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Distribution of Property in a Divorce: What Do I Stand to Lose?
One of the most common issues I deal with as a family law practitioner pertains to the valuation and distribution of property in a divorce setting. Many people are surprised about what circumstances can and cannot affect the distribution of marital assets, having seen one too many television courtroom dramas.
In Florida, all property or any portion thereof acquired during the marriage through marital funds, labor, efforts and/or services are the "marital assets" of both parties, and therefore subject to equitable distribution. This is despite title thereto, and includes both party's joint and separate bank accounts, retirement or pension accounts, stocks, investments, vehicles, and real and personal property. Because Florida is a "no-fault" jurisdiction, you will not be able to punish your spouse for his/her bad behavior by asking the Court to award more of the assets to you, or by asking for alimony.
Who Keeps the Marital Home?
The goal of equitable distribution is to liquidate and distribute all assets at the time the Final Judgment is entered. If you own a home that was acquired during the marriage and/or with marital funds, any equity therein must be distributed in the divorce. There are many factors that are considered in determining how and when the equity is distributed between you and your spouse.
When the parties have children, a court may find that it is desirable for the custodial parent to remain in the marital home to avoid uprooting the children from their routine and stability. The Court will offset assets in order to balance the equities. When there are insufficient offsetting assets to permit the custodial parent to remain in the marital home, the Court may order that the marital home be sold in the future when it is least detrimental to the best interests of the children. Generally, in the eyes of the Court, the younger the children, the more resilient they will be to change and the less likely they are to have developed attachments to school, friends, activities, etc.
Often, particularly if there are no children, one party wishes to keep the marital home and to remain living there. If feasible, that party may buy the other party out of his/her share of the equity in the marital home by effectuating a refinance or otherwise obtaining sufficient funds with which to do so. If neither party can afford to keep the marital home and/or creditworthiness is an issue in obtaining a refinance/loan, the home will have to be sold and the net proceeds distributed to the parties.
Pensions and Retirement.
Pensions, annuities, 401K Plans, Keoghs, IRAs and any form of deferred compensation plans are subject to equitable distribution, despite the fact that they are titled in only one party's name. Only that portion of the asset accruing during the marriage through the date of the Petition for Dissolution of Marriage is subject to equitable distribution.
The value of 401K Plans, Keogh plans and assets such as IRAs are easily ascertained by simply obtaining account balances. The valuation of a pension or annuity is more complex. Actuaries or pension evaluators routinely provide the present dollar value of pensions. The tax consequences of distributing these assets must be taken into consideration and are all too often overlooked.
Date of Valuation. Assets subject to distribution are typically valued as of the date of filing of the divorce petition. If the asset increases or decreases in value due to fluctuating market conditions, the gain or loss is realized by both parties at the time of the actual distribution/sale of the asset. However, when an asset has increased in value due to the sole efforts of one party, the gain usually will be awarded to the person responsible for the increase. Losses are similarly treated; recent case law has created several exceptions to the general rule, depending upon whether an asset was premarital, whether the increase/decrease was active or passive, and whether a non-owner spouse contributed to the increase in value during the marriage.
In family court, although an asset's value may be agreed upon by the parties, it is crucial to establish valuation by expert opinion if it is in dispute. Testimony of CPAs as well as business and real estate appraisers can have a substantial effect on the outcome of a divorce case.
Valuing and distributing your assets in a divorce setting can be an intricate endeavor and certainly should not be taken lightly. I often find that both those with significant assets and even those who believe their assets to be relatively simplified have more to gain than they realize.
Florida is a no-fault divorce state. The only requirements to getting a Florida divorce is that the marriage is irretrievably broken and that the filing spouse meets the residency requirements. The only other ground for divorce in Florida besides the marriage being irretrievably broken is mental incapacity of one of the spouses.
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