Fort Lauderdale Divorce Lawyer Blog

The Miami Herald is reporting that the Supreme Court of Florida has issued its opinion in Kaaa v. Kaaa that addresses whether and under what circumstances passive appreciation of a marital home that is a nonmarital asset is subject to equitable distribution.

For 27 years, the parties resided in a home that was purchased by the husband for $36,500 six months before the marriage. During the marriage, marital funds were utilized to pay the mortgage and improve the home. Although the home was refinanced during the marriage, the wife was never placed on the title or deed. At trial, the parties stipulated that the value of the home was $225,000 and the outstanding balance of the mortgage was $12,871.46. The trial court found that the home was nonmarital, that the mortgage balance had been reduced by $22,279 and the renovation to the carport increased the value of the home by $14,400. Accordingly, the trial court ruled that the the enhancement value of the home, $36,679, was subject to equitable distribution and ordered the husband to pay the wife $18,339.50. In affirming the decision of the trial court, the Second District Court of Appeal held that the former wife was not entitled to equitable distribution of the passive appreciation of the real property.

The Supreme Court of Florida quashed the decision of the Second District Court of Appeal and concluded that passive appreciation of a non-marital asset is considered a marital asset when marital funds or the efforts of either party contributed to the appreciation. A nonmarital asset which appreciates during the marriage, only due to inflation or market conditions, becomes in part a marital asset, if it has indebtedness which is reduced by marital funds. Improvements or expenditure of marital monies which results in the enhancenment of the value of a nonmarital asset is an asset subject to equitable distribution. Additionally, the nonowner spouse is also required to have made contributions to the property during the marriage by investing marital funds or the efforts of either party.

In determining whether a nonowner spouse is entitled to a portion of the passive appreciation, the court is required to perform a five part test. First, the court is to ascertain the fair market value of the property. Next, the court is required to determine whether there has been passive appreciation in the home's value. Third of all, the court must find that the passive appreciation is a marital asset under Florida Statute 61.075(2) by virtue of whether marital funds were used to pay the mortgage, whether their were contributions to the property by the nonowner spouse and the extent that these contributions affected the appreciation of the nonmarital asset. Fourth, the court is to then determine the value of the passive appreciation that accrued during the marriage. Finally, the court is to compute how the passive appreciation should be allocated by dividing the indebtedness at the time of the marriage by the value of the asset at the time of the marriage.

If you have property that is non-marital or believe that you may have an interest in your spouse's nonmarital property, you should consult with a divorce lawyer in Broward to discuss your rights.

When you meet with your Fort Lauderdale marital and family law attorney, you will be asked about you and your spouses assets and liabilities as part of your divorce case. Your Fort Lauderdale divorce lawyer will explain to you the difference between marital and non-marital assets and liabilities as set forth in Florida Statute 61.075. One way that the Broward County divorce judge can award you an interest in the enhancement value of a non-marital asset for equitable distribution purposes is as a result of marital efforts or marital funds that result in an increase in value of a non-marital asset.

In Shinitzky v. Shnitzky, the former wife appealed the trial court's order which held that funds recovered in a lawsuit for damages arising from the loss of a non-marital asset were a non-marital asset. Before the marriage, the Former Husband sold his business for $8 million. The parties did not dispute that the $8 million from the sale of the Former Husband's business was non-marital. After the marriage, the Former Husband placed the $8 million into a brokerage account. The broker absconded with the money. The parties worked together to recover the funds for two years during the marriage. The Former Husband then moved out of the house and pursued the lawsuit on his own before recovering $5.6 million and an uncollectible judgment against the broker.

The Former Wife argued that the funds received from the lawsuit were marital since they were acquired during the marriage. While the Former Husband agreed that if marital labor or funds had been used to pursue the lawsuit and that if the expenditure of marital effort or funds had increased the value of the recovery that the increase could be considered marital, he argued that none of the recovery was marital since marital funds or efforts did not increase the value of the $8 million non-marital asset.

The trial court found that the asset was derived from a lawsuit concerning a non-marital asset that had not increased in value during the marriage. The Fourth District Court of Appeal affirmed the decision of the trial court. The Court reasoned that the evidence presented at trial did not establish that marital labor or funds enhanced the value of the asset.

To determine whether a portion of the lawsuit recovery is a marital enhancement resulting from the expenditure of marital efforts or funds, the initial value of the lawsuit must be supported by competent substantial evidence. Here, the only evidence of the value of the lawsuit was that the account had been worth $8 million before the theft and that the Former Husband settled the lawsuit for $5.6 million.