Equitable Distribution Flashcards
What statute governs equitable distribution.
F.S. 61.075
The Court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on what factors?
I.C. AC/DC DIED
1. The contribution to the marriage by each spouse, including contributions to the care and education of the children and services as a homemaker.
2. The economic circumstances of the parties.
3. The duration of the marriage.
4. Any interruption of personal careers or educational opportunities of either party.
5. The contribution of one spouse to the personal career or educational opportunity of the other spouse.
6. The desirability of retaining any asset, including an interest in a business, corporation, or professional practice, intact and free from any claim or interference by the other party.
7. The contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.
8. The desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so, it is in the best interests of the child or that party, and it is financially feasible for the parties to maintain the residence until the child is emancipated or until exclusive possession is otherwise terminated by a court of competent jurisdiction. In making this determination, the court shall first determine if it would be in the best interests of the dependent child to remain in the marital home; and, if not, whether other equities would be served by giving any other party exclusive use and possession of the marital home.
9. The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within 2 years prior to the filing of the petition.
10. Any other factors necessary to do equity and justice between the parties.
When can the Court award an interim partial distribution?
When good cause is shown upon a sworn motion establishing the specific factual basis.
How is “good cause” defined for purposes of an interim partial equitable distribution?
Extraordinary circumstances.
In determining if extraordinary circumstances exist, the court must consider: (1) whether there is a need for funds to avoid or prevent the loss of an assets through repossession or foreclosure, the loss of housing, the default of either party to pay a marital debt, or the levy of a tax lien; (2) whether there is a need for funds to pay an expenses for a dependent child if nonpayment would be detrimental to the child; (3) whether the access of funds is necessary for either party to pay attorney’s fees; (4) any other factor that would justify the award. **NEW LAW IN 2024
What is the burden of proof to overcome a gift presumption?
Clear and convincing evidence.
What is the date used to identify marital assets?
The earliest of the following: date the parties entered into a valid separation agreement; other agreed upon date expressly provided for in an agreement; date of filing.
What date or dates can be used to value an asset?
The Court can use various dates to value an asset. Such dates include, date of filing, date of distribution or any other date that is just and equitable.
Can the Court consider a liability arising out of a forged document as a marital asset?
No- a liability obtained through forgery is considering a non-marital liability of the party who committed the forgery. * Note this does not apply to forging a tax return because the signature only verifies the income, but does not create a liability.
Can the court go back more than 2 years from filing when determining if there was dissipation?
Yes, the statute provides a 2 year look back, but it does not prevent the court from going back more than two years.
Does the Court need personal jurisdiction over a party to distribute assets.
Yes. Personal jurisdiction is required to distribute assets and resolve property rights.
What are considered marital assets by the court?
SEVEN
- Assets and Liabilities acquired during the marriage
- Enhancement in value and appreciation of non-marital assets either from efforts of either party or contribution or expenditure of marital funds or other forms of marital assets
- Paydown of principal of a note and mortgage secured by nonmarital property
- Interspousal gifts made during the marriage (however, if real property must be in writing and comply with statute of frauds)
- Vested and non vested retirement benefits accrued during the marriage
- Marital interest in a closely held business
- All real and personal property titled as TBE acquiring before or during the marriage
What are considered non marital assets by the court?
FIVE
- Assets acquired and liabilities incurred by either party prior to the marriage, and assets acquired and liabilities incurred in exchange for such assets and liabilities;
- Assets acquired separately by either party by noninterspousal gift, bequest, devise, or descent, and assets acquired in exchange for such assets;
- All income derived from nonmarital assets during the marriage unless the income was treated, used, or relied upon by the parties as a marital asset;
- Assets and liabilities excluded from marital assets and liabilities by valid written agreement of the parties, and assets acquired and liabilities incurred in exchange for such assets and liabilities; and
- Any liability incurred by forgery or unauthorized signature of one spouse signing the name of the other spouse. Any such liability shall be a nonmarital liability only of the party having committed the forgery or having affixed the unauthorized signature. In determining an award of attorney’s fees and costs pursuant to Section 61.16, the Court may consider forgery or an unauthorized signature by a party and may make a separate award for attorney’s fees and costs occasioned by the forgery or unauthorized signature. This subparagraph does not apply to any forged or unauthorized signature that was subsequently ratified by the other spouse.
