EQUITABLE DISTRIBUTION OF ASSETS AND LIABILITIES
Property Distribution or Equitable Distribution as it is called in Florida is one of the most prevalent issues in any divorce action. The good news is that most of the time, alimony and timesharing (child custody) are the most contentious issues. From my experience, cases involving primarily the division of assets and liabilities are not, for the most part, as contentious as custody or alimony cases. The good news is that most property disputes quickly resolve themselves at mediation. The reason for this is that unlike the issue of attorneys fees and costs and alimony, which are discretionary in nature, the statute affecting property division (property distribution or equitable distribution) absent certain circumstances like business valuations and/or a battle of experts, is pretty straightforward.
Florida does not have equal distribution necessarily, but often, the court will attempt to have cases resolved by dividing assets and liabilities as equal as possible, as a starting point. If everything were divided equally, this would mean that every single asset or liability would have to be sold and/or divided in half, which is not always desirable.
Instead, the Florida courts try to figure out the net estate (assets minus liabilities), and then try to distribute them so that each party is left with approximately the same net dollar value of the assets in each party’s respective column. This does not mean that each party will have the exact same number of assets or liabilities in their column. I often provide an example to clients where I liken the process to trading baseball cards. One card may be more valuable than 10 cards combined, yet the court would award one asset (card) to one party and the remaining 10 assets (cards) to the other party. As long as the total net values awarded to each party is equal or close to it, then arguably it is considered an equitable (fair) distribution.
Florida Statute §61.075 governs the equitable distribution of assets. According to that statute, the general rule is that any asset that has been acquired during the course of the marriage is marital in nature, which means that it is subject to equitable distribution (divided or distributed equitably).
There are some exceptions to this that are set forth in the statute. Even though, as I just mentioned, the general rule is that any asset that is acquired during the course of the marriage is marital, an inheritance received during the marriage would not be marital and would belong solely to the party who received it. This asset or assets would be carved out and not factored as part of the marital equitable distribution scheme.
Comingling– There are some problems with the above scenario, however, as any party who happens to commingle the funds from a non-marital asset can convert part, or even all, of that asset and thus have it treated as marital in nature. This is especially the case when it becomes so difficult for the court to differentiate between the marital portion and the non-marital portion. Another problem that I often see is when the other party adds the other spouse’s name to that asset (usually a home and/or joint bank account), this unfortunately creates a legal presumption that the asset in question is marital in nature. This becomes extremely difficult to contest later as one party would be obligated to prove by clear and convincing evidence that a gift was not intended.
Some other examples of what is considered marital or non-marital assets are set forth in specific detail in Florida Statute §61.075.
LIABILITIES / DEBT
This same Florida Statute §61.075 governs the equitable distribution of liabilities/debt. It is very similar in its application as marital and non-marital assets are dealt. If a liability was incurred during the course of the marriage, it is presumed to be marital in nature, and is subject to equitable distribution.
Adultery– In the case of adultery, even though Florida happens to be a no fault jurisdiction, it does not have really an impact in most cases. However, when it comes to equitable distribution, if one party has spent marital funds on an adulterous affair, the Florida court’s will allow the other party to recoup one-half of the that portion that was dissipated or spent on that adulterous affair (note: the court can only go back 2 years).
Some other examples of what is considered marital or non-marital liabilities/debts are set forth in specific detail in Florida Statute §61.075 itself.