The financial aspect of divorce can be very complicated. Typically, one spouse is more knowledgeable of finances and the couple’s individual financial status. If you are the spouse that is less informed, now is your chance to get caught up.
Often couples forget that when it comes to finances, in addition to their finding common ground, they need their creditors (in regard to debts) and the court (in regard to child support) to go along with the plan.
Dividing Your Assets and Debts. You will have to decide how to divide or distribute all of your assets and debts so that you can achieve a financial divorce. Your assets are your home, retirement accounts, bank accounts, investment accounts, possessions, businesses, insurance policies, cars, etc. Your liabilities will include debts – such as your student loans, credit card debts, car loans, mortgage debt, etc.
FULL financial disclosure is key during this part of the mediation process. In order to negotiate and participate meaningfully in the mediation process both spouses must be aware of what you own, what you owe, what was owned previous to the marriage, and what has been acquired since the marriage.
Before your divorce is final you will need to fill out a Family Law Financial Affidavit which will outline the financial details you discussed in mediation. (If you want to see this form prior to mediation, copies can be found on the FL Supreme Court’s website in both PDF and RDF formats – www.flcourts.org. There are two forms, Family Law Financial Affidavit (Short Form) 12.902(b), which should be used when an individual’s gross income is under $50,000 per year and a Family Law Financial Affidavit 12.902(c) which should be used when an individual’s gross income is $50,000 or more per year.
Now is a good time to run a credit report so that you can see what your creditors are saying about your status. It’s important to know if a creditor is calling a debt yours or your spouse’s. Additionally, your mediator will encourage you to consult with your accountant before you decide how to divide your assets so that you and your spouse can consider future tax liabilities and other concerns.
Alimony/Spousal Support. You and your spouse may decide that one of you will pay the other alimony. Alimony payments may be short-term, long-term, permanent, or paid in a lump sum. If you and your spouse agree to an alimony provision in your agreement you will also need decide if this alimony will be modifiable or non-modifiable and how it will be structured – as a temporary, lump sum, bridge-the-gap, rehabilitative, durational, or permanent periodic payment.
When discussing this issue the mediator may ask you to consider the needs of the spouse requesting the alimony as well as the ability of the other spouse to pay the alimony. Additionally, you will want to consider things like the standard of living established during your marriage, the length of your marriage, the contributions each of you made to the marriage, your ages, your physical and emotional conditions, and your financial resources.
You may decide on a lump sum, temporary, “bridge-the-gap,” durational, permanent, or rehabilitative alimony plan. And, you and your spouse will also want to consider what circumstances would warrant a change in the plan.
Paying or receiving alimony can have long-term consequences so the mediator may encourage you to consult with other professionals before making any decisions about alimony. The IRS has rules and regulations that determine whether alimony is tax deductible or taxable so you should consult with your accountant before deciding what to do.
Child Support. Child support is calculated using a prescribed formula based on your net incomes and the number of overnights the children spend with each of you.
Your mediator will calculate child support for you using your incomes, the cost of each parent’s health insurance, the cost of your children’s health insurance, the cost of work related child-care, and the number of nights that your children will spend with each parent.
Child support is based on the parents’ net income. For purposes of child support, net income is calculated by subtracting the following from the parents’ gross incomes:
* federal, FICA and medicare taxes
* mandatory retirement and union dues
* the cost of health insurance coverage – for the parent only
* alimony payments, and
* court ordered child support from prior cases.
The parents’ combined net incomes and each parent’s percentage share of that income is then calculated. The child support guideline chart provides the minimum amount of child support, using the parent’s combined net monthly income and number of children in the family. Then child support is calculated based on the number of overnights the child spends with each parent.
The calculation of child support is outlined in Florida Statutes 61.30. Child Support. Scroll down to 61.30.