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Equitable Distribution

The term “equitable distribution” is used by many Florida lawyers and judges to describe how marital property should be divided in a divorce case. What is considered ‘property’ in a divorce case? In a divorce property includes assets and liabilities. Assets are anything that you own or that generates income: a car, a business, bank accounts, retirement plans, jewelry, patents, land, etc. However, only ‘marital assets’ can be divided.

Although the word “equitable” is used, the term is somewhat of a misnomer as it refers to a statutory process and does not necessarily mean “equally”. Equitable distribution basically is the process of (1) separating marital and non-marital assets and liabilities; (2) assigning a value to marital liabilities; and (3) determining which party gets each marital asset or liability after the divorce. See the questions below where we explain more in depth what are considered marital assets and what are considered non-marital assets.

Below is a list of commonly asked questions that our West Palm Beach, Florida Family Law Attorneys receive about Equitable Distribution during a divorce in Florida. Equitable distribution is the division of property, assets and debts. Clicking each question listed below will provide you with a detailed answer.

In most cases, yes. Florida Statute 61.075(1)(i) provides that “the intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within 2 years prior to the filing of the petition” is to be accounted for during the splitting of property. Essentially, the statutory language means that if you prove your spouse spent money on an affair, the amount of money they would be otherwise entitled to receive upon divorce under the law will be reduced by the money that was spent on the affair.

With few exceptions, assets or liabilities acquired after you or your spouse file for divorce are not marital in nature and are not accounted for during the process of splitting property upon divorce. However, if the right to receive an asset existed before the parties filed for divorce the court will most likely consider the asset a marital asset.

The State of Florida specifically states in statute 61.075(6)(b)5 that a liability incurred through forgery or an unauthorized signature of one spouse is a non-marital liability. The liability will remain non-marital unless the other spouse endorses the forged or illicit signature at a later date.

In Florida property or real estate is considered a marital asset subject to equitable distribution unless one spouse proves it is non-marital asset.

Florida Statute 61.075 (6)(a )2 states: “All real property held by the parties as tenant by the entireties… shall be presumed to be a marital asset.”

It is irrelevant whether the property was obtained prior to or during the marriage. If one party asserts that some or all of real property is non-marital, he/she is responsible for providing the proof that the property is non-marital.

In the case of a retirement plan consisting of a qualified pension, profit sharing incentive program, or a stock bonus plan; a qualified domestic relations order (QDRO) may be used to transfer the receiving spouse’s entitled assets with a low tax burden. QDROs may be modified but not be initiated in a post dissolution action. A QDRO cannot be used to transfer an IRA or for a pension plan containing an anti-alienation provision. Oftentimes, our lawyers will consult with an expert well versed in creating and implementing QDROs for the limited purpose of making sure the QDRO is prepared in a tax advantageous manner.

DROP benefits, like other retirement plans, are subject to distribution to the extent of which they were accrued during the marriage. A Florida court has ruled that in any divorce finalized prior to 1998 (the year DROP began), the dependent spouse may still receive distribution from the DROP benefits if the settlement or final judgment agreed to divide the retirement benefits of the obligor spouse.

In the case of a retirement plan consisting of a qualified pension, profit sharing incentive program, or a stock bonus plan; a qualified domestic relations order (QDRO) may be used to transfer the receiving spouse’s entitled assets with a low tax burden. QDROs may be modified but not be initiated in a post dissolution action. A QDRO cannot be used to transfer an IRA or for a pension plan containing an anti-alienation provision. Oftentimes, our lawyers will consult with an expert well versed in creating and implementing QDROs for the limited purpose of making sure the QDRO is prepared in a tax advantageous manner.

If an engagement ring was given (or received) before you were married then it is not considered a marital asset. As a non-marital asset it is thus not accounted for or divided during the divorce process.

However, if the ring was purchased during the marriage, or in cases where an “upgraded” ring was given or received, the new ring is a marital asset that is subject to equitable distribution. In this case, it may not be necessary to sell the ring, but the value of the ring would be credited to the spouse retaining the ring when the court determines how to split property between a divorcing couple.

Inter-spousal gifts are considered marital assets under Florida Statute 61.075 (6)(a)1c and are therefore subject to equitable distribution. The court has decided upon three conditions which must be met to show intent to give a gift: “(1) donative intent; (2) delivery or possession of the gift; and (3) surrender of dominion and control of the gift.”Mills v. Mills, 845 So.2d 230, 233 (Fla. 3d DCA 2003). Furthermore, the statute only allows for gifts given during the marriage. Premarital gifts, such as engagement rings, are not subject to equitable distribution.

The appreciation in value of a non-marital asset is, under the authority of Florida Statute 61.075 (6)(b), subject to equitable distribution under the condition that the appreciation resulted from marital labor and/or marital funds. In this case, each party is entitled to one-half of the amount of increase in value of the asset. Any regular maintenance expenses which do not lead to an appreciation in value of the asset should not be considered by the court as an enhancement in value; however, the court may consider the maintenance expenses when determining whether or not to order an unequal distribution.

