Can You Lock Yourself Into Non-Modifiable Alimony? (Discussion w/RIO ROCKET)

Sydney Mitchell:

Hi. My name is Sydney Mitchell.

Matthew Brickman:

Hi, I’m Matthew Brickman, Florida Supreme court mediator. Welcome to the Mediate This! Podcast where we discuss everything mediation and conflict resolution.

Matthew Brickman (00:10):
What was interesting when I went to the Alimony Reform conference is so many of the people that were upset with these lifetime alimony award, uh, awards, number one, they were by contract. So that means that they created that and agreed to it, either prenuptial, postnuptial, or mediation. They were not, uh, while their agreement became an order of the court, it was not an order from the court. It was not that they argued and a judge said, okay, I’m hitting you with lifetime and you can’t modify it and haha sucker and get outta here. And now that person years later is wanting to retire and they can’t retire because they’ve got this lifetime obligation that they can’t modify.

Matthew Brickman (01:14):
Well, you’ve gotta go look at the statute. And the statute does not say that Alimo lifetime alimony is non-modifiable. In fact, it actually says it can be modified. Well, so how did you end up getting non-modifiable lifetime alimony by agreement? Because a judge can’t order it. That’s reversible error. So wait a second. You’re off at the agreement that you entered into. Well, why did you enter into that agreement? That’s a bad deal. I don’t know. You know, maybe they traded something in equitable distribution. Um, I was telling you about the one mediation. Um, we’ll, we’ll, we’ll, we’ll let the listeners in on this one. Mediation I had years ago where the husband was the big earner. Let’s go back to our million 40,000, right? Okay, let’s reverse it back to husband’s making a million, right? And it’s his own company. And this was back when alimony was tax deductible.

Matthew Brickman (02:16):
He’s looking for any, like, like a lot of people looked at, um, alimony, um, like a tax shelter <laugh>. You know, it’s like, is that a tax shelter? Can I use that to my advantage? Oh, I could write all of that off, no problem. In fact, let’s make all of it alimony, none of it child support, let’s just call it all. And of course, the wife or the mom wouldn’t want it all called that because she’s gotta pay taxes on it. It’s not free money. Whereas child support was, but he was looking basically for a tax shelter. And he was younger and he was like, dude. And, and he actually was one of the few that was like, I know that I have exposure. I know that I’m gonna be paying a long time. I don’t care. Because he had the mentality of, I need a tax shelter.

Matthew Brickman (03:04):
I’ve got this booming business. I’m buying her out basically. So fine, well, fast forward years later, I have him back in mediation. Well, for what? Well, he’s remarried and his wife, his new wife is off that there’s this lifetime obligation to pay her all this amount of money. Cuz she’s looking at it as that’s taken away from our family. Which is true. Well, don’t give it to her. Fine. But here’s the deal. Now he’s wanting to retire, which means he doesn’t need that tax shelter anymore. The problem though was at the time, years ago, he was like, I’m gonna be running this company until the day I die. I ain’t getting remarried. Marriage sucks. I’m getting divorced. I’m never doing this again. Yeah, yeah, yeah. May I can write all that off. That’s a business writeup. Absolutely. So he signed that contract. It’s a contract, and he put the term in there non-modifiable.

Matthew Brickman (04:07):
Okay, well now he wants to change it. Okay, well if you had just like, his worst day in court would’ve been lifetime modifiable. Mm. The judge can’t do non-modifiable. So what I, what I heard at this conference was so many of the people in there had a lifetime non-modifiable term in there. Well, as a mediator, I’m going, but the statute provides that you can modify. Why do you have a non-modifiable term? Answers were all over the board. You know, they bought out an equitable distribution over time. Um, and they agreed to those terms. And so my job as a mediator is not to give legal advice. My job is to give information. And I tell people, RIA, you may like what I tell you. You may not like what I tell you, but I will not not tell you something. You choose not to settle.

