What are equalizing payments in a high net divorce?

In the absence of other provisions between spouses, an equalizing payment in a high net worth divorce is made by one spouse to the other to ensure an equitable distribution of assets and debts.

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Florida is an equitable distribution state that deals with the identification, appraisal, and distribution of marital assets and liabilities. Without a prior agreement between the spouses, all marital assets and liabilities are to be fairly distributed among the parties in the event of a high net worth divorce.

The typical situation is that one spouse is set to receive more than the other because some property assets simply cannot be equitably divided. In such an instance, the assets will either be sold to allow the split of the profits, or one of the spouses will keep the asset and the other will receive something of comparable value.

To ensure the marital estate is equalized (there is no imbalance in joint property assets), one spouse will typically owe the other a lump sum payment. This amount is usually paid over time and is referred to as an “equalizing payment”.

Suppose the wife is awarded assets and debts that leave her with less equity in the entire marital estate than her husband. In this situation, the husband would owe his wife an equalizing payment.

Equalizing payments in high net worth divorces

During mediation or at trial, each party in the high net worth divorce will present their evidence and claims as to the worth of the marital assets and their share of the division. These aspects are usually reflected in the marital balance sheet. In most situations, the court’s order will leave a shortfall in the division of marital assets, so an equalizing payment will be required to meet the fair and equitable division.

If you are the party that must provide the equalizing payment, you need to make the best of a challenging situation and carefully develop a payment plan along with specific payment terms under the guidance of your lawyer. The trial court will consider a just and reasonable equalization payment strategy.

Equalizing payments are usually enforced through traditional debt collection procedures such as:

  • garnishment
  • attachment
  • lien

In some situations, one of the spouses agrees from the start to an inequitable division of the marital assets. This means that the individual chooses to waive receiving the equalizing payment either out of generosity or for the sole purpose of moving on from the divorce. There are few benefits to going through a long, drawn-out high net worth divorce.

A Florida high net worth divorce can incorporate many issues that require careful presentation to the court. Your marital settlement agreement requires careful review and consideration of the included terms. Attorneys with experience in equalization payments can assist with determining and documenting marital assets when going through a high net worth divorce. Schedule a free consultation with our Miami high net worth divorce lawyer, owner and principal at The Law Offices of Sean M. Cleary to discuss the specifics of your case.

Disclaimer: Please note that the information provided on this site is not formal legal advice, also the site does not allow you to form an attorney-client relationship.