Articles Posted in Equitable Distribution

Few spouses, while happily married, stop to consider maintaining the proper legal segregation of assets they acquired separately before or during the marriage. This often leads to trouble when a spouse mixes his/her separate assets with marital property and, as a result, causes the law to view that asset as having become marital property as well. One recent decision from the 4th District Court of Appeal, ruling that a real estate interest a wife inherited had converted to marital property, demonstrates the problems a spouse can create when she fails to maintain the required separation.

Before the couple married, the woman and her two sisters inherited a house. While the couple was married, the wife bought out her sisters’ ownership interests in the house. The couple eventually renovated and sold the house. They paid for the renovations from money in a marital account. When they sold the house, they deposited the proceeds into a marital account. What was left over after capital gains taxes remained in that marital account for the next 10 years, where they used to money to make stock trades.

Some time later, the husband filed for divorce. The trial court ruled against the husband’s request to include the wife’s original one-third ownership interest as a marital asset for purposes of equitable distribution.
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Sometimes, in divorce matters, a couple can seem to reach a mutual agreement on the distribution of their marital assets, only to uncover a sticking point later. Such was the case for one Florida couple, who battled over the division of the husband’s military pension. The Second District Court of Appeal threw out a trial court order regarding the pension because the terms of that order contained elements that were not part of the couple’s mutual agreement and allowed the wife to share in benefits the husband would earn after the marriage had ended.

J.F. filed for divorce in 2011. His wife asked for a division of the couple’s retirement accounts as part of equitable distribution of their assets. The couple arrived at a settlement agreement, which they conveyed orally to the court on the record. At the hearing, some confusion emerged when the spouses’ attorneys attempted to recite the agreement about the husband’s military pension to the trial court. The parties later disagreed on the precise terms of the division of the military retirement, and the trial court held another hearing. The husband later challenged the resulting “Order for Division of Military Retirement Pay”, claiming it did not reflect the couple’s true agreement.

The appeals court agreed with the husband. The order suffered from two fatal flaws. First, it gave the wife a share of several future benefits, including the husband’s post-retirement cost-of-living adjustments, a portion of any retroactive payments the husband might receive if he chose to remain active after his normal retirement date and a piece of the husband’s exit bonuses, voluntary separation incentive pay or special separation benefits. This was problematic because the husband would not accrue any of these benefits until after the marriage ended and none of these benefits were discussed in the couple’s oral recitation of their agreement before the trial court. As a result, the wife had no claim to a share of those benefits and the order should not have included them.
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A wife’s effort to claim to claim two burial plots as belonging solely to her failed as a result of an unfavorable 1st District Court of Appeal decision. The court concluded that, although the two plots were her separate assets when her aunt gave them to her, one of the plots became marital property when she chose to transfer ownership of that plot from her name to the names of her and her husband collectively. This transfer constituted a spouse-to-spouse gift that changed the status of that plot.

In happier times, the couple decided to add the husband to the deed of one of two burial plots the wife had received as gifts from her aunt. Some time later, the couple’s marriage deteriorated and the pair sought to divorce. As part of that proceeding, the trial court considered how to classify the burial plot co-owned by both spouses. The trial court ultimately declaring the burial plot as non-marital property that belonged to the wife.

The husband appealed this decision, and the 1st DCA agreed with the husband. In resolving the question, the court decided that the wife’s decision to add the husband to the deed of one of the plots changed that asset’s status. Florida Statutes Section 61.075(6)(b)2 says that an asset acquired by one spouse as a result of “noninterspousal gift,” even during the marriage, is nonmarital property belonging to the spouse who received the gifted asset. That is what happened when the wife’s aunt gave the plots to the wife, meaning that, at that point, both plots were nonmarital assets belonging to wife.
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A wife’s efforts to escape responsibility for a $13,500 credit card debt her husband ran up mere days before the wife filed for divorce proved unsuccessful. The debt, incurred to pay for the college education of the couple’s daughter, occurred during the marriage and was not the result of intentional waste or depletion of marital assets, meaning that the courts must classify it as a marital debt for purposes of establish an equitable distribution of the couple’s assets.

This couple’s 27-year marriage was nearing its end by June 2011. Although the wife had informed the husband she planned to seek a divorce, she did not file immediately. Around the same time, the couple’s adult daughter was planning to start college in North Carolina that fall. The husband charged $13,500 on the couple’s Discover credit card to pay for the daughter’s college expenses. Four days later, the wife filed her divorce petition.

At trial, the wife stated that she had not planned to pay for the daughter’s college costs, but instead insist that the daughter pay her own way. The wife persuaded the trial court that the husband’s maneuver was an attempt to force her should a financial burden she never intended to undertake and that the husband should bear sole responsibility for the Discover card debt.
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With Christmas having recently come and gone, many people likely received a new addition to an existing collection of possessions. For some, it may have been a new piece of jewelry; for others, perhaps a new power tool. When these collections of become an issue in a divorce, there is a clear right way, and wrong way, to go about seeking to include them in the equitable distribution of assets. The recent decision in a First District case highlights one of the wrong ways to establish value, which resulting in the 1st District Court of Appeal rejecting a wife’s efforts to include her husband’s tools in the couple equitable distribution.