Matthew Brickman (05:09):
You choose to go in front of a judge, something goes sideways and you’re like, oh, why didn’t somebody warn me? Mm-hmm. <affirmative>, I’m that yellow blinking light going warning, warning. Like, here’s your possibility. So in my mediations, I’m not there to give ’em legal advice, but I’m there to say, okay, what? You know, well, let’s look at the statute. And I, I can’t say the statute says, and you need to, but I give information. So I’m like, let, let’s go on a field trip. Let’s look at the statute. And we look at the statute and it says, okay, lifetime. Well, first off, there has to be a factual finding, okay? And the court has to see that the other forms of alimony or combination of the other forms are inappropriate. And then it could, cuz it says may could be lifetime, but it doesn’t say it’s non-modifiable. It says it can be modified. So, all right, now that you have all that information, you’re free to make your own decision. And Rio, I’ve never had anybody that voluntarily said, sign me up for non-modifiable lifetime. I have had non-modifiable duration.

Matthew Brickman (06:27):
And w the reason for that is because they may negotiate a lower amount. If we go back and look at our chart, remember it was about 19 five, right? Or what they would say is 19 five. All right, so let’s see. So what did we say? It’s a 20 year marriage. Yeah, 20 year marriage. So potentially it could be a longer duration, depending, right? It could be more than 20 years, but fine, they negotiated maybe instead of 20, no, it was 19 five plus child support. So it was about $20,000. So maybe instead of 19, five a month, I’ll give you 30 a month, but for 10 years, and I’ll make it non-modifiable. So they buy themselves out of potentially lifetime, even modifiable. But lifetime, buy your exposure. I’ll give you more. Like I will front load your alimony and I’ll give you a term that you will never get by statute in order to limit my potential exposure. There’s so many different reasons for why someone might do that. And I’ve had that where they have put in a non-modifiable term, I’ve never had non-modifiable lifetime.

RIO ROCKET (07:57):
Yeah. So you’re saying essentially non-modifiable lifetime alimony is usually something someone agreed to in exchange for something

Matthew Brickman (08:07):
Else.

RIO ROCKET (08:08):
Like, but, but maybe, so one possible scenario is the instant gratification of, well, I don’t, I don’t have to pay so much right now upfront, I’ll trade it for, oh, hey, and you know, instead of me giving you all this upfront <laugh>, instead of you getting, you know, a house car and kids and every, all, all the things that I could possibly give you upfront, let me have some of that. I’ll just pay you for the rest of your life.

Matthew Brickman (08:32):
Well, and, and, and you know what, I would imagine, I haven’t seen it, but I would imagine, let, let, let’s stick with our scenarios. Everyone just sticks with the same numbers, same scenario. Let’s say that alimony is 19 five,

RIO ROCKET (08:46):
Right? Okay.

Matthew Brickman (08:49):
So you know what, maybe they say instead of potentially 19 five for lifetime, all agree, you know, and, and, and it’s not. And it, and it’s modifiable. And they’re like, no, no, no, I want more or less or whatever. But they agree. Look, I’ll give you 10, but for life and not modifiable, I mean, people, people contract to do things all day long. You agree to a lesser amount and make it lifetime. And, and look on the other side, you’ve gotta, you know, as a mediator, I I, I have to look at both sides, you know, for him, he would be buying a lesser amount, even though it’s longer and it’s locked in for her. You know what? She’s getting a certainty for bills and expenses, and she’s getting finality without having to pay her attorney for a chance. Not to mention in a court it would be modifiable, right?

Matthew Brickman (09:48):
And she’s by. And so, you know, and, and here’s the other thing for the receiver, let’s say that he’s, let’s say that he’s the one making a million. She’s making 40. She wants alimony. It is a hundred percent her burden to prove her need. Not hard, your Honor. Here’s my bills and my expenses. Like here’s my need. But she also has to prove his ability. He doesn’t have to defend this. She has to prove, if she can’t prove his ability for 19 five, she’s not getting it. She has to prove that that’s a huge burden. That comes with a huge expense. That means that she’s having to pay her attorney tens of thousands of dollars. And most likely not only, uh, you know, in, in a big money case like that, not only are they paying their attorneys, they’re most likely paying forensic accountants. Mm-hmm.

