Property Division/ Equitable Division of Assets
Florida has has adopted what is known as Equitable Distribution when dividing property in a divorce. This means that marital property is fairly divided between the parties.
All assets and liabilities must go through the same analysis for equitable distribution: identification, classification as non-marital or marital, setting aside of non-marital property, then valuation of the marital assets and liabilities, and distribution of the marital assets and liabilities. An overview of these steps is set forth below.
Identification and Classification of Assets and Liabilities:
Identification involves determining when the asset or liability was acquired. Marital assets and liabilities include all assets acquired and liabilities incurred during the marriage, individually by either spouse or jointly. Marital assets also include the increase in value of non-marital assets resulting from the efforts of either party during the marriage. All assets acquired and liabilities incurred by either spouse after the date of the marriage and not specifically established as non-marital assets or liabilities are presumed to be marital assets and liabilities.
For many married couples, retirement assets like pensions, 401(k) plans, Individual Retirement Accounts (IRAs), profit sharing plans and deferred compensation plans are the largest assets after the marital residence. Even if the retirement account is earned as a result of one spouse only, the portion of it that was earned during the marriage is still marital property subject to equitable distribution.
Setting Aside of the Non-Marital Property:
Next, the Court must set aside non-marital assets and liabilities before distribution of marital assets and liabilities. The assets and liabilities that are separate and are set aside are not included in the overall equitable distribution scheme.
Valuation of the Marital Assets and Liabilities:
The Court must then assign a value to each marital asset and liability. The Court has discretion to choose a valuation date to value each asset and liability. Generally, the date of valuation is either the date the parties entered into a valid agreement or the date of filing of the Petition for Dissolution of Marriage. Valuation of each asset and liability must be based on evidence and cannot be determined by splitting the difference.
Distribution of the Marital Assets and Liabilities:
The Court will next designate which party will keep each asset, which party will be responsible for each liability, whether an asset or liability will be split, or whether an asset will be sold. It is not uncommon for parties to focus on a single asset or liability, for example the marital home. Remember that the Court must consider all of the marital assets and liabilities together when distributing the same.
If marital assets include business interests or other complex assets, we help ensure that the distribution of assets is handled properly. We work cooperatively with forensic accountants, appraisers, and other financial experts.
The Court starts with a presumption that assets and debts are split equally. However, sometimes there is not a simple way to make things come out equally. If this is the case, the Court may order an equalizing payment from one party to another. This is to balance the equitable distribution scheme.
Many other aspects of Florida divorce are modifiable, like alimony, child support and custody/timesharing. However, the equitable distribution of marital property is not modifiable in Florida.
If you are facing a divorce and have concerns about distribution of your assets, call us. You need capable legal counsel to protect your assets, interests and future.