Tag: equitable distribution gifts

Big Update to Florida’s Property Division Law

There have been big updates to Florida’s property division law after Governor Ron DeSantis signed an important House Bill this month. Many divorce lawyers will be interested in the changes to the equitable distribution statute this bill makes and it can impact your divorce right now.

Property Division Law

Dividing up property in divorce

In every divorce case, courts have to equitably distribute of assets and liabilities between the parties. In order to do that, the court first has to evaluate what assets and liabilities exist, then determine which are “marital” and which are “non-marital.” A new law makes some interesting changes to what are marital and non-marital assets, and how to distribute them.

Marital assets include things like, any assets and debts acquired during the marriage, the enhancement of value and appreciation of non-marital assets due to the efforts of either spouse or the contribution of marital funds or other marital assets; interspousal gifts during the marriage; retirement, pension, profit-sharing, and other similar funds during the marriage

A court always starts with the premise that a distribution of marital assets and liabilities should be equal, unless there is justification for an unequal distribution based on certain factors.

The new bill tries to clarify different aspects of the equitable distribution process. For example, the bill clarifies what sort of circumstances justify an temporary partial distribution during a divorce, and even provides a list of factors for the court to use in making a determination on whether there is good cause to make a temporary partial distribution.

Can you give your house away as a gift?

Believe it or not, there were cases in Florida where spouses accidentally gifted non-marital homes to their spouse by Valentine’s Day card or birthdays cards not knowing they would be found to have the proper donative intent.

The new law 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 bill 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 – does not change the character of the real property.

Finally, the new law changes the definition of non-marital 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.

How do you value the family business

Your small business can be a marital asset, and difficult to value. That’s  because of the concept of “goodwill.” Goodwill is that intangible value of your business above and beyond the value of its physical assets. Things like, your company’s brand, reputation, amount of loyal customers, employee relations, and proprietary technology are aspects of goodwill.

One kind of goodwill is called “enterprise goodwill”, the value that exists separate and apart from the reputation or continued presence of the spouse who owns the business. Enterprise goodwill is a marital asset equitably distributed in a divorce. On the other hand, “personal goodwill” is the goodwill attributable to the spouse, not to the business itself, and is not a marital asset. That begs the questions, what is and isn’t personal goodwill?

Under the new law, courts have to consider evidence that a non-compete clause or a similar restrictive covenant may be required upon the sale of the business. The law clarifies that the mere existence of a non-compete provision is not dispositive as to whether the goodwill is considered enterprise goodwill. So, even if the valuation of a business is based on the requirement for a non-compete contract, the court can still determine whether the goodwill is enterprise or personal and subject to equitable distribution.

The new law becomes effective July 1, 2024 and is available here.

Divorce and the Engagement Ring

Kim Kardashian reportedly refused to give back her engagement ring to estranged husband, former basketball player, Kris Humphries. Is a spouse obligated to return an engagement ring after a divorce has been filed – whether the ring is worth $2mm or not?

engagement ring

Keeping Up with the Kardashians

A source close to the Kardashian situation reports that her husband Kris contends that the marriage was a total sham and that Kim only wed him for publicity so therefore she has no right to keep such an expensive gift.

This is the latest battle in the drawn-out Kardashian-Humphries divorce proceedings. The reality star filed for divorce from Humphries in October 2011 after just 72-days of marriage. He responded a month later by filing for an annulment on the basis of fraud and a legal separation.

Florida Engagement Rings

I’ve written about some of the history and law about engagement rings before. Until the 1930s, a woman jilted by her fiancé could sue for financial compensation for “damage” to her reputation under what was known as the “Breach of Promise to Marry” action.

As courts began to abolish such actions, diamond ring sales rose in response to a need for a symbol of financial commitment from the groom. Florida abolished the appropriately termed “heart balm statutes”. Heart balm statutes were laws allowing couples to sue each other to recover money for the alienation of affections and breaches of contract to marry.

As one court poetically noted:

[A] gift given by a man to a woman on condition that she embark on the sea of matrimony with him is no different from a gift based on the condition that the donee sail on any other sea. If, after receiving the provisional gift, the donee refuses to leave the harbor – if the anchor of contractual performance sticks in the sands of irresolution and procrastination – the gift must be restored to the donor. A fortiori would this be true when the donee not only refuses to sail with the donor, but, on the contrary, walks up the gangplank of another ship arm in arm with the donor’s rival?

After an engagement ring is given, and if the couple doesn’t marry, in New York the law deems a broken engagement as no one’s fault. Accordingly, the ring should be given back to the giver, with few exceptions. Most states have adopted that approach.

This is true in Florida. Lawsuits to recover an engagement ring by disappointed donors usually are resolved by courts looking to see if the engagement was terminated by the donee or by mutual consent of the parties. The rationale is that rings are given on the implied condition that a marriage ensue.

