Posted by Nydia Streets of Streets Law in Florida Divorce

Equitable Distribution and alimony and two common components of a Florida divorce, especially when the parties have been married for a long time. Alimony must be based on the net incomes of the parties, and factors such as the age and health of the parties, and the lifestyle established during the marriage have to be considered. Distribution of marital assets and debts begins with the premise that division should be equal, but there are factors that call for unequal distribution. These were issues in the case Ritacco v. Ritacco, 4D19-809 (Fla. 4th DCA January 27, 2021).

The parties were married over 22 years by the time a petition for dissolution of marriage was filed. The wife was a homemaker while the husband was a police officer who supported the family. After a trial, the wife was awarded permanent alimony and the parties’ marital assets and debts were distributed. Both parties took issue with the trial court’s determinations and each cross-appealed the final judgment.

With regard to alimony, the husband argued it was error to award permanent alimony and for the trial court to fail to consider income that was available to the wife from Deferred Retirement Option Plan benefits awarded to her in equitable distribution. The appellate court found there was no error in awarding permanent alimony based on the circumstances of the case, and it further held there was no error in refusing to consider the DROP benefits as income to the wife. The court held “The trial court did not abuse its discretion when it decided not to impute the investment income from the DROP account to the Former Wife. After the trial court considers evidence regarding a 72(t) payment plan, it can decline to impute investment income for equitable reasons. See Regan v. Regan, 217 So. 3d 91, 94 (Fla. 4th DCA 2017). This is because ‘there may be cases where the use of a 72(t) payment plan may yield so little in income as to make it impractical to use as a source of income. . . . [P]ayment plans may [also] prove more costly than the amount of income available.’ Niederman, 60 So. 3d at 550. The trial court considered the interest that could have been generated if Former Wife had elected to receive funds from the DROP account under a 72(t) payment plan, and it was within its discretion to decline to include those funds as imputed income.”

The appellate court did find error, however, in the trial court’s treatment of the husband’s employment benefits in determining his ability to pay alimony. The court held “However, the court erred in considering Former Husband's employee benefits, including health and vision insurance, as income for the purpose of alimony calculation. These benefits are not liquid assets or in-kind payments. See Niederman, 60 So. 3d at 548. The case law that identifies insurance as income relies on section 61.30, the child support guidelines, which has a broader definition of ‘income’ that includes in-kind payments. [internal citations omitted]. Even using this more expansive definition, Former Husband's insurance would not be considered income. The evidence showed that as an employee of PBSO, Former Husband cannot opt out of his insurance benefits and choose instead to have additional income.” The court also found error in the trial court’s use of the parties’ gross income to calculate alimony rather than net, so the case was remanded for these issues to be addressed and alimony to be recalculated.

Next, the husband argued it was error for the court to order him to obtain life insurance to secure the support award. The appellate court disagreed, holding the trial court’s findings that the husband worked in a dangerous field, that he could afford the payments, and that the wife would become destitute without his support were adequate findings to support the life insurance obligation. However, the court found it was error for the husband to be required to also designate the wife as a survivor beneficiary on his retirement account because this would provide a windfall for her. The court held “Former Wife is entitled to half of Former Husband's pension as part of the equitable distribution of assets but if Former Husband were to die, she would be the 100% beneficiary of the pension. As the 100% beneficiary of Former Husband's pension, Former Wife would receive an amount that exceeds her current alimony award. Thus, assigning Former Wife both life insurance and the 100% pension survivor benefit would overcompensate her.”

The appellate court then turned to the wife’s withdrawal of funds from the parties’ HELOC on the date she filed her petition for divorce. The husband argued this debt should be considered separate debt. The wife testified she used the funds to support herself and the parties’ then-minor child because the husband was denying her support otherwise. The appellate court found it was error to classify this debt as marital because “Despite finding that Former Wife incurred these expenses as a necessity, the trial court nonetheless erred when it included a $65,761.00 withdrawal from the HELOC made on the day Former Wife filed her petition for dissolution as a marital debt. Since Former Wife incurred the debt on the day she filed for divorce, the court erred in considering that amount as part of the marital debt.” (internal citations omitted).

Last, the court considered the husband’s argument that it was error to award half of his pension to the wife without considering tax liability, resulting in an unequal distribution to the wife without findings to justify it. The court held “The trial court ordered that Former Husband pay half of his gross pension income to Former Wife without accounting for any tax liability. However, if Former Wife receives half of the gross amount, and Former Husband is solely responsible for the taxes paid on the total amount, then Former Wife receives a significantly larger portion of pension income. See Lopez v. Hernandez, 252 So. 3d 266, 268 (Fla. 4th DCA 2018). This constitutes an unequitable distribution, see Pomeranz, 901 So. 2d at 896, which would have required the trial court to make factual findings that show an unequal distribution is appropriate. See Robbie, 788 So. 2d at 293. The trial court's intentions on this matter are not clear from the record. If the trial court intended for Former Wife to receive more of the pension income, then it was required to consider the tax consequences that Former Husband brought to the trial court's attention and make factual findings that supported such an unequal distribution.”

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