For many clients going through divorce, there is a concern that their nonmarital property can transform into marital property, and then get distributed by a court. Believe it or not, divorce lawyers know that in certain cases, it is easy for your nonmarital asset to be transformed into a marital one. One couple in north Florida found out how courts look at whether your nonmarital property has been transformed into a marital property during a divorce.
Defining Marital and Nonmarital Property
Understanding a little about Florida’s equitable distribution statute will help you protect your premarital assets from being wrongly divided. In Florida marital assets and liabilities include assets acquired and liabilities incurred during the marriage, individually by either spouse or jointly by them.
Many people forget that marital assets also include the enhancement in value and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.
Another area of transforming nonmarital assets into marital one is by gifts. Under Florida law, marital assets include gifts between spouses during the marriage.
Conversely, nonmarital assets and liabilities include things like assets acquired and liabilities incurred before the marriage, and assets acquired separately by either party by non-interspousal gift, bequest, devise, or descent. For example, an inheritance may initially be considered nonmarital property absent anything else.
Before a court will classify your assets as either marital or nonmarital, the court will consider numerous factors. One of the factors a court will look at is the title of the property. A court will also consider whether you commingled your marital funds with your nonmarital funds. Were there any increases in the value of your nonmarital stock accounts because of marital efforts, or control of the funds? If so, a court may consider that too. They will also look at the length of the marriage, and your intent concerning the marital or nonmarital status.
Transforming Marital Property
In a recent case in Florida’s panhandle, a husband and wife divorced. During the trial, the family judge added to the equitable distribution schedule one of the husband’s Certificate of Deposit accounts. However, there was no evidence that the CD account, which was acquired ten years before the marriage, had transformed into a marital asset.
On appeal, the appellate court reversed the decision. The appellate court found that there was no evidence at the trial that there was any enhancement of the CD account through the husband’s efforts. The court also noted that there was no evidence that the husband commingled his nonmarital funds with marital funds. Lastly, there was no evidence that he had given to his wife the CD account as a gift.
Gifts between spouses are an important and frequent way in which a nonmarital asset becomes a marital asset. Believe it or not, there are even cases in Florida where spouses accidentally gifted non-marital homes to their spouse by birthday card, not realizing they would be found to have the proper donative intent.
Florida’s New Anti-Gift Law
This year the law changed in Florida. The revised equitable distribution statute now prohibits interspousal gifts of real estate unless there is written documentation that complies with the provisions for conveyance of real property under the statute governing deeds to property.
The mere inference of a gift of real property will now not meet the threshold required for an interspousal gift unless there was written documentation for a conveyance.
The new law in Florida also makes it clear that when a spouse merely signs a deed for the sole purpose of conveying a homestead property – other than the other spouse or both spouses jointly – the deed does not change the character of the real property from nonmarital property to marital property.
Finally, the new amendment to the equitable distribution statute changes the definition of nonmarital assets and liabilities so that real property acquired separately through non-interspousal gift, bequest, devise, or descent and in which legal title has not been transferred to both parties as tenants in the entireties, remains non-marital property.
The appellate decision is here.
