Quick Info: What is marital property?
Marital property in Florida is anything acquired during the marriage with money earned while married. It does not matter whose name the asset is titled in. There are many unique rules that govern gifts, inheritances, retirement accounts, and family businesses.
The general rule in a Florida divorce is that the court considers and divides up the “marital” property of the ex-spouses and that the non-marital property of each party remains with the spouse that owns that particular property. In dividing up the marital property, the court is expected to be guided by principles of equity, making sure that the marital property division treats both spouses in a fair (but not necessarily in an exactly similar) manner. Although a property division might not necessarily be 50/50, the property division should be such that each party is treated fairly and exits the divorce with a similar amount of the marital estate. As opposed to community property states Florida is an equitable distribution jurisdiction. That means we start with a presumption of a 50/50 split but then apply hundreds of rules in an effort to make the division more fair.
Of course, the first step of a property division requires the court to determine what is and what is not marital property. This is not always as simple as it sounds: it is not as simple as looking at when a particular asset or piece of property was acquired. Instead, Florida statutes provide courts with guidance in determining whether a particular asset or property is marital or non-marital property. The word “guidance” is used because courts and judges in Florida have incredible discretion to do what they believe is fair.
Marital property is divided by the court in a Florida divorce. Florida Statute 61.075 describes what constitutes marital property. It includes:
- Assets acquired during the marriage. If a particular property or asset was purchased or otherwise acquired (in most cases) during the marriage, it is considered marital property. It does not matter if the property or asset was acquired by one or both spouses. For instance, if a husband purchases a classic car during the course of his marriage to his wife, the classic car will be considered marital property, even if the husband purchased the property with money from his own paycheck and only his name appears on the title, the car is still likely to be treated as marital property. A common myth is that a spouse can protect an asset by keeping it in his or her name. That is not true in Florida.
- Enhancement in value and appreciation of non-marital assets. If a non-marital asset becomes more valuable because of the work of one or both of the spouses or because one or both spouses spent marital funds or assets on improving it, the “enhancement” – that is, the difference between the present value of the asset and the value of the asset prior to the marriage – can be considered marital property. But it is important to keep in mind there are different rules that look at whether the enhancement was due to active labor, marital money investment, or passive appreciation.
This situation frequently arises when one spouse owns a business from before the marriage. After the marriage, the other spouse becomes an employee of the business. By the efforts of both parties, the business expands and increases in value. That increase in value would be considered marital property, even if the business existed before the marriage. But the business division in a divorce is a science all its own.
Or consider a house owned by the wife. She used and owned the house before she met and married her husband, and her name appears on the mortgage and title. After the two married, however, both of them spent a considerable amount of money improving and adding on to the house. As a result of their efforts, the house appreciates in value. That appreciation would be considered marital property.
- Interspousal gifts during the marriage. When one spouse gives another spouse a gift, that gift would be treated as marital property. Suppose Jesus gives Juana a new car for their tenth wedding anniversary. Regardless of where Jesus obtained the money for the gift – and regardless of whose name appears on the title or who primarily drives the car – the car can be considered marital property and subject to division by the court.
This can be advantageous for the spouse who gave the gift, as the value of the gift would be divided between the parties by the court. Conversely, for the spouse who received the gift, this means that he or she may not be able to keep the gift or would have to offset the value of the gift in another way. For instance, suppose Jesus and Juana have $100,000 worth of marital property subject to division, including a $30,000 car. If the car is treated as marital property, each party would receive $50,000 of the marital estate. However, if the car is treated as separate or non-marital property belonging to Juana and not subject to division, then there is only $70,000 worth of marital property. Jesus would receive $35,000, while Juana would receive $35,000 worth of marital property plus the car.
- Real and personal property held as tenants by the entireties. If the parties hold property as tenants by the entireties, then that property is presumed to be a marital asset. Tenants by the entireties is a special form of ownership available only to married couples. In order to be held as tenants by the entireties:
- The property must be subject to joint control and ownership;
- Both spouses must have an identical interest in the property;
- The parties must have been married at the time they acquired the property;
- The spouses’ interest must have been granted by the same instrument; and
- The spouses’ interest must have begun at the same time.
Tenants by the entireties offer certain protections and benefits for married couples; however, owning property in this manner will result in the court presuming the property so held is a marital asset. If one spouse wants the court to treat the property differently in a divorce, he or she has the burden of showing that the presumption is incorrect and that the property is in fact separate, non-marital property. He or she must do so by “clear and convincing evidence.”