Matthew Brickman (10:39):
<affirmative>, those are, you know, seven to 10,000 just to get started. Um, and they are probably paying, well, she’s, she’s paying her attorney. And not only is her attorney gonna be requesting discovery going, give me all your bank accounts, give me everything but just a c y a, they’re probably gonna be subpoena filing subpoenas just to make sure they got ’em. Sh all of ’em straight from the bank, the lending institution. I mean, it’s costly. And so for her to be like, okay, I may take a little bit less, I won’t have my exposure or my burden. I mean, people do strange things in their negotiations all day long. Um, it’s, yeah. I mean, or, or yeah. You know what, just, just like you said, he may want to keep more of the toys and pay her a bigger amount because he doesn’t wanna refinance the home.

Matthew Brickman (11:40):
You know? I mean, right now, as we sit here, right now, people are getting creative and buying people out of other things because they don’t wanna refinance because their home is at 3%. And right now, if they’re gonna refinance, they’re a seven. And now if, and, and, and what’s interesting is they can afford the mortgage where it is. If they have to refinance, then you know what? They can’t even keep it because the monthly amount, it’s sort of like a lot of people do not go into a dealership going, all right, I need to find the $20,000 cars, cuz I know I can afford that. They’re gonna go in there going, I want this car. And what do they ask? Not what’s it, you know, not how much is it? What’s my monthly payment?

Matthew Brickman (12:22):
It’s the same thing we deal with as you know, what not, okay, over, over this much time, how much am I gonna give them? No, what’s my monthly payment? And so, you know, can I afford? And that’s why it’s need versus ability to pay. Mm-hmm. <affirmative>. Um, one of the other things that we have, um, one of the other things that we have at our disposal, um, and we’ve got a lot at our disposal and mediation to help people figure this out, is we have an alimony present value buyout. So we could put in there and say, okay, well let’s say for example that it’s 19,005, right? And then how many months? So let’s just say that, um, let’s just say that he said, look, I’m not paying you a dime longer than this marriage, right? 20 years. So that’s what, um, uh, 20 years times 12 months, that’s 240 months, right?

Matthew Brickman (13:31):
So that’s a present value after tax is 4 million 718, 750 $1,000. Buyout. Uh, that gets paid when well may, maybe, maybe he wants to pay it upfront. Maybe he wants, or maybe he wants to give her the home and all of his equity as part of this buy down to lower the monthly or negotiate the potential exposure for how long it is. Again, most, I mean, if we, if we look at Florida law in the statute lifetime, non-modifiable is not part of the statute. So if someone’s got a non-modifiable term, most likely they negotiated that in their, in their, in their final settlement. They agree to it. And you’ve gotta look at their entire agreement to understand why. And you may not see it because it’s not explicitly written. I am giving this in exchange four. Right? And being that we don’t have to produce all of these charts and stuff, stuff in their settlement agreement, you’re not gonna see, okay, well there was an unequal distribution. You know, we may say, Hey, he’s awarded the home and there’s no equitable distribution buyout. We don’t get to see all these things. It’ll say, you know, he’s taking his debt, she’s taking her debt, he’s getting this asset, she’s getting this asset. And then here’s the alimony amount.

RIO ROCKET (15:11):
Okay? So yeah. So in other words, you don’t ever see something in, in writing where it says, Chad traded this for non-modifiable lifetime alimony. It’s just, you have to look at the entire document. And if you do it well enough, you’ll find out that there was something of great value, at least to Chad, that <laugh> in which he was willing to trade for non-modifiable, because that’s selling his soul essentially.