Once a marriage proposal is extended and accepted — once the promise is made — no matter what day of the year, that ring is no longer considered a gift. It’s a contract to enter into marriage.

The general rule in Florida is that an engagement ring given before the marriage, becomes a non-marital gift if the marriage is completed. If so, the ring becomes the non-marital property of the Wife.

If the engagement ring is viewed by the court as a non-marital asset, it is not subject to equitable distribution in divorce proceedings, and the spouse keeps it as their own.

Reality TV

Relying on real attorneys and not Judge Judy, both sides of the Kardashian case have accused each other in court and in the media of deliberately slowing down the divorce process, which has lasted five times longer than their marriage.

Recently, Kardashian’s attorney told the judge that her client is “handcuffed to Mr. Humphries” because his team is still not ready for trial. The estranged couple is set to return to court in mid-February to determine a trial date.

The Huffington Post article is here.


Divorce Auction

Russell Crowe sold dozens of items this past weekend at a Sotheby’s auction to help him fund his divorce from ex-wife Danielle Spencer. The auction appears to have worked better than expected.

The Art of Divorce

Crowe titled the event “The Art of Divorce,” the divorce auction took place in Sydney on his 54th birthday and featured more than 200 items, including movie memorabilia, antique treasures, artwork and a collection of instruments.

A replica Roman chariot from the same movie in which Crowe played the general-turned-gladiator Maximus, thought to be worth up to AU$10,000, was sold for AU$65,000.

Sotheby’s had estimated the sale would bring in up to AU$3.7m (more than $2.8 million in U.S. dollars), but many items sold for more than their original pricing.

Florida Property Division

In Florida, courts distribute marital assets and liabilities between the parties with the premise that the distribution should be equal unless there is a justification for an unequal distribution. Although it may seem like it, equitable distribution is not an auction.

I’ve written about various aspects of property division before, including Russell Crowe’s proposed auction when it was first announced.

Marital assets are properties acquired and debts incurred during the marriage, individually by either spouse or jointly by them.

Marital assets and liabilities also include the enhancement in value and appreciation of non-marital assets resulting either from the efforts of either party during the marriage.

Dissipation and Waste

One of the relevant factors courts look to in property division is whether one of the parties intentionally dissipated, wasted, depleted, or destroyed any of the marital assets after the filing of the petition.

Spouses can dissipate assets by giving away money irresponsibly, spending money on girlfriends, gambling losses, and drug usage. Some people would rather lose the money outright than split it with their spouses.

If the dissipation of an asset resulted from misconduct, the question is whether a spouse used marital funds for his own benefit unrelated to the marriage at a time when the marriage was undergoing an irreconcilable breakdown.

Misconduct is not mismanagement or even a simple squandering of marital assets in a manner of which the other spouse disapproves. There is no report that the Crowe auction was a waste of assets.

Instead, there has to be evidence of the spending spouse’s intentional dissipation or destruction of the asset. Where marital misconduct results in a depletion or dissipation of marital assets, it can serve as a basis for unequal division.

Alternatively, courts can look at the misconduct, and can assign to the spending spouse as part of their equitable distribution, the misconduct losses.

Battle for the Jockstrap?

Among the most popular items at the auction was the breastplate he wore in “Gladiator” when his character Maximus (spoiler alert) bites the dust. The piece sold for $125,000 while matching leather wrist cuffs scored $32,000.

Crowe also sold items from movies like “Master and Commander,” “The Silver Brumby” and “Proof,” though the Royal Navy dress blues from “Master” proved extremely popular, bringing in a $115,000 haul.

One of the more curious items was the leather jockstrap Crowe wore in the 2005 film “Cinderella Man.” The protective piece went for $7,000 to one lucky bidder.

“I put it in the collection as a piece of whimsy and a bit of a gag. Funny enough, it’s garnered a lot of attention,”.

He and Spencer wed in 2003, and news broke of their split in 2012. The divorce is just about finalized, and the ex-couple share two children.

The auction raised money for the A.C.M.F. charity, which provides free music education and instruments to disadvantaged and indigenous children and youth at risk in Sydney.

The New York Times article is here.


Gifts and Divorce

Kurt Cobain’s widow, Courtney Love, is dodging a final decision on who gets Kurt Cobain’s famous guitar: their daughter, Frances Bean Cobain, or her estranged husband. The dispute over Nirvana’s former lead singer’s famous guitar raises the issue of gifts and divorce.

Isaiah Silva – who’s in an ongoing divorce with Frances Bean Cobain (daughter of the late Kurt Cobain)) – claims Courtney’s refused to come to the door twice when his investigators tried to serve her with deposition papers. According to the documents, she’s also hiding from the L.A. Sheriff’s Dept.’s attempts to do the same.