How does the Court determine the value of marital interests in a closely held business?
(I) fair market value (defined as the price at which property would change hands between a willing and able buyer and a willing an able seller, without compulsion, with both parties having knowledge of the relevant facts); (II) if there is goodwill separate and distinct from the continued presence and reputation of the owner spouse, it is enterprise goodwill, which is considered a marital asset; (III) the court must consider evidence that a covenant not to compete or similar restrictive covenant may be required, but such evidence alone does not preclude the court from finding enterprise goodwill
Does the Court have the authority to equitably distribute real property outside of the Court’s jurisdiction?
Yes, however, the Court may not enter an order vesting legal title because that amounts to a partition. The Court’s in personam jurisdiction alone provides the court the authority to determine the equitable rights of the parties.
Are engagement rings subject to equitable distribution?
No, an engagement ring is a gift made on an implied condition to marry, therefore, once married, the engagement ring becomes pre marital property and is not subject to equitable distribution. This applies even if the ring has family heirloom status.
However, if an engagement ring is converted into another piece of jewelry, the additional cost is marital.
Do commingled assets maintain their non-marital classification?
No. Nonmarital assets that are commingled with marital assets lose their separate nature are subject to equitable distribution. Commingling occurs if nonmarital property becomes so intermingled with marital property that the marital property is no longer traceable and is incapable of being specifically identified as nonmarital property.
Is student loan debt acquired during the marriage, considered a marital liability when the other spouse will not benefit from the education due to the dissolution of the marriage?
No, the benefit is not a factor to be considered when allocating a marital debt for student loans.
Is debt incurred during the marriage, but used to cover a non-marital expense, considered marital debt?
No. The party who incurs a debt to cover a non-marital expense, the debt incurred is also non marital. Mortgage obtained during marriage signed by both parties, while note only signed by husband, on husband’s non-marital property and funds used for improvements on nonmarital property, was a non marital liability even though wife signed the mortgage as banks often require.
What is enterprise good will and is it marital?
Enterprise goodwill is the value of a business which exceeds the tangible assets (book value/NAV) and represents the tendency of clients/patients to return and recommend the practice irrespective of the reputation of the individual practitioner. Enterprise goodwill is marital.
What is personal goodwill and it is marital?
Personal goodwill is attributable to skill, reputation and continued participation of an individual. Personal goodwill is not marital.
How is the enhancement of a non-marital asset treated for purposes of equitable distribution?
An equitable distribution of marital assets should take into account the appreciated value of a nonmarital asset caused by the expenditure of marital funds or labor, including the parties’ management, oversight, or contribution to principal. Remember, only enhancement is marital, not the non-marital asset itself.
What is considered dissipation of marital assets to warrant an unequal distribution?
Dissipation exists where one spouse uses marital funds for his or her own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown. Examples, include, when one party creates an irrevocable trust and funds it with marital funds; withdrawing retirement funds to buy yourself a new house.
What is not considered dissipation?
Depletion of cash during the pendency of dissolution of marriage proceedings to pay living expenses or attorneys fees. There must be a finding of intentional misconduct related to the reduced balance.
Is adultery a basis for an unequal distribution?
No, not unless it results in a greater financial need of the other spouse or the depletion of marital assets.
When is joinder of a corporation necessary?
- when a party to the DOM requests transfer of corporate assets
- when both parties have access to corp books, personal expenses paid from corporate assets, there exists a blending of marital and business assets and joinder is required
When is joinder of a corporation not necessary?
If neither party to the DOM seeks a claim against the corporation. When the only request is to distribute corporate stock.
Is failure to comply with a property settlement punishable by contempt of court?
No. If the obligation is in the nature of settlement of property rights as opposed to alimony, support, or maintenance, the contempt power of the court cannot be invoked.
What kind of proceedings would trigger disposition of assets and liabilities under 61.075?
