What is marital property? Marital property is the property of the marriage subject to equitable distribution. When you go through a divorce, you need to distribute assets and liabilities. BUT – not ALL assets and liabilities are distributed. Only the marital assets and marital liabilities are distributed.
To determine what is marital, the court will look to Florida Statute 61.075. Specifically subsection 6 deals with determination of marital versus nonmarital property. It reads as follows:
“(6) As used in this section:
1. “Marital assets and liabilities” include:
a. Assets acquired and liabilities incurred during the marriage, individually by either spouse or jointly by them.
b. The enhancement in value and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.
c. Interspousal gifts during the marriage.
d. All vested and nonvested benefits, rights, and funds accrued during the marriage in retirement, pension, profit-sharing, annuity, deferred compensation, and insurance plans and programs.
2. All real property held by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset. If, in any case, a party makes a claim to the contrary, the burden of proof shall be on the party asserting the claim that the subject property, or some portion thereof, is nonmarital.
3. All personal property titled jointly by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset. In the event a party makes a claim to the contrary, the burden of proof shall be on the party asserting the claim that the subject property, or some portion thereof, is nonmarital.
4. The burden of proof to overcome the gift presumption shall be by clear and convincing evidence.
(b) “Nonmarital assets and liabilities” include:
1. Assets acquired and liabilities incurred by either party prior to the marriage, and assets acquired and liabilities incurred in exchange for such assets and liabilities;
2. Assets acquired separately by either party by noninterspousal gift, bequest, devise, or descent, and assets acquired in exchange for such assets;
3. All income derived from nonmarital assets during the marriage unless the income was treated, used, or relied upon by the parties as a marital asset;
4. Assets and liabilities excluded from marital assets and liabilities by valid written agreement of the parties, and assets acquired and liabilities incurred in exchange for such assets and liabilities; and
5. Any liability incurred by forgery or unauthorized signature of one spouse signing the name of the other spouse. Any such liability shall be a nonmarital liability only of the party having committed the forgery or having affixed the unauthorized signature. In determining an award of attorney’s fees and costs pursuant to s. 61.16, the court may consider forgery or an unauthorized signature by a party and may make a separate award for attorney’s fees and costs occasioned by the forgery or unauthorized signature. This subparagraph does not apply to any forged or unauthorized signature that was subsequently ratified by the other spouse.”
When you get divorced, the court will go through a process in dividing up your property and debt. Throughout this process both assets and liabilities that are considered “marital” are divided. Any asset or liability that either you or your spouse entered the marriage with is not included in these calculations.
Naturally, the first step for the court is to determine what is considered marital and what is nonmarital. There are statutory and case defined rules, but basically if the asset was earned or obtained during the course of the marriage, it will probably be considered marital. If the asset was owned before the marriage or received as a gift from someone outside the marriage or by inheritance, then it’s probably nonmarital, unless it was converted to marital.
An asset can be converted to the status of marital if it is given by spousal give. That is, from one spouse to the other during the marriage. Although a spouse may not be thinking that their action was an inter-spousal gift, it’s sometimes done without understanding the consequence. This “transfer” can be achieved by listing the other spouse on the account, deed, title, etc. When doing so, there is a legal presumption that the action was an gift, making the asset (and related debt) marital.
Once the marital assets and debts are determined, the court will have to place a value on them. After all, the court needs to divide them up equitably, which is most commonly “equally”, and to do so the court must know what they are worth.
The element of fairness in a divorce may require imputing income to a former spouse. This basically involves considering that former spouse’s proven earning potential or other ability to obtain income when determining alimony and related matters.
The general rule regarding involving another state in divorce-related proceedings is whether the other state has an adequately strong interest to justify that involvement. One factor is which people whose rights are at stake live in the second state.
Conflicts in laws that protect competing rights and other interests can require that a court determine which protection trumps the other. One way that this conflict can occur in divorce proceedings is when a former spouse seeks a court order to apply proceeds from selling a homestead to satisfying a support duty delinquency.
Although proof related to establishing paternity can determine that someone fathered a child, subsequent reliable evidence that that person is not the father can disestablish that paternity.
