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How to divide assets and liabilities in a Florida divorce

House dividedIt is easy to get lost in the various financial and asset disclosure requirements that are imposed by Florida law.  A great deal of financial information and documentation can be needed in order to complete the divorce, depending on the extent of the marital estate and the complexity of the parties’ finances.

Florida utilizes the “Equitable Distribution” standard when dividing assets and liabilities.  This article will outline the general rules and requirements for “equitable distribution” of a marital estate in the State of Florida.

Generally, property includes assets and funds.  Assets include real estate, personal items, bank accounts, retirement accounts, accrued sick and vacation pay, intellectual property (patents, trademarks, and copyrights), stock options, businesses and business interests, and tangible personal property (e.g., cars, jewelry, guns, art, and pets). Liabilities, which are also subject to equitable distribution in a Florida divorce, include any kind of debt such as a mortgage, student loan, credit card debt, tax liens, car loans, etc.

Contact our attorneys today to discuss your rights!

Step One: Distinguish Marital and NonMarital Property

If a given piece of property was obtained during the marriage, with marital funds or labor, it will typically be treated as marital property.  As such, the court will presume that an equal division of the property is fair and equitable. Examples of marital assets include:

  • Real property held as tenants by the entirety;
  • Personal property held as tenants by the entirety;
  • Gifts from one spouse to another;
  • Insurance benefits acquired during the marriage;
  • Any appreciation or enhancement in the value of non-marital assets;
  • Pension benefits, workers’ compensation benefits, social security income, interests in pending lawsuits, and stock options acquired during the marriage.

Nonmarital property includes any assets or liabilities before or after the marriage, or from sources that are independent of the marriage, such as an inheritance. In some limited instances property acquired during the marriage is also considered a spouse’s nonmarital property.  Unless steps are taken to change the title or the value of the property in the marriage, the following types of property are generally considered nonmarital assets:

  • Assets or liabilities that a party possessed prior to the marriage;
  • Assets or liabilities acquired during the marriage, but through an exchange for a nonmarital asset;
  • Income derived from nonmarital assets during the marriage (unless the income was used as a marital asset);
  • Any assets and liabilities that are excluded from being considered as marital property under a valid written agreement, such as a prenuptial agreement; and
  • Any liabilities incurred by the fraud of one of the spouses (that spouse is responsible for the liability);
  • Assets that were inherited;
  • Assets or liabilities that were obtained after the filing of a petition for dissolution of marriage.

Converting Nonmarital Property to Marital Property

Nonmarital property can be converted into marital property. This can happen if nonmarital property is retitled from one spouse’s name into both spouses names, or when nonmarital property is comingled with marital property, and the value of the marital and nonmarital assets becomes indistinguishable. This commonly occurs when spouses open a joint bank account and add nonmarital funds to the account. In both retitling and commingling situations the entire value of the property is converted into marital property.  Also, where nonmarital property is enhanced due to the labor or financial contribution of either spouse during the marriage, the property can be converted into marital property.

However, it’s important to note that any professional practice associated with the degree is considered marital property, and can be factored into both division of property and in deciding alimony.

Step Two: The court will then value the marital property.  The value of marital property can be determined by various methods, including an assessment of the purchase price, the value of the property if sold during the divorce, recognized authorities for the value of assets, such as a Blue Book value in reference to a car, or an expert analysis of the value of the asset.

The court classifies the property as either marital or nonmarital property. Nonmarital property is set aside and marital property is lumped together. The court uses the date of marriage and the date the parties enter into a valid separation agreement or the date of filing a petition for dissolution of marriage to determine the dates used for classifying the property as marital or nonmarital.

Step Three: The court then distributes the marital property.  Generally, the presumption is that the property will be divided equally, but the court may allow the marital property to be divided unequally as long as the result is equitable. Determining what is equitable involves a totality-of-the-circumstances, fact intensive, including:

  • The contribution to the marriage by each spouse (including contributions to the care and education of the children and services as homemaker);
  • The economic circumstances of the parties;
  • The duration of the marriage;
  • Any interruption of personal careers or educational opportunities of either party;
  • The contribution of one spouse to the personal career or educational opportunity of the other spouse;
  • The desirability of retaining any asset, including an interest in a business or professional practice, intact and free from any claim or interference by the other party;
  • The contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the martial assets and the nonmarital assets of the parties;
  • The desirability of retaining the marital home as a residence for any dependent child of the marriage;
  • The intentional dissipation, waste, depletion, or destruction of marital assets during the marriage; and
  • Any other factors necessary to do equity and justice between the parties.

Marital Misconduct and Unequal Distributions

Courts allow for unequal distribution of marital assets where marital misconduct caused a waste of marital assets. These situations can arise in instances where marital funds have been spent on an extramarital affair, were gambled away, or used to support a drug addiction.

It is important to note that marital misconduct alone is not enough for a court to award an unequal distribution. It can be difficult to prove these allegations without extensive discovery and investigation.

Equitable Distribution is Final

Once the division of marital assets and liabilities has been formally decided, it is final. This is a clearly distinguishable legal standard when compared to legal standards governing child custody, alimony, and child support. Judgments in those areas can be subsequently modified due to a material and continuing change in circumstances.

Conclusion

Dividing property is almost always a complicated aspect of any divorce.  Obtain the advice of an experienced family law attorney who can help guide you through the process and protect your rights and interests in a divorce.  If you need assistance with your divorce in Walton, Okaloosa, Bay or surrounding counties, Contact Us to discuss your divorce rights.

1 Comment

  1. Pingback: Who gets the family pet? | florabamalegal

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