-dissolution of marriage; or
-proceeding for disposition of assets following a dissolution of marriage by a court which lacked jurisdiction over the absent spouse or lacked jurisdiction to dispose of the assets
the court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors, including the factors as specified in Fla. Stat. § 61.075(1)(a)-(j).What must court do first in distribution of assets and debts?
-set apart to each spouse that spouse’s non-marital assets and liabilities
How is valuation of a business calculated in Florida?
“The valuation of a business is calculated by
determining the fair market value of the business which is the amount a willing buyer and willing seller would exchange assets absent duress
What is the critical test to determine if a stock option is marital v. nonmarital
The date in which the options are GRANTED not the vesting date.
What is the presumption of assets acquired, and liabilities incurred by either spouse subsequent to the date of the marriage and not specifically established as non-marital assets or liabilities
Presumed to be marital assets and liabilities.
Who has the burden of establishing an asset or liability incurred during marriage is nonmarital?
Where assets/liabilities acquired/incurred during the marriage, the burden shifts to the party trying to establish it as non-marital. Once an asset/liability is established as pre-marital, the burden shifts to the opposing party to establish the asset as marital.
When a party claims appreciation of a nonmarital asset is marital, who has the burden?
Party making the assertion has the initial burden of proof to show marital efforts or funds used for improvement and the burden then shifts to the owner spouse to show some enhancement is exempt.
What was the proposition set forth in Held v. Held?
In 2005, Court concluded in Held that the adjusted
book value was used in determining the fair market
value of the business. The court rejected the inclusion of a non-solicitation agreement in enterprise goodwill.
What does Thompson v Thompson Fla Supreme Court case stand for?
This is a 1991 Florida Supreme Court case that stands for the proposition that GOODWILL is:
Fair market value approach should be the exclusive method of measuring business goodwill in FL
What are the seminal cases in FL on goodwill?
- Held v. Held
- Williams v. Williams
- Thompson v. Thompson
Are domestic support obligations dischargeable by bankruptcy
No - however, under the Bankruptcy Abuse Preventing and Consumer Protection Act, OTHER TYPES OF OBLIGATIOSN AND DEBTS ARISING OUT OF A SEPARATION OR DIVORCE INCLUDING PROPERTY SETTLMENTS ARE STILL DISCHARGEABLE UNDER CHAPTER 14
If court orders partition, what must the FJ include?
Reasonable deadlines for sale to take place - list date, etc
What must be plead for partition
- description of land
- names & address of owners
- quantity held by each
- Any other matter to enable court to adjudicate the rights and interest of the party
How is subject matter jurisdiction determined in partition
In any county where the land or any part thereof lies
Who can bring partition
Any one or more legal owners or others interested in the land to be divided
When is partition appropriate
When the property cannot be divided
With respect to a marital business, what can a court do with or without joining the corporation as a party
- distribute corporate stock that is marital
- prevent party from disposing of corporate assets in party’s control
- order transfer for corporate stock to the other
When is joinder of a corporation to an action necessary
If transfer for corporate assets is requested
Can spouse not living in a home seek rental value of property being occupied by other spouse during the dissolution of marriage action.
Not if the occupancy is for the benefit of a minor child pursuant to a court order
What factors shall court consider in determination of entitlement to setoffs or credits upon sale of marital home
61.077
(1)Whether exclusive use and possession of the marital home is being awarded, and the basis for the award;
(2)Whether alimony is being awarded to the party in possession and whether the alimony is being awarded to cover, in part or otherwise, the mortgage and taxes and other expenses of and in connection with the marital home;
(3)Whether child support is being awarded to the party in possession and whether the child support is being awarded to cover, in part or otherwise, the mortgage and taxes and other expenses of and in connection with the marital home;
(4)The value to the party in possession of the use and occupancy of the marital home;
(5)The value of the loss of use and occupancy of the marital home to the party out of possession;
(6)Which party will be entitled to claim the mortgage interest payments, real property tax payments, and related payments in connection with the marital home as tax deductions for federal income tax purposes;
(7)Whether one or both parties will experience a capital gains taxable event as a result of the sale of the marital home; and
(8)Any other factor necessary to bring about equity and justice between the parties.
