Equitable Distribution and Division of Assets

Equitable Distribution: Defined

Florida follows the “equitable distribution” theory of separation of property, unlike some states that follow the “community property” theory. In “community property” states, the assets are divided exactly equal between the separating spouses; in Florida, an “equitable distribution” state, the assets and debts are distributed between the spouses in a fair, or “equitable,” manner. The assets to be separated between the parties is only the property which is marital property; non-marital property is not taken into account or separated by the court.

Non-Marital Property

Some property is considered non-marital property. Typically, non-marital property includes:

  • Property obtained prior to the marriage, unless the spouses have treated the income from the non-marital property by commingling the property;
  • Property bought, sold, or exchanged with non-marital property; and
  • Property the parties have agreed is non-marital through either a prenuptial agreement or postnuptial agreement.

Commingling occurs when one spouse has non-marital property and the income from the non-marital property is mixed with the marital property. This most often occurs with bank accounts or mortgages. For example, if the Husband as a premarital bank account and the Wife begins to deposit her paychecks into this bank account when they get married, then the Wife can argue that the bank account is no longer non-marital as the funds have become so highly intertwined with the marital funds that it is impossible to distinguish which funds are marital and which funds are non-marital; another example is if the Wife owned a house prior to the marriage with a mortgage encumbering the property and the Husband substantially pays on the mortgage, then the home may no longer be non-marital. In either circumstance, when the funds have been commingled, the court will consider the non-marital property to be a gift, and thus martial. These cases can often become highly complicated and it is highly recommended that the assistance of an attorney be sought.

Marital Property

Marital property, including assets and debts, is any property that was:

  • Obtained during the marriage;
  • Paid for with marital funds; or
  • Commingled non-marital property.

It is important to note that how the property is titled or deeded (car solely in the Wife’s name or the home solely in the Husband’s name) does not affect if the property is martial or non-marital. If the property was obtained during the marriage, it is nearly always marital property.

Assets in a marriage include, but not limited to, bank accounts, retirement accounts, cars, boats, homes, pensions, or anything similar; the term “assets” is a very broad term to encompass a broad range. If some of the property, such as retirement accounts or pensions, had a value prior to the marriage but gained value in the marriage, the assistance of an attorney and a financial advisor is highly recommended as separating out the values of these assets can be very complicated.

Debts within the marriage are very similar to the assets; they include, credit card debts, loans, mortgages, and similar. If the debt encumbers a specific asset, such as a mortgage or car, then the party receiving the asset will likely take the debt associated with that asset. With unsecured debts, such as personal loans and credit cards, these debts often are separated equally between the parties. If one party were to spend large amounts of money on certain non-marital items that they will keep with them after the marriage, such as large purchases of cloths, for example, then it is possible that those debts may remain with the purchasing party and “carved out” of the overall debt to be separated. It is important to note that, unfortunately, if one party were to hide credit cards or loans from the other spouse, then both spouses may be liable for the entire debt, even if the unknowing spouse did not consent or even know about the debt. If there is a large amount of debt and how the money was spent is highly contested, then the assistance of an attorney is highly recommended.

Division of Assets and Liabilities

Once a court determines or an agreement is reached as to what is non-marital and marital, the court will then decide how to split the assets between the parties. As previously mentioned, this does NOT necessarily mean the marital property will be separated exactly 50% to each party; the law only requires that the distribution of the property be “equitable.” The court will attempt to separate the marital property and balance the debts against the valued assets; it is not uncommon for one spouse who receives more in assets to receive more in debt. For example, if the home, which is typically the largest asset in more marriages, is worth $200,000 and the mortgage is $175,000, then the spouse receiving the home will likely end up with a higher asset value but will also likely end up with a higher debt because they will take the mortgage.

In some circumstances, the court can award unequitable distribution; this is where one party will receive a higher award (net value of the assets received minus the net value of the debts received). Some important factors when requesting and receiving unequitable distribution are, but not an exhaustive list, include:

  • How long the parties have been marriage;
  • Each spouses’ debt and liabilities;
  • Education of each party;
  • If one party has wrongfully dissipated assets after the Petition was filed or the two (2) years before the Petition was filed; and
  • Economic circumstances of each party. 

If unequitable distribution is going to be requested, obtaining the assistance of an attorney is highly advisable.

Conclusion

While the separation of property, on its face, appears to be as simple as splitting the property in half and giving it to each party, unfortunately the circumstances of life do not permit such simple conclusions. Once the assets and liabilities are separated, it is highly advisable that your name be removed entirely from the liability; if the receiving spouse does not make payments on the debt, then it is possible the creditor can come after the other spouse. Although the court determined that the liability was to remain with one party, the creditor is not obligated to abide by that order and can go after all individuals whose name is on that liability.

If you have any questions or concerns about your specific situation, it is advisable that you contact an attorney to discuss your options.

From the Author: W. Matthew Kowtko, Esq.

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