session/Bill/2023/1416

WFSU
https://news.wfsu.org/state-news/2023-07-02/a-new-law-puts-an-end-to-permanent-alimony-in-florida

Pensacola News Journal
https://www.pnj.com/story/news/politics/2023/07/03/florida-alimony-reform-law-sb-1416-explainer/70379415007/

How Inheritances Impact Alimony Payments

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Inherited wealth is usually given to one individual with the intention that it stays with that individual. This can be accomplished through a prenuptial agreement or a family trust, keeping the inherited monies out of a joint account and, therefore, away from the soon-to-be ex-spouse.

If a divorcing couple has assets or is expected an inheritance, a family law professional is your best ally in crafting an agreement to avoid negatively affecting your financial goals. 

Nonmarital Assets

Inherited monies are generally considered a nonmarital asset, therefore not subject to division.  However, if the monies are converted to a marital asset, they could be divided, whether the transfer was intentional or unintentional.

Through an interspousal gift, a nonmarital asset can be converted to a marital asset, therefore subject to equitable distribution. If the gift involves real estate, the title to the property is not a factor in determining an interspousal contribution because Florida is not a title theory state.

Marital Assets

Transmutation describes a property converted from one’s separate property into a marital asset. For example, if one of the spouses owned the property before the marriage, but it is titled in both partners’ names after marriage, it’s now a marital asset, therefore subject to division.

Even if a premarital agreement is in place, couples who do not manage their affairs with the help of a family law specialist who understands Florida family law may risk losing inherited wealth to the ex-spouse. 

The descendants can enter into a prenuptial (prenup) or postnuptial (postnup) agreement to manage the inherited wealth, though the couple may not be willing to have their finances micromanaged. 

Couples may also want to consider creating an irrevocable trust to hold inherited wealth, especially if it is to be passed on to their children.  

Alimony

Generally, in the absence of a marital agreement, the wealthier spouse may have to pay alimony to the other depending on their incomes and prospects for earning.  

Alimony may be awarded to the lesser earner depending on the length of the marriage, the standard of living, contribution, and debts each individual contributed to the marriage. Is there a need for ongoing spousal support and is there an ability to pay for such support?

The prediction that inherited wealth is forthcoming is not a factor in determining alimony. While you may have good reason to believe that a large inheritance is coming in the future, you cannot count on it for sure until the assets have been distributed to the heir/beneficiary.

If one spouse receives alimony from the other and one of the spouses inherits a substantial sum of money at a later date, alimony may be subject to revision, either up or down, even if it is permanent alimony. 

On a related note, alimony may be affected by the increase in value of other nonmarital assets as well. Particularly if either party’s investment helped that asset grow or if marital funds were used to maintain the investment.

Commingling an Inheritance

Of course, there are few black-and-white answers when it comes to divorce, and that remains true when it comes to inheritances. An inheritance may be considered marital property if it is commingled with other marital assets during the marriage. This just means that the asset was combined with marital property and is consequently indistinguishable from marital property.

This may play out in several different ways, depending on the type of inheritance you receive. For example, imagine a spouse that receives $100,000 from a family member upon their passing. They do not put it in a separate account under their own name and instead just deposit it into the marital bank account where both spouses can access it.

Over the next few years, that account is used to pay bills, take vacations, and otherwise benefit the marriage as a whole. When the couple splits, the courts may determine that the inheritance was commingled since it was kept with marital funds and used by both parties.

Another scenario: imagine a person who receives a vacation home for their inheritance. Although it is only in their name, they have family vacations there with their spouse and children.

When they aren’t using it, they rent it out and use the rental income to increase the family’s overall income. When something breaks, they tap into their shared bank account to fund repairs or upgrades. At this point, marital funds have been used to improve the property and income from the asset has been used to benefit the marriage. The vacation home may be commingled and viewed as marital property.

Your Florida Family Law Professional,

Divorce can be complicated, especially if there is wealth to consider or a future inheritance. Saving money by not hiring a lawyer can be a mistake that costs you dearly.

