Marital Property

  • Measuring Marital Property

The  measurement of marital property is very complex.   It requires applying  complex legal principles to different properties.   Congress recognized  that this skill is critical in protecting employee's right to  retirement benefits.  It created very strict licensing requirements for  actuaries.  This same skill used to protect retiree interests can also  be used to measure the proper marital value of real estate, liquid funds  and certain business properties.  An under-valuation of marital  property means one spouse is shortchanged.   An overvaluation of  property means the other spouse is shortchanged.  Either occurs almost  all the time.   This results in one spouse being shortchanged.   This occurs often because the experts retained lack proper discipline to undertake correct valuations. 

  •  Property is Presumed Marital 

It  is the burden of the spouse who claims a non-marital component to  demonstrate it.  Because property is presumed marital, failure to  demonstrate a non-marital portion transmutes the property into marital  property.   Sometimes this burden is met with a prenuptial agreement  defining what is non-marital property.   Sometimes this burden is met by  methods of tracing funds.   But tracing funds requires an understanding  of the law and the issues involved.   In some circumstances, the method  is defined by statute. Transactional  tracing is often confused with tracing funds.  The first is used in  overcoming a presumptive gift by demonstrating intent.  The second is  used in establishing a non-marital portion. When the two are confused  (which occurs more often than not) the marital property is vastly  overstated.

Non-marital  Property can create marital property when it appreciate only because  marital effort was used.  It can be changed into marital property when  it is commingled inside a joint accounts or held in a tenants by the  entireties account.  It can be changed into marital property through an  inability to calculate a marital portion.  It can be changed by securing  a marital loan and repaying the loan with marital money.  The latter  occurs with great frequency with both 401(k) plans and real estate  initially outrightly owned by one party.  For all of these  reasons how  you fair in court is directly linked to the quality of the expert you  retain.

Spousal Support 

  • Spousal support is determined  by comparing the Marital Standard of Need to the other spouse's ability to pay. 

  • Ability to pay reflects that spouses marital standard of need  

Measuring the Marital Standard of Need

Do  not be mislead that this is an easy computation. While the court has  broad discretion in determining the amount of support, the  underpinnings  of the award it makes are based on the level of skill  deployed in these measurements.  When the amount of the award is  reversed on appeal, it is more often than not these measurements which  are wrong.  An appellate court seldom reverses a discretionary decision  of the court.  Measuring the marital standard of need requires an  in-depth understanding of how the marital statutes define need.   It  also requires applying the statutes to measure the need.  Both involve  skill.  As the appellate court is unlikely to reverse the court needs to get it right and getting it right depends on the expert you retain.

Ability to Pay

Ability  to pay requires an in-depth understanding of income and all its related  components and how that income is related to the way marital property  is divided.  When the ability to pay is undervalued the court is unable  to award a sufficient amount.  When it is overvalued the alimony award  can be excessive.  Undervalued income often results when income is not  imputed when warranted. When and how much to impute is a complicated  matter and very often determined incorrectly.  It is the most likely thing overturned by the appellate courts because neither attorneys nor the experts they hire have any knowledge in this area.  Mr Reiss is a written authority on the subject and helped shaped case law for it. 

Overvalued income  results by confusing an income stream with actual income.  An income  stream includes repayments of principal such as repayment of a note, the  coupon rate of a bond and an annuity payment. 

It is also overvalued when it is counted elsewhere in the equitable scheme.   When  proper measurements are not made the court makes the awards without  proper guidance.   (There is a Florida Bar Journal article covering the  topic of alimony and the issue of ability to pay in the publication  links section.   Jerry Reiss & Michael Walsh, The Mathematics for Imputing Income,  80 Fla. B. J. 64 (July-August, 2006) ).  This specific article is cited  as authority in West Law's Annotated statute of alimony,  F.S. 61.08  (2006). 

The Division of Marital Property is interrelated to the Alimony Amount 

  • The expert you retain must be thoroughly versed in the statutory definition of marital property and all its components.   
  • The expert should be thoroughly versed in the spousal support statute. 

This  requires a  complete understanding of the statutory definition of  income as well as how the income is  directly related  to  the  valuation  of  the  property that produces the income.   Only when the  expert knows both can proper measurements of either be made.   

For  example, how can an expert lay claim to qualifications   to   value    a   stream   of   income   that   requires   retirement   for   its    receipt   without understanding how to factor into that calculation the  case law that prevents the person paying support from retiring before a  certain age?  The plain simple fact is most experts do not know proper  valuation techniques nor do they observe the law that governs the  calculation. This leads to substantial over and under-valuations of  property.   This error compounds because support payments are directly  related to the valuation of property.   

How can a person claiming  expertise with support lend proper assistance without understanding  retirement plans and the way they work? Income and the ability to pay  spousal support cannot be determined without first determining the  amount of marital assets and how they will be divided. This is required  by statute. Either extra support payments or an unequal division of  marital property  and  sometimes both correct  marital assets   dissipated  from  marital misconduct.   

Who pays attorney's  fees  is   determined  with  very  similar principles  to  alimony.  Except   the very  right  to alimony is determined by the court by considering a  laundry list of statutory factors; whereas an award of attorney's fees  is determined under principles of due process of law.

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