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Jerry Reiss ASA**

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1st Step (Essential)
Benefit Valuations
QDRO'S
Legal Malpractice
Transmutation Issues
Marital Property
  • Measuring Marital Property
 
The measurement of marital property is very complex.   It requires applying complex legal principles to different properties.   Congress recognized that this skill is critical in protecting employee's right to retirement benefits.  It created very strict licensing requirements for actuaries.  This same skill used to protect retiree interests can also be used to measure the proper marital value of real estate, liquid funds and certain business properties.  An under-valuation of marital property means one spouse is shortchanged.   An overvaluation of property means the other spouse is shortchanged.  Either occurs almost all the time.   This results in one spouse being shortchanged.   This occurs often because the experts retained lack proper discipline to undertake correct valuations.
 
  •  Property is Presumed Marital
 
It is the burden of the spouse who claims a non-marital component to demonstrate it.  Because property is presumed marital, failure to demonstrate a non-marital portion transmutes the property into marital property.   Sometimes this burden is met with a prenuptial agreement defining what is non-marital property.   Sometimes this burden is met by methods of tracing funds.   But tracing funds requires an understanding of the law and the issues involved.   In some circumstances, the method is defined by statute. Transactional tracing is often confused with tracing funds.  The first is used in overcoming a presumptive gift by demonstrating intent.  The second is used in establishing a non-marital portion. When the two are confused (which occurs more often than not) the marital property is vastly overstated.


Non-marital Property can create marital property when it appreciate only because marital effort was used.  It can be changed into marital property when it is commingled inside a joint accounts or held in a tenants by the entireties account.  It can be changed into marital property through an inability to calculate a marital portion.  It can be changed by securing a marital loan and repaying the loan with marital money.  The latter occurs with great frequency with both 401(k) plans and real estate initially outrightly owned by one party.  For all of these  reasons how you fair in court is directly linked to the quality of the expert you retain.




 Spousal Support

 

  • Spousal support is determined  by comparing the Marital Standard of Need to the other spouse's ability to pay.
  • Ability to pay reflects that spouses marital standard of need 

 

Measuring the Marital Standard of Need

 

 Do not be mislead that this is an easy computation. While the court has broad discretion in determining the amount of support, the underpinnings  of the award it makes are based on the level of skill deployed in these measurements.  When the amount of the award is reversed on appeal, it is more often than not these measurements which are wrong.  An appellate court seldom reverses a discretionary decision of the court.  Measuring the marital standard of need requires an in-depth understanding of how the marital statutes define need.   It also requires applying the statutes to measure the need.  Both involve skill.

 

 

Ability to Pay

 

Ability to pay requires an in-depth understanding of income and all its related components and how that income is related to the way marital property is divided.  When the ability to pay is undervalued the court is unable to award a sufficient amount.  When it is overvalued the alimony award can be excessive.  Undervalued income often results when income is not imputed when warranted. When and how much to impute is a complicated matter and very often determined incorrectly.   Overvalued income results by confusing an income stream with actual income.  An income stream includes repayments of principal such as repayment of a note, the coupon rate of a bond and an annuity payment.

 

It is also overvalued when it is counted elsewhere in the equitable scheme.   When proper measurements are not made the court makes the awards without proper guidance.   (There is a Florida Bar Journal article covering the topic of alimony and the issue of ability to pay in the publication links section.   Jerry Reiss & Michael Walsh, The Mathematics for Imputing Income, 80 Fla. B. J. 64 (July-August, 2006) ).  This specific article is cited as authority in West Law's Annotated statute of alimony,  F.S. 61.08 (2006).

 

 

 The Division of Marital Property is interrelated to the Alimony Amount

 

  • The expert you retain must be thoroughly versed in the statutory definition of marital property and all its components.
  • The expert should be thoroughly versed in the spousal support statute.

 

This requires a  complete understanding of the statutory definition of income as well as how the income is  directly related  to  the valuation  of  the  property that produces the income.   Only when the expert knows both can proper measurements of either be made.   For example, how can an expert lay claim to qualifications   to   value   a   stream   of   income   that   requires   retirement   for   its   receipt   without understanding how to factor into that calculation the case law that prevents the person paying support from retiring before a certain age?  The plain simple fact is most experts do not know proper valuation techniques nor do they observe the law that governs the calculation. This leads to substantial over and under-valuations of property.   This error compounds because support payments are directly related to the valuation of property.   How can a person claiming expertise with support lend proper assistance without understanding retirement plans and the way they work? Income and the ability to pay spousal support cannot be determined without first determining the amount of marital assets and how they will be divided. This is required by statute. Either extra support payments or an unequal division of marital property  and  sometimes both correct  marital assets  dissipated  from  marital misconduct.   Who pays attorney's  fees  is  determined  with  very  similar  principles  as  alimony is.  Except  the very  right  to alimony is determined by the court by considering a laundry list of statutory factors; whereas an award of attorney's fees is determined under principles of due process of law.

* Listed in Best Experts in America® for Family Law.    2007 - 2012