Crystal Collins Spencer, Attorney at Law has over 30 years of experience representing both petitioners and respondents in divorce cases. There are many nuances to divorce law that may leave you vulnerable. Let her experience in these complex legal matters work for you. Contact her Pensacola office today at (850) 795-4910 or send us an online message to set up a personalized consultation to discuss your case.

Sources:

Fl Bar
https://www.floridabar.org/the-florida-bar-journal/protecting-an-inheritance-in-the-event-of-divorce/#:~:text=In%20addition%20to%20the%20impact,mostly%20on%20that%20spouse’s%20income.

Spousal Support Tax Deduction Ending Soon

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Spousal support, also commonly referred to as alimony or spousal maintenance, is a payment from one spouse to another that is either ordered by the court or agreed upon between both parties as part of a final divorce settlement. Spousal support is not ordered or agreed upon in all cases, and the amount and duration of payments is dependent on the specific circumstances of the case.

In determining the amount of the spousal support payment, tax consequences are typically among the main considerations. Because alimony payments are often substantial, the ability for the payor spouse to deduct these payments has often been an important issue. Up until now, payor spouses have been able to deduct alimony payments as long as they followed IRS guidelines. In addition, recipient spouses have been required to claim the payments they receive as income on their taxes.

This all changed last year with the passage of the Tax Cut and Jobs Act (TCJA) of 2017. The TCJA was the most sweeping tax reform legislation since the 1980s. It included hundreds of changes to the tax code for both individuals and businesses. While the cuts in corporate and individual tax rates were the most publicized aspects of the bill, there are several relatively minor changes that significantly impact certain groups of people. Among them is the elimination of the tax deduction for ex-spouses who pay spousal support.

How Alimony Tax Law Changes Impact Divorcing Spouses

Under the TCJA, payor spouses are no longer able to deduct their spousal support payments on their taxes, and recipient spouses are no longer required to claim what they receive as income. At first glance, this may seem to have a binary affect in which the payor spouse is penalized, and the recipient spouse is rewarded. While it may be true that eliminating the deduction for alimony payments penalizes the payor spouse, this does not necessarily mean that the recipient spouse will benefit from the change. In actuality, this change could vastly reduce the combined income of the two spouses, which is not good for either one.

Here is an example of how this might happen. If a payor spouse earns $550,000 per year, their federal tax rate is 37%. Under the old rules, if they pay $100,000 per year in alimony to the recipient spouse (who does not earn any additional income), the income of the payor spouse is reduced to $450,000, moving them into the 35% tax bracket, and giving them a tax bill of $157,500. At the same time, the recipient spouse receives $100,000 and pays 24% in federal taxes, or $24,000.

Under the new law, the payor spouse no longer has the deduction, leaving them with a taxable income of $550,000 and a tax bill of $203,500, an increase of $46,000. Meanwhile, the recipient spouse only saves $24,000. This reduces the spouses’ combined income by $22,000. This type of change could significantly impact negotiations as many spouses might argue that they cannot afford to pay as much in alimony because the deduction was taken away.

How Does this Change Affect Current Spousal Support Agreements?

If you are already paying or receiving alimony, the changes in the TCJA will not affect you. In addition, all divorces finalized on or before December 31, 2018 will still be under the old rules. For divorces finalized on January 1, 2019 and thereafter, the new law will be in effect and payor spouses will lose their spousal support deduction.

If you are currently considering divorce, there is a very short window of time remaining to finalize the proceedings in time to benefit from the old tax laws. If the deductibility of alimony payments is a major concern for you, it is best to take action as soon as possible.

Speak with an Experienced Pensacola Family Law Attorney

Crystal Collins Spencer, Attorney at Law, has over three decades of experience representing clients in Florida who are going through a divorce. Attorney Spencer has an in-depth understanding of the issues couples must resolve during a dissolution of marriage, including spousal support. She works closely with her clients, taking the time to listen and understand their unique needs and concerns, and working tirelessly to protect their rights and interests.

Call our office today at 820-912-8080 to schedule a consultation, or you may send us a secure and confidential message through our web contact form.