Home Chad Van Horn What Is The Financial Impact of Divorce?

What Is The Financial Impact of Divorce?

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Divorce is traumatic even when it is amicable and desired by both parties. In Florida, there are unique laws that govern a dissolution of marriage. The law states that no divorce will be granted unless both parties agree that the marriage is irretrievably broken, or one party is adjudged to be mentally incapacitated for a term of at least three years prior to the filing. If there is a minor child of the marriage, the court will mandate counseling and parenting classes to try to affect a reconciliation. If this is not possible and the court finds the marriage is irretrievably broken, matters become more complex.

The Purpose of Florida Divorce Laws

Florida’s divorce laws have been tweaked and refined over the years to preserve or repair marriages and to safeguard family relationships. The court feels it is in the best interests of all parties to amicably settle disputes and mitigate the financial impact of divorce and other potential harm on spouses and children of the marriage. Even when there are no minor children – either because they are adults or there were no children in a long-term marriage – questions of support need to be answered and settled.

The Marital Estate

When a person dies, their property automatically becomes an estate that needs to be divided according to their stated wishes, or in the absence of a will and testament undergo an equitable division adjudicated by the probate court. When a marriage dies, all of the marital property accrued over the term of marriage – including during the process of dissolution – becomes an estate as well. This distinction applies to all property or assets accrued from the date of the marriage no matter which partner holds title to them. There are exceptions to this rule that include inheritances, gifts, family businesses, and retirement accounts or pensions.

Regular and Simplified Dissolutions

There are two tracks for divorces in Florida. The simplified version has eligibility requirements that must be met.

  • Neither party is contesting the divorce, but both agreed the marriage is irretrievably broken.
  • There are no children of the marriage under 18 – this applies to adopted children as well – and no pregnancy.
  • Both parties have agreed on the distribution of marital assets and debts, and neither party is seeking spousal support.

The regular form of dissolution is more complicated and must be filed when there are minor children of the marriage, adopted children, or children of the marriage as yet unborn. Either spouse begins the process by filing for dissolution of marriage alleging that the marriage is irretrievably broken and setting out their needs in the division of the marital estate. The responding spells must file an answer within 20 days of service and may also counterpetition with any issues they wish to address.

Equitable Distribution: Meaning and Process

Florida is an “equitable distribution state” – but that doesn’t mean splitting the marital estate right down the middle 50-50. The court must factor in contributions to the marital estate including those of the stay-at-home spouse in raising children and keeping house. Likewise, the future economic opportunities of both parties must be considered in the financial impact of divorce, including the effect of putting off education and career to raise children, care for family members, and keeping house.

Even when there are no longer minor children in the home, the duration of time spent as a stay-at-home parent will be accounted for by the court. Becoming a long-term stay-at-home parent often causes spouses to forgo educational opportunities and professional advancement, significantly impacting their future earning potential in their ability to support themselves. Both parties in the divorce are required to provide financial statements to the court so that the court may consider how to affect equitable distribution.

A word of warning. If the marriage has been rocky for some time, the court will not be amused or lenient if either party has been flagrant in willfully depleting the marital estate or accruing debt in hopes of negating any financial award or obtaining a higher settlement amount.

Debts in the Marriage as a Financial Impact of Divorce

Just as with the estate of a deceased person, the estate of the marriage must pay any creditors. Debt incurred prior to the marriage whether student loans, personal loans, medical expenses, mortgages, or credit card debt are not part of the marital state. Only debts accrued from the date of the marriage are considered marital debts. In the case of a mortgage on the marital home or mutual ownership of motor vehicles, this debt may be restructured to make one spouse the sole owner and debtor.

In the Presence of a Prenuptial Agreement

A prenuptial agreement is not an automatic out from the regular divorce process. The court will review the document and determine as to whether or not the provisions in the document should stand. If the document does not meet the standards of Florida law, it will not be worth the paper that it’s written on.

 

Separating Finances

Part of the financial impact of divorce comes from separating finances upon filing for divorce. Both parties should establish separate credit cards and separate bank accounts at different financial institutions. Likewise, both parties will need to update insurance and estate planning to reflect the end of the marriage. There are also cases in which there are marital assets to divide, but the debts accrued in the marriage are overwhelming. This circumstance is considered to be an insolvent estate and both parties should consider filing for bankruptcy prior to seeking to dissolve the marriage.

Get Help

The emotional and financial impact of divorce can seem overwhelming, even when amicable. Facing marital difficulties and financial difficulties at the same time adds another layer of difficulty to an already stressful time. “We also understand that an insolvent marital estate needs to be dealt with prior to beginning a divorce. We will work with both parties for the best possible result and in the best interests of everyone involved,” said Chad Van Horn, founding partner, attorney of Van Horn Law Group, P.A. in Fort Lauderdale.


About Chad Van Horn

Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people.

 

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Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people.