Alimony for the Heiress? Imputing Income to Assets

The increase in late-in-life divorces among baby boomers in the U.S. has led to questions about how to divide assets and determine alimony. The court must consider all the assets and income of both parties, including property acquired before and during the marriage, as well as inherited or gifted assets. This can be complicated when trying to determine what income should be attributed to each asset. For example, is a vacation home worth the same as a stock portfolio with the same value? The court also has to consider cash and liquid assets, but there are some complications when these assets have been used to pay for legal fees or housing. In divorce cases, both spouses should not be allowed to hide their money in investments that don’t make much money. The law says that both spouses have to use their skills and money wisely, and can’t try to avoid paying their fair share. For example, in one case, a husband who was good with money was making very little from his investments, so the court said he had to use his money better and pay more to his ex-wife. The same goes for real estate – if one spouse is renting out property but not making much money from it, the court can say they need to try harder or pay more. In a New Jersey case, a person received a lot of money and used it to buy a big, expensive house. They then said they couldn’t afford to pay support. The court said that the money in the house should still be counted as income, and they should pay support based on that. In another case, the court said a big house wasn’t necessary for the person, so they had to sell it and split the money with their ex. Another person argued that income should be counted from their money in the bank, but the court didn’t agree because they didn’t give any evidence. The California courts have decided that when it comes to financial support, real estate is treated the same as any other investment. This means that even if a property isn’t making money, the court can still consider it as a source of income. This decision was made in the case of In re Marriage of Destein in 2001. In a California case, the court ordered the husband to pay support based on the potential sale proceeds of land he owned, even though he was only living on a portion of the land. In Florida, courts generally do not consider income from retirement accounts when calculating support, but some courts have started to do so. This means that a spouse with a retirement account could continue to increase their savings while receiving alimony. When a retirement fund’s earnings are not considered as part of the income, one spouse may end up subsidizing the other spouse’s savings. This goes against the policy of alimony, which is meant to provide for current needs, not to build up savings. When calculating imputed income, courts look for reasonable and safe investment standards. They don’t want to see risky investment strategies that could result in losing money. The goal is to make sure both spouses are receiving a fair amount of income, not to change their investment strategy. Some courts in Florida and New Jersey have mandated specific rates of return to calculate income for divorce cases. In one case, the court used the U.S. Treasury note rate to impute income to a wife who gave away her inheritance. In another case, the court used Moody’s Composite Index on A-rated Corporate Bonds to establish a rate of return. Some cases have also looked at the historical investment patterns of the parties to determine a reasonable return. Some states have set a standard rate of return for figuring out how much income should be imputed to investments and assets. This helps to make sure that people aren’t losing money on their investments just to pay alimony. When figuring out how much money someone needs for support, the court should look at all their assets and use a standard rate of return to calculate their income. This rate should be easy to figure out and should give a reasonable, safe, and consistent return. For example, the 10-year U.S. Treasury Bill rate could be used. After figuring out the total income, a decision will be made on how much support should be given based on historical needs. Both parties can choose how they want to spend or save their money without interference from the other person or the courts. This is a list of legal cases and statutes related to divorce and financial matters. It includes information about how retirement accounts are divided in divorce, as well as how investment returns are calculated and considered in alimony decisions. It also mentions laws related to investing and alimony payments. William H. Stolberg and Jane Hawkins are experienced family law attorneys in Ft. Lauderdale. They have been practicing law for a long time and are experts in handling family legal matters. They are part of the Family Law Section and are dedicated to serving the public and improving the justice system.

Source: https://www.floridabar.org/the-florida-bar-journal/alimony-for-the-heiress-imputing-income-to-assets/