Florida divorce: reducing an equalizing payment to account for present value
Posted by Nydia Streets of Streets Law in Florida Divorce
A party who is owed payments under a Florida divorce agreement may be able to enforce those payments against the other spouse’s estate if the spouse passes away. This issue arose in the case Allen v. Estate of Allen, 4D19-2195 (Fla. 4th DCA April 22, 2020) in which the former wife sued the former husband’s estate to recover equitable distribution payments due to her under a marital settlement agreement.
The parties entered a marital settlement agreement which provided that both waived all forms of alimony, and that this provision was non-modifiable. The agreement also provided “As and for an equalizer payment, commencing November 1, 2015 and every 1st of the month thereafter, the Husband shall pay to the Wife the sum of $5,000.00 for 120 months and his equalizer payments shall automatically terminate after the 120th payment. This monthly sum takes into consideration any alimony the Husband may have owed the Wife, and the sums owed to the Wife under equitable distribution.” Finally, the parties agreed the former husband would obtain a life insurance policy in the amount of $400,000 and the former wife would be permitted to recover from the former husband’s estate the difference between the death benefit and the amount still remaining to be paid from the equalizing payment. The former husband unfortunately passed away shortly after the final judgment was entered, leaving the former wife in a position to seek payment from his estate.
The former wife filed a claim against the estate and the estate paid her only $140,000 even though she was owed a $200,000 difference between the total equalizing payment and the $400,000 she received from the life insurance policy. The estate reasoned that because she was receiving a lump sum payment, she was receiving a windfall and should only receive its present value. Specifically the estate argued “At the end of 80 months, [using the Estate's accountant's calculations,] $400,000 . . . would have grown to $457,205.20. The Estate has made monthly payments totaling $140,000 to date (November 2015 — February 2018). As such, the remaining amount due to Jane Allen is $2,794.80.” The trial court accepted the estate’s reasoning and ruled “that the ‘equalizer payment’ was a ‘periodic payment’ and, ‘because of the demise of the decedent, that payment was escalated and the wife has received a windfall. And the wife has to recognize that she is only entitled to the present value, and that's what [Buoniconti v. Buoniconti, 36 So. 3d 154 (Fla. 2d DCA 2010)] says and that is what is required by law.’” The trial court continued "[w]hen [the former wife] receive[s] the money in advance, it's subject to present money or present-value deduction . . . .’”
The former wife appealed, and the appellate court agreed with her. Citing Mandy v. Williams, 492 So. 2d 759, 760 (Fla. 4th DCA 1986) the court held, "‘[S]ince property rights in a dissolution of marriage action are absolutely fixed and vested at the time of entry of the final judgment of dissolution, the trial court cannot thereafter modify those rights.’ Here, the equitable distribution of $600,000 vested with [the former wife] on the day that the final judgment of dissolution was entered. [The former wife] was owed nearly the entire $600,000 equitable distribution at the time of [the former husband’s] death. The life insurance policy's ‘death benefit’ paid her $400,000. The Estate has paid her an additional $140,000. The MSA's "Life Insurance" clause provides that "[i]n the event that the death benefit does not cover what is owed to [the former wife] under this Agreement, she shall be permitted to recover from the Husband's estate in the event of his untimely demise." Thus, the amount that [the former wife] ‘shall be permitted to recover’ after receipt of the $400,000 is the portion of the $600,000 that she had not yet received. This is so because there is no provision in the MSA permitting the Estate to reduce the payment stream to present value.”
Enforcing your marital settlement agreement requires careful review and consideration of the terms of the agreement. To be sure your settlement agreement captures your true intent, it is important to consult with a Miami divorce lawyer prior to signing it.