Matthew Brickman (15:39):
Now, now, Rio, um, and, and the people that listen to this that have had me as their mediator and the people that listen to this, that are going to get me as their mediator, I am all about not what you want to do, but why do you want to do it? Because people can get positioned in a negotiation. People can get very positioned in what I want. So I always, I always talk about, uh, the game, hungry, hungry Hippo.

RIO ROCKET (16:13):
Mm-hmm.

Matthew Brickman (16:13):
<affirmative>, right? The little hippos and the Marvel kids game. That’s mediation. That’s most divorces. Um, sometimes that’s a lot of marriages, just the marriage itself, where you go in with a consumer mentality. You know, if I did that with my wife, we would already be divorced. I would tell you, if I went into our marriage going, well, I need this to fill to, to feel fulfilled, right? And she’s going, well, I need this to feel fulfilled. Okay. I can give you that for the rest of my life. No, I can’t. I’m not, I’m not built like that. I’m human. I’m going to fail. And as soon as I don’t meet her demand or her need, guess what? Resentment, entitlement, conflict. And then guess what I stopped doing? Well, if you’re not gonna meet mine, oops, I am meeting yours either. Mm-hmm. <laugh> consumer mentality, and the whole thing falls apart. We crash the plane. No wonder half of ’em fall outta the sky. Right? But if I go into it going, all right, what do you need? I can give that to you. Well, what do you need? Yeah, I can give that to you. Okay, well, we can actually create value. And if I’m always giving to her, and then she’s always given to me, which means I’m always given to her, which means she’s always given to me. Neither of us are without

RIO ROCKET (17:35):
Mm-hmm.

Matthew Brickman (17:36):
<affirmative>, that’s not most mar marriages, most relationships. And it certainly is not a divorce. A divorce is hungry, hungry hippo. Resources are scarce, emotions are high. I’m gonna hit that hippo as hard and as fast as I can to grab as many marbles as I want. Now at the end of it, okay, how many marbles did you get? Did you get everything you wanted? Sometimes people get stuff they don’t even care about, but they got it. And it’s like, okay, now what? Well, you got it. Okay. We had 18 marbles, you just get nine. Did you get everything you wanted? No, not really. And then you, and then what happens is, subliminally Rio, we leave things of value still sitting on the negotiation table because we didn’t talk about what, or all we did is talk about what, we didn’t talk about the why behind the what.

Matthew Brickman (18:26):
And I’ve given the, the analogy before in mediation, and I think I’ve done on one of my podcasts where we talk about the lemon, where, you know, husband and wife are getting divorced, they’re arguing over the limit. Or I went the lemon, I went the lemon. Well, I found, I, you know, I’m the one that found the house. Well, I’m the one that put most of the down payment. Well, I’m the one that, you know, went to Lowe’s and bought the tree. Well, I’m the one that planted, well, I’m the one that keeps watering it. They get lemons, they can’t figure it out. They go in front of a judge, judge goes, you have one lemon. The two of you cut it and have, get out. And on the way out to the parking lot, husband turns to the wife goes, what? You want the lemon for it? Well, I wanted the pulp. I was gonna make lemonade. Would you want it for? Well, I wanted toine. Oh, well, if we had talked about why we wanted it, we would’ve created value. You would’ve gotten a hundred percent of what you were looking for instead of getting 50% of what you don’t care about.

Matthew Brickman:
Occasionally Sydney and I will be releasing Q & A bonus episodes where we will answer questions and give you a personal shout out.

Sydney Mitchell:
If you have a comment or question regarding anything that we discuss, email us at info@ichatmediation.com that’s info@ichatmediation.com and stay tuned to hear your shout out and have your question answered here on the show.

Matthew Brickman:

For more information about my services or to schedule your mediation with me, either in person or using my iChatMediation Virtual Platform built by Cisco Communications. Visit me online at www.iMediateInc.com. Call me at 561-262-9121, Toll-Free at 877-822-1479 or email me at MBrickman@iChatMediation.com.