When a married couple divorces in Florida, the court must divide assets (property, income, investments, etc.) and liabilities (debts). Who gets what, and how much? How is that decision reached?
NOTE: This issue can get extremely complicated during a divorce. The following is a very brief, general explanation of asset and liability division that does not cover all issues or possibilities. Contact George Gelb for a more in-depth explanation.
The standard used by Florida courts for the division of assets and liabilities is Equitable Distribution. That means the division must be equitable, or fair, to both parties. Florida law provides that usually equal is fair, but if the judge believes a precisely equal division would be unfair, the judge will consider a number of factors to decide what would be a fair division.
Factors the court considers in determining equitable distribution of assets include:
- length of the marriage
- each spouse’s economic circumstances
- any interruption in either spouse’s career or educational opportunities
- each spouse’s contributions to the marriage, including contributions as a homemaker or parent
- either spouses contribution to the career or educational opportunities of the other spouse
- each spouse’s contribution to acquiring or increasing income
- each spouse’s contribution to improving marital or non-marital assets
- liabilities incurred by either spouse, whether affecting martial or non-marital assets
- either spouse’s intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition for divorce or within 2 years prior to filing
The court will also consider how easy or difficult an asset is to divide.
For example, a business started by one spouse during the marriage would generally be a marital asset, but in most cases the judge would award the business entirely to the operating spouse, while giving the other spouse other property or money to make up for it. A court won’t order a couple to divide a marital home–in other words, to each take part of the actual house–but the judge could order them to sell it and divide the proceeds. A judge also has the option of awarding one spouse the right to live in a marital home temporarily, if this seems to be the most equitable resolution. The court will give particular consideration to how this option might benefit any children who are still in school.
(source: divorcenet.com)
What constitutes marital property?
Marital property includes all assets and debts the spouses acquired during the marriage. It doesn’t matter if they were acquired separately or together – if they were acquired during the marriage, they count as marital property. Marital property also includes retirement benefits, pension, insurance benefits, profit-sharing, annuity, deferred compensation, and more.
Only marital property is divided upon a divorce. Non-marital property is not divided, unless it meets certain requirements (see below).
What is non-marital property?
Non-marital, or separate, property includes assets and debts owned or acquired prior to the marriage, or acquired during the marriage as a gift (not from the other spouse) or inheritance. It also includes anything predetermined in a written agreement such as a prenuptial or postnuptial agreement to remain separate property; income from separate property, unless it has been treated as marital property; and items purchased with or exchanged for separate property.
If non-marital property increases in value over the course of the marriage, the increase in value will be considered marital property. For example, if you own a business worth $1M and while you are married the value increases to $1.5M, the court will consider the original value of $1M as separate property and the extra $500K as marital property to be divided.
Can I change non-marital property to marital property?
Yes, you can change non-marital property to marital property a few ways. One ways is by commingling. Your pre-marital bank account can become marital property if your spouse deposits money into it. A house owned by one spouse before the marriage can become marital property if the other spouse pays the mortgage and other expenses.
Another way to change non-marital property to marital property is by title. Let’s say you own a condo prior to the marriage. This is your separate property. But during the marriage you change title to joint ownership. The court would presume you intended to make a gift to the marriage, and the condo will now be considered marital property.
NOTE: How you hold title is very important in Florida. Contact George Gelb for a FREE consultation and to determine if the courts will likely consider your property marital or non-marital.