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Marital Assets / Debts

Under Florida Statute 61.075, "equitable distribution" is defined as a judge's division of marital assets and debts (that is, those acquired from the date of marriage to the date of filing of a divorce lawsuit) at time of trial. Of course, the parties can divide their marital assets and debts at any time before a trial. Valuations can often be determined by the parties assuming s valuation date is agreed upon. For example, values of financial accounts can be determined by using the closest monthly statements; value of real property can be determined by using a realtor's comparative sales analysis, an S.R.A. real estate appraiser (used by banks for mortgage loans), N.A.D.A., Edmunds, Kellys or other vehicle appraisal service online, etc. Parties can prepare If a business is involved, usually the services of a C.P.A. is required.

A judge must not include "premarital assets and debts" and "nonmarital assets debts" in equitable distribution. Assets/debts acquired before a marriage (premarital") and assets/debts acquired during the marriage, but from a source unconnected with the marriage ("nonmarital") and which remain titled solely in one spouse's name, are used as separate money, and, most importantly, are not comingled with marital funds are treated as one spouse's separate assets/debts. However, in unusual circumstances, a judge can use a person's premarital or nonmarital assets for lump sum alimony and/or for attorney fees to pay the other spouse assuming a great disparity of income between the parties and no other source of money being available to pay alimony or fees.

If the value of a premarital asset or nonmarital asset increased ("enhanced") during the marriage by marital money and/or services or labor, the other party will generally be entitled to one-half of the "enhanced value" of the asset. Assume that a husband owned a stock account before the marriage, continued to own it in his own name during the marriage, and the value of the account significantly increased during the marriage. The wife would be entitled to one-half of the increased value if the increase was due to "active appreciation" (that is, the husband actively traded stock within the account). However, the wife would not receive one-half is the increased value of the stock account was due only to "passive appreciation" (that is, increase in value due only to improved market conditions).

If an asset is part premarital and part marital, usually only the marital portion is subject to equitable distribution. For example, if a spouse and/or his/her employer contributed to a pension plan both before and during a marriage., a judge will ultimately require the plan administrator to only divide the marital portion. The marital portion is generally divided by a QDRO ("qualified domestic relations order") entered after the entry of a final judgment of divorce. A division of a pension by a QDRO will not result in a tax penalty (i.e., no early withdrawal penalty) nor will the division be treated by the Internal Revenue Service as a taxable event. The recipient spouse ("alternate payee") will receive her/his portion of the proceeds in accordance with the other spouse's ("participant") retirement. If the participant spouse dies before his/her retirement, the alternate payee spouse will not receive her/his portion, unless the participant spouse elected in writing to provide the alternate payee with "survivorship benefits." These benefits, of course, benefit surviving alternate payee spouse, but, if elected, will result in a lower monthly pension to both parties if the participating spouse does not die before retirement.

The presumed division of marital assets and debts is a 50/50 split, but, unlike in community property states, a 50/50 split is not necessarily the ending point if the judge applies any of the following factors:

(a) The contribution to the marriage by each spouse, including contributions to the care and education of the children and services as homemaker.
(b) The economic circumstances of the parties.
(c) The duration of the marriage.
(d) Any interruption of personal careers or educational opportunities of either party.
(e) The contribution of one spouse to the personal career or educational opportunity of the other spouse.
(f) The desirability of retaining any asset, including an interest in a business, corporation, or professional practice, intact and free from any claim or interference by the other party.
(g) 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 marital assets and the nonmarital assets of the parties.
(h) The desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so, it is in the best interest of the child or that party, and it is financially feasible for the parties to maintain the residence until the child is emancipated or until exclusive possession is otherwise terminated by a court of competent jurisdiction. In making this determination, the court shall first determine if it would be in the best interest of the dependent child to remain in the marital home; and, if not, whether other equities would be served by giving any other party exclusive use and possession of the marital home.
(i) 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.
(j) Any other factors necessary to do equity and justice between the parties.

A judge has the right the value different marital and/or liabilities using different dates. However, the date of filing a divorce lawsuit will often be used as the valuation date, unless other considerations exist (for example, passive appreciation or depreciation of stock/securities in which case the date of trial could be used as the valuation date of those assets).

Gifts from one spouse to the other during their marriage (i.e., from date of marriage to date of filing the divorce) are considered marital assets and are subject to equitable distribution. The spouse who received a gift is entitled to keep it, but the spouse who gave it is entitled to receive one-half of their present fair market value from the other spouse. However, a husband who gives an engagement ring to his fiancé before marriage is not entitled to a one-half credit.

Although a spouse's premarital assets are generally not distributed to the other spouse in a divorce case, they can be distributed in unusual circumstances. For example, if a husband, who owned a premarital account, depleted the parties' savings account, the wife could be awarded money from the husband's premarital account equal to one-half of the saving account's balance. Florida law views a marriage as a "financial partnership" and, therefore, unlike other areas of law such as real property law, it makes no difference whether an asset or debt acquired during a marriage is titled solely in the husband's name, wife's name, or joint names. There are exceptions of course. For example, if a wife bought real estate during the marriage solely with money received from her mother, the money was placed in the wife's sole checking account, and the real estate was titled in wife's name only, then the real estate would considered a "nonmarital asset" which is viewed the same way as a "premarital asset." However, there are even exceptions to the principle that a non-marital asset or premarital asset is considered the sole property of its owner. For example, if either the above wife or her husband used her/his labor or salary during the marriage to improve the value of the real estate, then the increased value ("enhanced value") portion is subject to equitable distribution.

A judge must include the following facts in his/her Final Judgment of Dissolution of Marriage:

(a) Identification of nonmarital and premarital assets;
(b) Identification of marital assets, including the individual valuation of significant assets, and designation of which spouse shall be entitled to each asset;
(c) Identification of the marital liabilities and designation of which spouse shall be responsible for each liability;
(d) Any other findings necessary to advise the parties or the reviewing court of the trial court's rationale for the distribution of marital assets and allocation of liabilities.

If you believe that your spouse may deplete or significantly diminish accounts titled jointly or conjunctively, before a divorce is filed, you should immediately consult an attorney. Even if a vehicle is titled in both spouse's names, one spouse could possibly claim a lost title and have the vehicle retitled in his or her sole name. Likewise, a spouse could cash in a financial account, such as a certificate of deposit account, which is titled jointly, but would incur a 10% early withdrawal penalty and federal income tax. If your spouse has access to your credit, and you no longer want him/her to use the card, you should cancel the account immediately, in writing and by phone, and reopen a new account. During a divorce case, it may be wise to pay only the minimum monthly credit card payment. The accumulation of debt during a divorce case could be beneficial in your divorce case.

The transfer of property, real or personal, between spouses as part of a divorce settlement or be court order is not a taxable event. For example, if a husband takes title to the parties' marital home in return for an agreed upon amount of money, the transfer is not taxable by the I.R.S. Documentary stamps are not even required to record the quitclaim deed, unless the home is rental property.

Contact Pinellas County Divorce Attorney Richard C. Griesinger today!

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