The case went before the court of appeal as a result of a dispute over the value of the husband’s tools. In the trial court dissolution hearing, the husband testified that the tools were worth $500. The wife, in her financial affidavit, stated the tools’ value at $20,000. In crafting its equitable distribution, the trial court awarded the tools to the husband, and accepted the wife’s $20,000 valuation. Because the trial court accepted this larger valuation for the husband’s tools, it lessened the amount the husband received in the remainder of his equitable distribution.

The husband appealed, and the court of appeal sided with him. The problem for the wife was a lack of proof to buttress her $20,000 claim. During the dissolution hearing, the wife admitted that her assessment was a blanket statement without specific evidence to back it up. The court explained that some amount of tangible proof is necessary to back up valuations such as the wife’s. The court noted that its decision mirrored the 2d DCA’s ruling in a 2000 case, Lassett v. Lassett, where the court rejected a husband’s $10,000 valuation of his wife’s jewelry collection because the only proof supporting the claim was the husband’s unsubstantiated testimony.
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When a couple divorces, one of the integral elements of property division is separating marital assets from non-marital ones. A recent 4th District Court of Appeal ruling highlights that an asset’s origin at the time the couple marries is not the only criterion for ascertaining its classification. In the Jordan case, the wife’s work improving an asset, and the couple’s use of the asset’s proceeds for marital benefits, converted the asset from non-marital to marital.

A chiropractor and his wife married in 1992. The husband conducted his practice in an office building he owned separately, as his parents had deeded it to him before he married. However, while the couple was married, the wife coordinated and performed several significant renovations and improvements to the building. Also during the marriage, the husband transferred title of the building to a corporate entity he created. The couple eventually sold the building, purchasing and then selling a salon. Over the years, the couple used funds from the corporation to pay their household and living expenses.

The couple filed for divorce in 2011. The trial court adopted the wife’s proposed judgment, and the husband appealed. On the matter of the office building and corporation assets, the court determined that the trial court correctly found it to be a marital asset. The husband’s professional building clearly was a non-marital asset when the couple had married. However, the wife’s work on the building was sufficient to convert it from a non-marital asset to a marital one. The wife was “instrumental” in the completion of “vast improvements …, which included replacing walls, installing new flooring, adding columns and a flag pole to the front, modifying lighting and other electrical work, adding an additional parking lot, replacing the roof, and putting in new doors and windows,” the court pointed out. The amount of effort the wife expended on the office building went far beyond mere maintenance, but rather, provided substantial enhancement in the asset’s value.
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One of the central underlying concepts of divorce and marital property settlement is something called equitable distribution. Equitable distribution, which is required by the Florida Statutes, means that each spouse should receive a fair portion of the marital estate, and each should share in both the marital assets and the marital liabilities. In a recent case, the 4th DCA rejected a trial court’s division of a 401(k) because it unfairly shared the account proceeds between both parties without similarly sharing the financial obligation for the outstanding account loan the couple took out during the marriage.

In 2011, a couple underwent mediation to reach an agreement regarding distribution of their property as part of their divorce. In addressing the husband’s 401(k) account with his employer, the couple agreed that the wife would receive one-half of the “the amount accumulated from the date of the marriage through January 1, 2008.” The agreement also stated that “loans and [withdrawals] taken during the marriage and not repaid will be taken into account for distribution purposes.”

The Qualified Domestic Relations Order (QDRO) the trial court entered, however, stated that the wife’s distribution would “not be reduced by the value of outstanding loans.” As a result, the wife received a payment of $47,505, while the husband’s remaining balance, which factored in an outstanding loan in excess of $30,000, stood at less than $13,700.
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Fort Lauderdale divorce attorneys often explain to clients that their marital home may be sold by the court or agreement of the parties as part of the equitable distribution of marital assets and liabilities. Often the marital home is the only asset owned by a divorcing couple and must be sold to divide the equity amongst the parties. Other times the parties cannot afford to maintain the home after their divorce is finalized and the marital home must be sold.

Out of the one million divorces per year, most cases require the sale of the marital residence. This can assist buyers in finding bargains. However, purchasing a home from a divorced couple can often be difficult. While one spouse may want to sell the home, the other spouse may frustrate the deal due to the fact that they are angry with their spouse or unwilling to leave the marital residence.

In order to avoid a problem when buying a home from a divorcing couple, a buyer should inquire if they are purchasing a home from a couple who has gone through a contested divorce. A buyer does not want to deal with any last minute problems such as a spouse who disappears in order to prevent real property from being sold. Buyers should speak to their real estate agent so that the necessary language to protect them can be insterted into any offer.