What date does the court use when determining the value of my assets and liabilities in a divorce? It’s a good question and the answer is found in the Florida equitable distribution statute: 61.075. Subsection 7 of that statute explains as follows:
“(7) The cut-off date for determining assets and liabilities to be identified or classified as marital assets and liabilities is the earliest of the date the parties enter into a valid separation agreement, such other date as may be expressly established by such agreement, or the date of the filing of a petition for dissolution of marriage. The date for determining value of assets and the amount of liabilities identified or classified as marital is the date or dates as the judge determines is just and equitable under the circumstances. Different assets may be valued as of different dates, as, in the judge’s discretion, the circumstances require.”
This can certainly seem confusing and things will change throughout the proceeding which may push values up or down. Stocks values may rise or plunge. Housing prices may go plummet. Businesses may grow substantially or be driven into the ground. Balances on redit cards may be run up and accounts may be drained.
The cut-off date for categorizing assets and liabilities as a marital and nonmarital is the date the parties enter into a valid separation agreement or the date of filing of a petition for dissolution of marriage. By and far, most people do not enter into separation agreements. They generally either file a petition for divorce or they just move out and the next step is that someone files the petition.
For example: We begin with your house having a net value (after subtracting the mortgage) of $50,000. If your spouse moves out and, although always made twice what you earn, decides not to pay any support, you will be forces to reduce all nonessential expenses and scrape by while making all mortgage payments. This may goe on for six months, during which time the value of the home increases by $30,000 to a net value of $80,000. If at the six month mark, you go to trial, and it is agreed amongst you that you should get the house, you may argue the value should be $50,000 and your spouse may say it should be $80,000.
At this juncture the court has discretion and is charged with “equitably” distributing the property. There is no black letter rule as to value here. Had your spouse contributed to the mortgage payments or provided you with support during the case, your spouse would have a much better argument for valuing the property at $80,000, but because your spouse didn’t contribute in any way, you have a good argument for the $50,000 valuation.
To give your spouse the benefit of appreciation when he/she did nothing to maintain the asset would be inequitable. This concept can be more complicated, but this is a simple explanation of how the court is likely to exercise discretion.
The court must determine the value of each marital asset and liability. Some assets are more difficult to value than others, but that doesn’t prevent some litigants from believing their proposed valuation method is the only appropriate method. Chances are, regardless of what one spouse believes over the other, your judge is very familiar with these issues.
So who chooses the valuation method? The judge of course. Now, it’s clear that some assets are just very simple to value. A savings account with $10,000 in it at the date the petition was filed and $10,000 in it at the date of final hearing is likely to be valued at $10,000. No method needs to be employed except to look at the amount of money in the account.
You should only approach complicated valuation issues with an expert. If you end up at trial and your spouse has an expert witness who will testify to the value of the business and you rely solely upon what you personally feel the business is worth, the judge is highly likely to rely up on the expert in determining equitable distribution. After all, neither you nor the judge is an expert in valuing a business. Experts are educated, trained, and have experience in their expertise. Who is the judge (or you, for that matter) to challenge the expert’s opinion? If there is any asset of complexity which has value in dispute, you are well served to spend the money necessary for an expert to value and testify as to its value.
What happens when you each have experts to value the property, but the experts disagree with each other because they made different assumptions or they used different valuation methods? The court has to choose a valuation method for the valuation and as we know from the 3rd district court of appeal 1998 case, White v. White, the court has discretion to determine the valuation method. In that case, the Wife’s expert valued a pension using the unit benefit formula and the Husband’s expert used the coverture fraction method. When that happens, the court needs to pick a valuation method. Although tempting, the court is not permitted to simply average the two valuations. That approach is more likely to be used in your settlement negotiation.
It is important that you speak with a professional who is able to give you professional legal advice. To schedule a consultation, call (561) 832-5900 or submit a consultation request from the contact us page and we’ll schedule a convenient time for you and Kevin D. Wilkinson to meet.
Will I get an asset in my divorce if I ask for it? The answer is maybe, maybe not. As a divorcing spouse in Florida, it’s important that you understand you don’t get an asset just because you really want it.
If you are seeking professional advice about child support and the enforcement thereof in the state of Florida, we recommend you obtain competent legal representation.