Monday, November 11, 2019

Judge Must Equitably Divide Marital Assets in Divorce

LAW MATTERS

Florida has no fault divorce. That means, if one of the parties says the marriage is over… it is over. Filing for a Florida divorce is relatively simple. One spouse must be a resident of Florida for at least six months before filing and claim the marriage is irretrievably broken. That claim by one party is sufficient, even when the other party disagrees. Division of marital property is one aspect of divorce, which can often be complicated.

Florida’s legislature has attempted to provide some order to this area through Sections 61.075 Florida Statutes, titled Equitable Distribution of Marital Assets and Liabilities. The statute mandates the court set apart to each spouse that spouse’s non-marital assets and liabilities and then distribute the marital assets and liabilities between the parties. The starting point for distribution of marital assets and liabilities is that the distribution should be equal, but the statute adds, “unless there is a justification for an unequal distribution based on all relevant factors.” The statute then provides a shopping list of relevant factors. The factors include:

(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 non-marital 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 two years prior to the filing of the petition.

Just in case there is something else a judge should consider, the statute includes one extra factor, which is “any other factors necessary to do equity and justice between the parties.”

Before the court makes a division, it must first determine what assets are marital and what assets are non-marital. Again, the legislature tried to help, as the statute provides that marital assets and liabilities include assets and liabilities incurred during the marriage, individually, by the spouse or jointly; enhancement in value and appreciation of non-marital assets resulting from the efforts of either party or use of marital funds or assets; gifts between spouses during the marriage; rights in retirement funds accrued during marriage. In effect, anything that is the product of a person’s effort or income from that effort during the marriage becomes partly or entirely a marital asset to be divided at time of divorce. Real property owned as tenants by the entireties (husband and wife) is presumed to be a marital asset, but a party can rebut the presumption. One way to rebut is to show the asset is owned jointly only for estate planning purposes and is not intended to be a marital asset. In 2018, the statute was amended to include a formula for calculating the marital portion on a note and mortgage on non-marital property or paid down for marital funds during the marriage.

Non-marital assets and liabilities are generally those owned before marriage by one party, gifts from third parties during marriage to one spouse and the income from those assets, unless the income was treated or used as a marital asset.

The statute even provides that a cutoff date to determine marital assets and liabilities as the earliest of the date the parties enter a valid separation agreement, any other date agreed to by the parties, the date of filing a petition for dissolution of marriage. The date for determining value is the date agreed by the parties or the date the judge decides is “just an equitable under the circumstances.” Different assets can be valued at different dates, if, in the judge’s discretion, circumstances require. That might be the case where value of stock moves in one direction while the value of other assets moves opposite.

Some assets are hard to divide. A good example is a business determined to be marital, but which is almost exclusively identified with one of the parties. The court can order a monetary payment in lump sum or installments to “balance” the distribution.

A judge cannot on a whim make an unequal distribution of marital assets. It is not even enough that there is evidence that would justify unequal distribution. A judge must specifically state the reasons for unequal distribution as part of the judgment.

What might warrant unequal distribution? In one case, the wife was awarded a marital business in which the wife worked “while the husband remained essentially idle drinking large quantities of beer.” In another case, one party was awarded a larger share of the marital pie when the spouse dissipated assets through gambling. Since divorce is no fault, adultery is not generally a factor. But, when one spouse spends a lot of money on an adulterous affair, it can justify an unequal award of what is left.

Not every reason for unequal distribution is sufficient. In one case, the appellate court ruled that one spouse’s attempted murder of the other spouse did not justify unequal distribution where the action did not deplete marital assets and had been punished by a criminal conviction. Superior earning ability of one spouse and where only one spouse has a pension have both been overruled as reasons for unequal distribution.

The statute only starts from the premise that marital assets and liabilities should be equally divided. It leaves open room for argument for or against unequal distribution and even argument of what is a marital asset. Since the statute does not settle all disputes in this area, parties in a divorce case are well advised to seek counsel of an experienced attorney.

William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.

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