What are equalizing payments and how can an attorney help to ensure equitable distribution. Read attorney Martin Deptula’s recent article in the Tampa Bay Business Journal for more.
When people think about divorce most people are drawn to the issue of alimony and, if children are involved, timesharing and child support. In Florida, however, the issue of equitable distribution is equally important and can raise subtle and sophisticated issues in both corporate and commercial sectors. These issues must be handled correctly to ensure a full and complete recovery.
Equitable distribution deals with the identification, valuation and distribution of marital assets and liabilities. Florida law presumes that, in the absence of an agreement between the parties, all marital assets and liabilities should be equally distributed between the parties. In order to equalize the marital estate, one spouse typically owes the other spouse a lump sum payment, that is usually paid over time. This payment is referred to as an “equalizing payment.”
Unlike alimony and child support payments, which can be enforced through a contempt proceeding and the threat of incarceration, equalizing payments are nothing more than money judgments, that can only be enforced through traditional debt collection methods, such as garnishment, attachment or a lien.
Essentially, the spouse who owes the equaling payment is the debtor, the recipient spouse is the creditor, and the debt is unsecured. Moreover, if an equalizing payment is ordered by a court, after a final hearing, the court cannot secure the equalizing payment, which leaves the recipient spouse, usually the wife, in the position of husband’s unsecured creditor.
In order to avoid this situation and ensure that the equalizing payment is paid in a timely manner, there is value to reaching an out-of-court resolution and securing the equaling payment with a promissory note, a note and mortgage or a collateralized security agreement. If the equalizing payment is significant, a surety bond can be used to secure its satisfaction.
I recently negotiated a resolution that required a husband to execute a quit claim deed that conveyed his home to my client, the wife. This deed was held in trust until the husband satisfied the equalizing payment or defaulted on his obligation. If the husband satisfied his obligation the deed was destroyed, if he defaulted on the equalizing payment the deed and the husband’s home was conveyed to the wife. These types of security instruments and agreements are invaluable and should be incorporated into a marital settlement agreement that involves an equalizing payment.
Of course, the payor spouse must agree and may require something of value, such as a discount or reduced interest rate, in exchange for securing the obligation. In addition, these types of security agreements must be incorporated into the marital settlement agreement and executed by the parties at the same time the marital settlement agreement is signed.
Most divorce attorneys are not comfortable drafting these sophisticated transactional documents and outside counsel should be retained. Fortunately, at Older Lundy Koch & Martino, we have a fully staffed corporate and transactional department that can be engaged at any time to draft the documents and agreements that may be needed to fully secure an equalizing payment.
Older Lundy Koch & Martino, founded in 2003, is a full-service law firm with offices in Tampa, Clearwater, Dade City, Trinity and Wesley Chapel. No matter what the issue is, Older Lundy Koch & Martino attorneys will have a precise understanding of the client’s needs and will deliver customized solutions. To set up a consultation with Martin Deptula, visit https://www.olalaw.com/contact-us/
Martin Deptula uses his extensive experience to vigorously represent clients in complex family law and commercial litigation. To learn more about him, visit www.olalaw.com/meet-our-team/martin-deptula