Support, Cash Flow, Taxes, and Liquidity
A woman can have substantial income and still walk into divorce without a clear answer to one basic question:
“What will my life actually cost when this marriage ends?”
That question should be answered before negotiating which assets you want to keep, whether you can maintain the marital home, or what a proposed settlement is truly worth.
Net worth and cash flow are not the same thing.
And a divorce settlement that looks equal on paper may produce two very different financial futures.
One Household Becomes Two
Begin by developing a realistic post-separation budget.
Consider:
- Housing;
- Property taxes;
- Insurance;
- Utilities;
- Health insurance;
- Childcare;
- Tuition;
- Children’s activities;
- Transportation;
- Household assistance;
- Debt payments;
- Professional expenses;
- Travel;
- Taxes; and
- Retirement savings.
Do not prepare the lifestyle you hope to have.
Prepare the lifestyle you can reasonably expect to maintain.
Do Not Assume Alimony Is Only a Husband’s Obligation
Florida’s alimony statute is gender neutral. Either spouse may seek alimony.
The court must first determine whether the spouse requesting alimony has an actual need and whether the other spouse has the ability to pay. If those requirements are established, the statute directs consideration of factors including the duration of the marriage, marital standard of living, resources and income, earning capacities, contributions to the marriage and the other spouse’s career, and responsibilities involving minor children.
Florida currently recognizes temporary, bridge-the-gap, rehabilitative, and durational alimony.
For a woman who earns substantially more than her spouse, possible support exposure should be evaluated before settlement negotiations begin.
Child Support May Also Affect Planning
Where children are involved, child support requires its own analysis.
Florida’s child-support framework considers the income of both parents and recognizes a broad range of income sources. Time-sharing can affect the calculation, but substantial or equal time-sharing does not necessarily eliminate a support obligation.
For families with substantial resources, also identify recurring expenses such as:
- Private-school tuition;
- Childcare;
- Tutoring;
- Therapy;
- Competitive sports;
- Camps;
- Uninsured medical expenses; and
- Other established children’s expenses.
Those expenses need to be part of the post-divorce financial discussion.
The House May Be Valuable—and Still Be the Wrong Asset to Keep
Many people enter divorce emotionally attached to keeping the marital residence.
Before making that decision, calculate its real carrying costs:
- Mortgage;
- Taxes;
- Homeowners insurance;
- HOA or condominium assessments;
- Maintenance;
- Repairs;
- Landscaping;
- Utilities; and
- Future major expenses.
Florida law specifically identifies financial feasibility as relevant when considering retention of the marital home in equitable distribution.
Keeping the house should be a financial decision as well as an emotional one.
Compare Assets by What They Are Really Worth to You
Consider three assets each listed at $500,000:
- $500,000 in cash;
- A $500,000 retirement account; and
- $500,000 of equity in real estate.
Those assets may have the same headline value but very different liquidity, tax characteristics, carrying costs, risk, and accessibility.
A privately held business interest adds yet another layer.
Before agreeing that a division is “equal,” discuss with the appropriate professionals:
How liquid is the asset?
Will selling it create taxes or transaction costs?
Does it generate income?
What will it cost to maintain?
When can I access the money?
What risks am I accepting?
Those questions can matter as much as the stated value.
Build a Post-Divorce Financial Plan Before Signing a Settlement
A thoughtful pre-divorce plan should leave you with an understanding of:
- Expected monthly income;
- Expected support obligations or receipts;
- Housing costs;
- Children’s expenses;
- Debt;
- Insurance;
- Available cash reserves;
- Retirement needs; and
- Which assets can realistically support your future.
The objective is not merely to divide the marital balance sheet.
It is to understand whether the proposed result works in real life.
Use the Perez-Calhoun Pre-Divorce Financial Planning Checklist
Our Pre-Divorce Financial Planning Checklist was designed to help you begin this analysis before litigation forces you to make decisions under pressure.
Use it to organize:
- Income;
- Assets;
- Liabilities;
- Business interests;
- Property outside Florida;
- Insurance;
- Retirement accounts;
- Children’s expenses; and
- Your anticipated post-separation budget.
Then bring those questions to your consultation.
Allow Perez-Calhoun Law Firm to Help You Plan What Comes Next
You worked hard to build your career, your financial independence, and the life your family enjoys.
If divorce is being considered, you do not have to wait until a petition is filed to begin protecting your future.
Allow Perez-Calhoun Law Firm to help you with your pre-divorce planning before major financial decisions are made.
We can help you identify the questions that should be addressed, organize the financial issues involved, and determine when additional financial, tax, accounting, or valuation professionals may be appropriate.
Pre-divorce planning is not about preparing for a fight. It is about preparing to make informed decisions.
Contact Perez-Calhoun Law Firm to schedule a confidential consultation and download our Pre-Divorce Financial Planning Checklist to begin preparing today.
This article provides general information regarding Florida family law and is not legal, financial, tax, accounting, or investment advice. Every dissolution matter is fact-specific.
