Tag Archive for: alimony

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/

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.