Articles Posted in Divorce

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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