How are pensions treated for purposes of equitable distribution?
Either as income or an asset, but not both.
What needs to be included a FJ for equitable distribution?
Written findings of fact as to the following:
a) clear identification of nonmarital assets and ownership interests
b) identification of marital assets, including the individual valuation of significant assets, and designation of which spouse shall be entitled to each asset;
c) identification of marital liabilities and designation of which spouse will be responsbi8le for each liability;
d)Any other finding necessary to advise the parties or the reviewing court of the trial court’s rationale for the distribution of marital assets and allocation of liabilities.
What are the sequential steps of equitable distribution?
Equitable distribution of marital assets is a three-step process: (1) identification of marital and nonmarital assets, (2) valuation of marital assets, and (3) distribution of marital assets as statutorily prescribed.”).
Although there is a presumption in favor of an equal distribution, a trial court may unequally distribute the marital assets and liabilities after considering the ten factors set out in section 61.075(1)(a)-(j), Fla. Stat.
How is the portion of passive appreciation subject to equitable distribution determined?
By multiplying a coverture fraction by the passive appreciation in the property during the marriage, specifically
I. the passive appreciation is determined by subtracting the value of the property on the date of marriage or the date of acquisition, whichever is later, from the value of the property on the valuation date, less any active appreciation of the property and less any additional encumbrances secured by the property during the marriage in excess of the note and mortgage on which principal is paid from marital funds;
II. the coverture fraction consists of a numerator (total payment of principal from marital funds) and a denominator (value of property on the date of marriage or acquisition, whichever is later).
III. The total marital portion of the property consists of the marital portion of the passive appreciation, the mortgage principal paid during the marriage from marital funds, and any active appreciation of the property during the marriage as described in sub-subparagraph b., not to exceed the total net equity in the property at the date of valuation.
IV. The court shall apply the formula specified in this subparagraph unless a party shows circumstances sufficient to establish that application of the formula would be inequitable under the facts presented.
Are settlement funds from a personal injury or worker’s compensation claim marital?
Only the portion of the damages paid to the injured spouse as compensation for PAST lost wages and loss of earning capacity is considered marital. Damages for future loss of earnings and loss of earning capacity and future medical expense are the separate property of the injured spouse, though they may be considered in fashioning alimony.
Weisfeld v. Weisfeld.
The marital property should also include those funds for which no allocation can be made.
What are the two principal methods whereby courts distribute and divide pensions?
- Immediate offset method: one spouse receives the present value of his or her interest in the other spouse’s pension ether in cash or as an offset to the share of marital property;
- Deferred distribution method: the court determines what the employee’s benefit would be if he or she retired on the date of the final hearing (without an early retirement penalty), then multiplies this amount by the % to whi8ch the other spouse is entitled. This yields a fixed dollar amount which the awarded spouses receive from each of the employee’[s pensi8on payments after retirement.
Are DROP accounts subject to equitable distribution.
Yes, a former spouse’s entitlement to an interest in a DROP fund and to interest and to COLAs on such funds, is subject to division.
How are stock options treated by the court?
The court has the discretion to treat stock options as income rather than assets, if the stock options are regular and recurring..
When stock options are given as deferred compensation for past services, how are the options treated?
As marital assets subject to equitable distribution.
Are stock options that were granted during the marriage, but not vested at the time of the filing of the dissolution, marital or non marital?
Marital. The date of granting is critical to determining the character of the options so long as they are for deferred compensation and not incentive to continuing working.
Define enterprise goodwill?
The value of a business which exceeds its tangible assets and represents the tendency of clients/patients to return to and recommend the practice irrespective of the reputation of the individual practitioner. (McDonald’s, Walgreens, etc).
Is enterprise goodwill a marital asset?
Yes, see Thompson.
Define personal goodwill?
Attributable to the skill, reputation, and continued participation of an individual.
Is personal goodwill a marital asset?
No. See Schmidt and Thompson.
What is the fair market value of a business?
What a willing buyer would pay and what a willing seller would accept, neither party acting under duress for sale of the business.
Who has the burden of proof to establish enterprise goodwill?
