If you are an executive or senior manager of a business, then there is a reasonable chance that the income you receive from your work comes in payments that are a bit more complex that just X dollars per hour or Y dollars per year. You may receive a combination of salary, commissions, bonuses or other payments that are, when taken together, structured to represent your true compensation. This can potentially create challenges, however, if you go through a divorce. The precision of your marital settlement agreement may make huge differences in matters like alimony, as the exact definitions used may alter how much you are legally obliged to pay. When it comes to negotiating or enforcing a marital settlement agreement as a corporate officer or manager, be sure to look to a South Florida family law attorney experienced in handling scenarios like yours.
Take, for example, the case of D.W. and his wife H.W. The husband was a corporate executive and he was “subject to different compensation programs.” At various times, he received a base salary, income deferrals, and the opportunity to receive performance-based bonuses.
When D.W. and his wife divorced, they entered into a marital settlement agreement that resolved, among other things, alimony. The agreement stated that the husband owed the wife alimony in the amount of 30% of the husband’s gross income. The contract defined gross income as “periodic income that Husband receives as a direct result of his employment efforts, before considering any deferrals and tax affected retirement savings husband may elect to have deducted from his pay.”
This wording came to be very important, as the wife eventually returned to court asking the judge to hold the husband in contempt. The wife’s argument was that the husband was paying her 30% of his income after deferrals were made, which was below the amount required by the agreement.
The husband argued that the agreement was clear regarding what amount he was required use to calculate his alimony and that he had actually paid more than what the agreement demanded. The trial court agreed, but the Court of Appeal sided with the wife in her appellate case. The problem that led to the successful appeal came down to the wording in the agreement.
The appeals court ruled that the MSA was ambiguous. Ambiguity exists if there is more than one reasonable interpretation of a contract provision. In this case, there were two, according to the court. Specifically, the court explained that the phrase “periodic income” could be construed to mean payments that the husband received in regular intervals and were guaranteed to him. Alternately, periodic income could reasonably be construed to mean pay that the husband received “repeatedly from time to time,” including bonuses and incentive pay.
The existence of multiple reasonable interpretations changes the way that a case is litigated and decided by the courts. If there’s only one reasonable interpretation, then the judge makes a decision considering only the contract document itself. If there are multiple reasonable ways the agreement can be construed, then the court holds a hearing and the spouses are entitled to bring in additional evidence to persuade the court regarding the best interpretation of the agreement. In this case, that meant that another hearing and more evidence were required.
For advice and counsel regarding your alimony, equitable distribution or other divorce issues, consult the skilled South Florida family law attorneys at Stok Kon + Braverman. Our experienced team has been helping clients protect their personal and business interests in high-asset divorce cases for many years.
Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.
More blog posts:
Florida Wife’s Alleged Misconduct Allowed Husband to Pursue Separate Divorce, Breach of Contract Actions, Florida Business Lawyers Blog, Nov. 8, 2018
Dealing with High-Value Asset Items (and High Expenses) in Your Florida Divorce, Florida Business Lawyers Blog, June 2, 2017