- Certain retirement benefits. The statute also includes “vested and nonvested” benefits, rights, and funds that accumulated during the marriage in any sort of retirement or insurance plan will be considered marital property. Suppose Jesus works for an employer that provides a 401k. Before marriage, Jesus had accumulated $10,000.00 in that 401k plan. After marrying Juana, he accumulated an additional $25,000 in his retirement plan before he and Juana divorced. While the $10,000 was acquired before the marriage (and will likely be treated as non-marital property), the $25,000 would be considered marital property. Retirement plans end up being divided in the majority of divorce cases.
Non-marital property (sometimes called separate property) is a property that is not included in the marital estate and is thus not subject to division by the court. Instead, whichever party owns the non-marital asset will keep that asset after the divorce. Non-marital property includes:
- Assets acquired prior to marriage. Those assets and property acquired by either of the spouses before they become married are to be treated as separate property not subject to division. Suppose Jesus purchases a Cadillac as a gift to himself after getting his first new job. A few years later, he marries Juana. Because Jesus acquired the Cadillac before his marriage, it will likely be treated as separate property. What is more, if Jesus later decides to trade in his Cadillac for a different car, that too can be considered a non-marital asset.
- Property acquired by non interspousal gift or inheritance. Continuing with the example of Jesus and Juana, suppose that Jesus’ brother gives him a Cadillac while Jesus is married to Juana. Or suppose that the Cadillac belonged to Jesus’ grandfather, who then gifts the Cadillac to Jesus as part of the grandfather’s will. In these situations, the court is likely to treat the property as Jesus’ separate property.
- Income derived from nonmarital assets. This situation typically arises when one spouse owns rental property prior to the marriage. So long as the spouse that owns the rental property keeps the proceeds separate from marital property or joint accounts, the income produced will be considered non-marital property.
- Assets and property excluded by agreement. Through a valid prenuptial or postnuptial agreement, the parties can exclude assets and property from division, even if the property would otherwise be considered marital property. Suppose Jesus and Juana enter into a postnuptial agreement. They agree, amongst other things, that Jesus’ car will be treated as his own separate property and Juana’s car will be treated as her own separate property. Assuming that they complied with the requirements for a legally enforceable agreement, the court will honor their agreement and exclude those items from the marital estate.
Commingling of Property
As if determining what is marital property and what is separate property is not difficult enough, sometimes spouses complicate the process because they have commingled – that is, combined – marital assets with non-marital assets. This frequently occurs when one of the spouses has an individual banking account in their name only before the marriage but, after marriage, they add their spouse to the account and allow their spouse access to the account. Or they pay marital debts and expenses (groceries, bills, etc.) from the account. If the parties are able to agree on what portion of the asset is marital and what portion is separate, the court will likely adopt that agreement. But what if the parties cannot agree? In such a situation, the court may need to step in and determine what part, if any, of the asset is separate property.
Assets and property are not the only things that get divided during a divorce; the liabilities and the debts of the spouses get divided as well. Similar to assets and property, liabilities are classified as either separate and non-marital or as marital liabilities, depending on who incurred the debt and when it was incurred. If a debt is found to be non-marital, then the spouse who incurred the debt will be singularly responsible for the full debt following the divorce. If, on the other hand, the liability is found to be marital, the court may order that both parties continue paying the debt jointly or that some marital assets be sold in order to satisfy the debt. For instance, Jesus’ student loans incurred before marriage will likely continue to be his separate debt, whereas credit cards used for purchases during the marriage will likely be considered a marital liability.
Our Property Division Attorneys
Once the court makes its final property division, it is extremely difficult to have that order undone. In other words, final property divisions tend to be final. That is why it is often very beneficial to hire our experienced family law attorneys early in a divorce case. After hiring us, it is important to:
- Disclose all assets and property. Hiding property from a person’s spouse is never a good idea, regardless of whether it was an active deception (a person affirmatively lied about owning certain assets) or whether it was an indirect deception (a person does not inform the spouse about other assets but instead remains silent). A court has means of punishing a deceptive spouse who is not truthful about his or her assets. Not only this, but a spouse who deceives his or her attorney about the spouse’s assets and property makes it impossible for the attorney to work to protect that property and its value.
- Discuss how the property was acquired and used. A person should also discuss how various assets and property were acquired and how they were used during the marriage. These important facts can be used by the attorney to argue whether certain property should be included in the marital estate or regarded as separate, non-marital property.
- Discuss what items and assets are important. Not all spouses feel the same way about all items of property. If there are particular pieces of property that carry a special significance, a party should discuss this with his or her attorney. Likewise, if there are assets that are of little importance, a party should communicate this as well so that the attorney can focus more time on those assets and pieces of property that are meaningful.
By seeking the advice of an Ayo and Iken attorney early in a divorce, a party has a greater opportunity to protect property that is meaningful and significant from division by the court.