What Is An Equalizing Payment?

The State of Florida is an equitable distribution state in which marital assets and liabilities are equitably distributed upon divorce. See Florida Statute 61.075. Many people think equitable means equal, however, equitable means fair. When there is no prior agreement entered into such as a prenuptial agreement or postnuptial agreement, the marital assets and liabilities will then need to be fairly distributed between the spouses when they decide to divorce.

As there are often multiple assets, such as homes or businesses, that sometimes cannot be equitably divided. This means that one spouse could receive more money in the divorce than the other during the equitable distribution scheme that will be completed in accordance with Florida Statute 61.075. See Florida Statute 61.075. So how does the court ensure fairness under equitable distribution? While each case is subjective and “no size fits all” with an agreement, there are a few legal resolutions to his scenario. 

First, the value of the asset would be calculated so the other would be awarded a comparable value. This would either be done by refinancing the property, typically the marital home, (if applicable) and providing the spouse with an amount equal to their share of equity or providing another asset within the marital estate of equal value. If the parties are unable to agree, the court will sometimes order partition of the asset. This means that the asset would be ordered to be put for sale, and the parties would split the profit. 

Additionally, to “equalize” the marital estate and ensure there is no imbalance in the joint marital assets, one spouse may sometimes have to then pay the other spouse a lump sum payment. The Florida courts have found that “[a] lump sum equalizing payment to accomplish equitable distribution ‘is properly awarded only when the evidence reflects a justification for such an award and the ability of the paying spouse to make the payment without substantially endangering his or her economic status.” Fortune v. Fortune, 61 So. 3d 441, 446 (Fla. 2d DCA 2011). This amount is sometimes paid overtime or taken out of the sale of an asset. This payment is referred to as an “equalizing payment” or “equalizer payment.”

However, there are limits to equalizing payments as found by the Florida courts in Sanders v. Peterson-Sanders, 4D20-2082 (Fla. 4th DCA May 26, 2021). The spouse ordered to pay an equalizing payment must have the ability to pay it. This means both spouses assets and debts will be reviewed, especially those divided upon the divorce. If you are the spouse who is ordered to pay an equalizing payment, make sure you abide by the court order. Develop a payment plan with specific terms with your attorney to be included in your agreement to ensure everyone involved is aware of the terms of the payment. If you fail to pay your equalizing payment the court may order your wages to be garnished, personal property may be taken, or a lien may be issued to satisfy it.

It is important to seek advice from an attorney who has experience with equalization payments, especially in high net divorces as they will be able to identify and calculate your marital estate properly.

If you or someone you know is seeking advice on divorce matters, you can speak with one of our family law attorneys at the Yaffa Family Law Group at 561-276-3880 or visit our website at www.yaffafamilylawgroup.com to schedule your confidential complimentary consultation.