I’ve written about the Nirvana guitar dispute before. At issue is the facts surrounding the 1959 Martin D-18E acoustic guitar Kurt played during Nirvana’s “MTV Unplugged” concert. ‘MTV Unplugged in New York’ is a live acoustic performance album by Nirvana.

The album debuted at number one, was Nirvana’s most successful posthumous release, went 5x platinum, and won a Grammy Award.

The guitar’s been a heated point of contention in the divorce. Frances says the “priceless family heirloom” belongs to her, but her husband says it’s his because, she gifted it to him during the marriage.

Florida Divorce Gifts

Florida is an equitable distribution state, unlike California, which is a community property state. As an equitable distribution state, in divorce, the court sets apart to each spouse’s nonmarital assets and liabilities, and distributes the marital assets and liabilities between the parties.

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. These factors include things like the contribution to the marriage by each spouse, the economic circumstances of the parties, and any interruption of personal careers or educational opportunities of either party for instance.

So, what are “marital assets and liabilities”? They include things like assets acquired during the marriage, and interspousal gifts during the marriage for instance. However, “nonmarital assets” include things like assets acquired before the marriage, and assets acquired by non-interspousal gift.

The fate of Kurt’s famous guitar then, could depend on whether the guitar was a gift from one spouse to another (as Isiah is alleging), and is therefore treated as marital property in an equitable distribution state, or whether it is non-marital.

About a Guitar

TMZ reached out to Courtney about the controversy, but her representatives claim she’s already publicly stated the guitar is a family heirloom and doesn’t belong to anyone other than family, which echoes what she stated previously.

If you don’t know Nirvana or the unplugged concert, stop reading and click here. You won’t be sorry.

Isaiah is claiming he owns Kurt’s former Martin D-18E guitar from the famed MTV performance. The guitar is a very rare; only 300 were made. However, the guitar’s sentimental value is immeasurable, as it was the last guitar played by Kurt before his suicide.

Silva is claiming he owns it because it was given to him by his wife as a wedding present, though she denies gifting it to him. Courtney Love takes her daughter’s side, and has said:

“It’s not his to take. It’s a treasured heirloom of the family’s”

If a judge were to determine that Kurt’s guitar was not a wedding gift from Frances – and given its multi-million dollar and sentimental value, a Cobain family heirloom – it would be Frances’. However, if a judge decides the guitar was a gift from Frances to her husband, an “inter-spousal gift”, the guitar would be marital property.

The TMZ article is here.


Is the Gift Really Yours?

How are those gifts you received during the marriage handled in a property division? The thought comes to mind as more people are buying divorce gifts to be given during divorce parties. Many people are surprised to learn how their spouse’s gifts to them during the marriage are treated.

Florida Equitable Distribution

When people divorce, there is a property division which we call equitable distribution in Florida. I’ve written about property division in Florida many times before. Equitable distribution is governed by statute and case law.

Generally, courts set apart to each spouse their non-marital assets and debts, and then distribute the marital assets and debts between the parties. In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.

Equitable distribution is a court evolved concept in Florida. It is used to achieve as fair a division of marital assets as possible. Marital assets are those assets acquired by the parties during their marriage from their work efforts, services, and earnings.

In determining whether certain property is a marital asset, the question is not which party holds title to the asset.

Our statute defines assets and liabilities falling within each of these categories, and establishes certain presumptions to assist in categorizing each asset and liability during a property division. The court then divides the marital assets and liabilities between the spouses.

Dividing Gifts Between Spouses

Under well-established statutory and case law in Florida, is that a gift between spouses during the marriage is actually a marital asset.  But proving something valuable was a gift can be tricky, as people don’t prepare paperwork when they are giving gifts.

A gift between spouses during the marriage is established by showing donative intent, delivery or possession of the gift, and surrender of dominion and control of the gift.

In other words, a gift is made when a donor, intending to make a gift, delivers the gift to the donee and relinquishes all possession and control of the gift.

Was it a Gift or a Loan?

Married couples receive some money from third parties – such as parents and other parents – during the marriage: sometimes the money is to carry them over during an emergency. Should that money be divided between them? It depends on whether it was a loan, and they should give the money back, or it was a gift to both of them, and the money is theirs.

Gifts to either spouse from a third party – such as a parent – are considered separate property and are not divided by the court. However, the caution against commingling still applies. If a spouse deposited the money from her parents in a joint account, it then probably became marital property, even if it was intended just for her.

In many divorces, one spouse claims money received from or given to a parent, sibling, etc. was a gift and the other claims it was a loan. Circumstances can be painted in a different light many years after the fact, and lawyers and judges must piece together what information they can to make a case and a decision.

If you receive or make a loan during your marriage, make sure its terms are fully documented in some sort of written and signed promissory note. If you receive or make a gift, draw up simple paperwork indicating specifically to whom the gift is being made, and that there is no expectation of repayment.