The party attempting to show there is enterprise goodwill.
What was the holding in the 2024 case of Rosenberg v.
Rosenberg as it pertains to the valuation of a business?
Personal goodwill of medical professionals in multi-member professional practice was required to be excluded in calculating net value of sale of medical practice in practice member’s marriage dissolution proceeding; just as divorcing member’s personal goodwill was his own non-marital asset, personal goodwill of other 34 physicians in practice was non-marital asset of each physician and not marital asset of divorcing member.
Are interspousal gifts marital property ?
An interspousal gift of real property may not be made in the absence of a writing that complies with the requirements of s. 689.01. The joinder of a spouse in the execution of a deed with the sole purpose of the conveyance of homestead real property to any person or entity other than the other spouse or both spouses jointly does not change the character of the real property being conveyed, or any proceeds from the sale thereof, to marital property. Effective as of July 1, 2024.
How are marital interests in a closely held business valued per the recent change to 61.075.?
The court shall determine the value of the marital interests in a closely held business as follows:
(I) The standard of value of a closely held business is fair market value. For purposes of this sub-subparagraph, the term “fair market value” means the price at which property would change hands between a willing and able buyer and a willing and able seller, with neither party under compulsion to buy or sell, and when both parties have reasonable knowledge of the relevant facts.
(II) If there is goodwill separate and distinct from the continued presence and reputation of the owner spouse, it is considered enterprise goodwill, which is a marital asset that must be valued by the court.
(III) The court must consider evidence that a covenant not to compete or a similar restrictive covenant may be required upon the sale of the closely held business, but such evidence alone does not preclude the court from finding enterprise goodwill.
What is the burden of proof as to whether an asset is nonmarital?
The burden of proof is on the party claiming the asset is nonmarital. Once it is proven that there was active appreciation of a nonmarital business or property, the burden then shifts to the other party to show that some, if any, portion of the enhanced value is exempt from equitable distribution.
Are irrevocable trusts marital assets?
No. Irrevocable trusts are non marital. However, this does not prevent the court from determining that transfer of marital assets to an irrevocable trust was dissipation preventing the court from awarding an unequal distribution.
What is the court required to do to determine that a spouse dissipated marital assets?
Court must make a specific finding of intentional misconduct based on evidence showing that the marital funds were used for one party’s own benefit for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown. Note, misconduct is not shown by mismanagement or simple squandering of marital assets in a manner of which the other spouse disapproves.
What is the cut off date for determining assets and liabilities to be identified or classified as marital assets and liabilities?
The earliest of the date the parties entered into a valid separation agreement, such other date as may be expressly established by such agreement, or date of filing.
Can debts satisfied as of the date of filing be included in equitable distribution?
No. It is error for the court to include an asset or liability in its equitable distribution determination if it does not exist at the date of filing (absent a valid separation agreement).
What is the date of valuation?
Per 61.075(7), the date for determining the value of assets and the amounts of liabilities identified or classified as marital is the date or dates as the court determines is just and equitable under the circumstances. Different assets may be valued as of different dates, as in the Court’s discretion, the circumstances require.
What valuation date is appropriate to value bank and other investment accounts?
Current date since the accounts change due to market forces, otherwise the court should make findings explaining it’s decision to use another date. Schroll.
What valuation date is appropriate for retirement accounts?
Date of trial, however, post filing contributions should be carved out as non-marital. Duhamel.
What is the standard of review for valuation date?
Abuse of discretion.
What is the standard of review for classification date?
De novo.
How does the court treat appreciation due to post filing efforts?
Asset should not ordinarily be valued as of a post dissolution date because the subsequent change in the property’s value due to non marital labor or efforts cannot be distributed. Jahnke.
If there was a valid separation date in another state, is it error for the Florida court to use that date for purposes of valuing the equitable distribution?
No. Date of filing separation action in out of state case is an appropriate valuation date selected by the trial court in FL. Kvinta.
The wife purchased a home in her name during the marriage. Undisputed that the husband made no financial contributions toward the home during the marriage. The trial court valued the home at the date of trial. The wife claimed date of valuation should have been when the parties separated (lower value) – seven years before the divorce was filed. Husband disagreed. When should property be valued?