There have been many conflicting court opinions on what portion of the appreciation should be subject to distribution. In general, the court will first establish the percentage of appreciation resulting from marital funds and/or labor. Any further enhancement in value on that percentage will be considered marital. It is the responsibility of the party claiming entitlement to the appreciation to show proof that the enhancement in value is in fact a marital asset. Likewise, the burden to prove that an asset is non-marital lies on the party declaring the property to be non-marital.

1.Marital assets and liabilities include:
a. Assets acquired and liabilities incurred during the marriage, individually by either spouse or jointly by them.
b. The enhancement in value and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.
c. Interspousal gifts during the marriage.
d. All vested and nonvested benefits, rights, and funds accrued during the marriage in retirement, pension, profit-sharing, annuity, deferred compensation, and insurance plans and programs.
2. All real property held by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset. If, in any case, a party makes a claim to the contrary, the burden of proof shall be on the party asserting the claim that the subject property, or some portion thereof, is nonmarital.
3. All personal property titled jointly by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset. In the event a party makes a claim to the contrary, the burden of proof shall be on the party asserting the claim that the subject property, or some portion thereof, is nonmarital.

The assets classifies as “non-marital” are stated in Florida Statute 61.075 (6)(a)(4)(b) and are as follows:

  1. Assets acquired and liabilities incurred by either party prior to the marriage, and assets acquired and liabilities incurred in exchange for such assets and liabilities;
  2. Assets acquired separately by either party by noninterspousal gift, bequest, devise, or descent, and assets acquired in exchange for such assets;
  3. All income derived from non-marital assets during the marriage unless income was treated, used, or relied upon by the parties as a marital asset;
  4. Assets and liabilities excluded from marital assets and liabilities by valid written agreement of the parties, and assets acquired and liabilities incurred in exchange for such assets and liabilities; and
  5. Any liability incurred by forgery or unauthorized signature of one spouse signing the name of the other spouse. Any such liability shall be a non-marital liability only of the party having committed the forgery or having affixed the unauthorized signature.

Assets acquired before the marriage should remain non-marital unless the asset is transferred to joint title during the marriage. Additionally, any enhancement in value of a non-marital asset caused by contributions of marital funds or marital labor is considered marital and should therefore be subject to distribution.

Noninterspousal gifts may be considered marital if intended for both parties and received during the marriage. A noninsterspousal gift may also be considered marital if the recipient jointly titles the gift. An inheritance may be classified as marital if the funds are placed in a joint account.

In general, any income from a non-marital asset may be considered marital if the parties used part or all of the income during the marriage to pay for marital expenses. Any asset purchased with non-marital income during the marriage may be considered marital if commingled with other marital assets.

A marital agreement preventing specified assets and liabilities from being considered marital should be accepted and enforced by the court unless the agreement calls for distribution forbidden by law.

A liability incurred by forgery or unauthorized signature should remain non-marital unless the other spouse later sanctions the unauthorized document.

The assets classifies as “non-marital” are stated in Florida Statute 61.075 (6)(a)(4)(b) and are as follows:

  1. Assets acquired and liabilities incurred by either party prior to the marriage, and assets acquired and liabilities incurred in exchange for such assets and liabilities;
  2. Assets acquired separately by either party by noninterspousal gift, bequest, devise, or descent, and assets acquired in exchange for such assets;
  3. All income derived from non-marital assets during the marriage unless income was treated, used, or relied upon by the parties as a marital asset;
  4. Assets and liabilities excluded from marital assets and liabilities by valid written agreement of the parties, and assets acquired and liabilities incurred in exchange for such assets and liabilities; and
  5. Any liability incurred by forgery or unauthorized signature of one spouse signing the name of the other spouse. Any such liability shall be a non-marital liability only of the party having committed the forgery or having affixed the unauthorized signature.

Assets acquired before the marriage should remain non-marital unless the asset is transferred to joint title during the marriage. Additionally, any enhancement in value of a non-marital asset caused by contributions of marital funds or marital labor is considered marital and should therefore be subject to distribution.

Noninterspousal gifts may be considered marital if intended for both parties and received during the marriage. A noninsterspousal gift may also be considered marital if the recipient jointly titles the gift. An inheritance may be classified as marital if the funds are placed in a joint account.

In general, any income from a non-marital asset may be considered marital if the parties used part or all of the income during the marriage to pay for marital expenses. Any asset purchased with non-marital income during the marriage may be considered marital if commingled with other marital assets.

A marital agreement preventing specified assets and liabilities from being considered marital should be accepted and enforced by the court unless the agreement calls for distribution forbidden by law.

A liability incurred by forgery or unauthorized signature should remain non-marital unless the other spouse later sanctions the unauthorized document.

The procedure for dividing assets and liabilities is governed by Florida Statute 61.075 (3). First, the court must identify all non-marital assets and the appropriate ownership of said assets. Next, all marital assets and marital liabilities are identified and the court determines which spouse is entitled to each marital asset and responsible for each marital liability.

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