As of date of separation. Bellegarde (2024 4th DCA case)
Can non marital property be converted into marital property?
Yes, if commingled, non marital property loses its non marital character. Pfrengle.
Who has the burden of proving that a jointly titled asset is non marital?
The spouse seeking to have the jointly titled property declared a non marital asset has the burden over overcoming the presumption by proving that a gift was not intended. The burden of proof to overcome the gift presumption is clear and convincing evidence.
H owned building prior to marriage. During marriage, building was put into an LLC formed during marriage. W helped with vast improvements made to the building. Building sold during marriage and parties used proceeds to purchase a business. Business sold and funds went back to LLC. Funds used to pay in part, family expenses. Marital or non marital?
Marital.
Is the paydown of a mortgage with marital funds marital when the asset did not appreciate?
Yes. Spouse should be credited for 50% of the paydown from marital funds even if the asset did not appreciate.
Is enhancement of non marital stock considered marital?
Depends on whether the appreciate was a result of marital effort, or just passive appreciation. If passive, it remains non marital. If a result of marital labor (ex, owner spouse was in upper management), enhancement is marital. Burden is on the non-owner spouse to prove that the owner spouse contributed marital efforts to the appreciation of non-marital stock. See Robbie, Oxley, Witt-Bahls.
Is a pre marital business that did not appreciate in value marital?
No. If there was no appreciation, the pre marital business remains non marital. Ramos.
When pre marital property had no equity at time of marriage, is appreciation marital?
Yes, where premarital property had no equity at the time of the marriage all of the appreciation should have been determined to be marital. Matyjaszek.
Do disparate earning abilities justify an unequal distribution?
No, disparate earning abilities alone is not sufficient to support an unequal distribution. Dease.
What is the general rule regarding distribution of a jointly owned business?
As a general rule, it is improper for the court to leave the parties as joint owners of a business. Such a financial arrangement is intolerable.
Is it error to add provisions to a QDRO not included in the MSA?
Yes, the QDRO must reflect the language in the MSA and cannot add terms.
What findings are required by the court regarding distribution of marital assets and liabilities?
In any contested dissolution proceeding where there has been no stipulation or agreement, any distribution of marital assets or marital liabilities shall be supported by factual findings in the judgment or order based on competent substantial evidence with reference to the factors enumerated in subsection (1). The distribution of all marital assets and marital liabilities, whether equal or unequal, shall include specific written findings of fact as to the (a) Clear identification of nonmarital assets and ownership interests; (b) Identification of marital assets, including the individual
valuation of significant assets, and designation of which spouse shall be entitled to each asset; (c) Identification of the marital liabilities and designation of which spouse shall be responsible for each liability; and (d) Any other findings necessary to advise the parties or the reviewing court of the trial court’s rationale for the distribution of marital assets and allocation of liabilities.
Is equitable distribution modifiable?
No. It is non modifiable.
Does partition have to be specifically plead?
There is a split amongst the districts.
2nd - not necessary to plead partition
4th - must be plead
5th - must be plead
Can the court order pre-judgment partition?
No. Blew v. Blew
When should a corporation be added to a dissolution of marriage proceeding?
When a transfer of corporate assets is requested. If the corporation is not joined then the trial court has no power to order a transfer of the corporate asset.
When is joinder of a corporation not necessary?
where one party does not seek a claim against the corporation or claim of unequal distribution of property owned by the corporation.
What does the 2024 case of Rosenberg stand for with regard to personal goodwill?
Personal goodwill of all of the physician’s in a multi-physician medical practice should be excluded from the net value.
Can the court “split the difference” when valuing assets?
No. the court cannot split the difference as it is an improper method of valuation.
What is the three step process to calculate marital and nonmarital portions of employment-related stock options?
- Determine whether stock options are employee compensation options or market options
- Is the primary purposes for past services or future services
3.Coverture formula for determining the marital and nonmarital portion of option in question is to take the time from the grant date to the date of filing and divide it by the entire time from the date of options in question were granted until the vesting date
