Equal Distribution of Marital Assets & Debts
In almost every dissolution of marriage case, the parties will need to consider the distribution of assets and debts as part of the dissolution process. In Florida, this is called “equitable distribution.” Equitable distribution is where each asset and debt owned by either party is classified as a non-marital or marital asset, valued and then distributed to one of the parties.
Divorce Lawyers: How to Determine Assets & Debts
First, the Court will classify each asset as either non-marital or marital in nature. The Court will set aside to each party any non-marital assets, such as assets acquired prior to the marriage or through inheritance. These non-marital assets will not be included as part of the overall distribution scheme, other than to be distributed to the owner.
Differentiating between marital and non-marital property and assets can be quite complicated, but Gainesville divorce lawyers know the ins and outs of complicated laws regarding the division of assets. For instance, even if an asset, such as a car, was purchased by one spouse from their private funds and has only one name on the deed, it will still be considered marital property. There may also be assets that are considered both partially non-marital and partially marital. If property was acquired before marriage, it is a non-marital asset, but if both spouses spent money to increase its value than the profits should be split. This frequently applies to houses. If one spouse owned the house prior to the marriage, but their spouse contributed money to remodel the house, which adds adding to its value, the spouses must then divide the value of the appreciated amount.
The only situation that allows a judge to distribute an asset to only one party, even if by law it is considered to be marital property, is if there is evidence of a valid prenuptial or postnuptial agreement. With a legal prenuptial agreement, it is will not matter how or when the assets were acquired.
Division of Marital Assets
Next, the Court will distribute marital assets and debts. The Court will begin with the premise that the overall distribution of assets and debts should be equal and frequently the distribution is equal.
Dividing up property, especially significant and sentimental property such as a house, can be difficult and lead to heated discussions. However, there are certain policies in place that help determine a solution. Common resolutions include:
- Selling the house
- Paying for your spouse’s share of the house
- Refinancing the house
- Allowing one spouse to take over mortgage payments.
Sometimes ex-spouses will choose to maintain ownership and mortgage payments of a house if they have children. This way, their children can continue living in their childhood home until they all reach legal age. Yet this does endanger the credit of the spouse who is not currently living in the house making it more difficult for them to find housing elsewhere. Selling the house is perhaps the most fair solution. Once it is sold, the profit is split evenly between the two spouses. If one spouses chooses to keep the house, they can choose to compensate the other spouse by trading them for other shared marital property, they can refinance it in order to remove the other person from the loan, or take full responsibility of the mortgage.
In regards to who gets the house, there are a variety of variables. If the couple has children, the spouse who has the majority of the child-care responsibilities will assume ownership. If the house was purchased before the marriage by one spouse and there are no children, that person will get to continue living in the house. If the property was purchased together and the couple is unable to come to a conclusion, a court will make a ruling according to the restrictions put in place in the state in which you file for divorce.
Unequal Distribution of Marital Assets
Typically, courts attempt to divide all marital assets as equally as possible, with the exception of non-marital assets or inheritance. The laws set in place in Florida strongly support this outcome and either spouse must provide significant relevant evidence for a judge to order that the assets are divided unequally. The legitimate reasons that the court might distribute property and assets unequally include:
- Length of the marriage
- Financial stability of each spouse
- Contributions to the marriage by each party
- Hindrances to personal career or education opportunities
- Intentional dissipation
The goal of a court is to divide up property and assets as fairly as possible and to prevent one spouse from significantly benefiting off of the marriage. For instance, if one spouse owns a multi-million dollar house, expensive cars and other various assets and the couple is only married for one or two years, the judge will not divide the assets in half. Otherwise, the other spouse would merely gain financial reward without contributing to the wealth itself.
Valuation of Assets
As part of the process of distributing assets and debts, the Court will need to value each asset. While this seems simple, it may not be as easy as it sounds. The Court will need to pick a valuation date, which may be the date the petition was filed or the date of trial or some other date. An asset such as a bank account can be easily valued as of a particular date. However, other assets may not be easily valued at a particular point in time.
In order to make sure that you are prepared when you walk into negotiations, you need to make sure that you know what your assets are worth. Start by contacting someone to appraise your assets including any artwork, collectables or real estate. It may take time to complete accurate appraisals and document findings so you will want to contact them well in advance. A certified public accountant who is able to determine the overall value of your retirement benefits will also be beneficial. Finally, you will want to perform your own online research to discover the value of less expensive items such as your car, furniture and electronics. Having thorough and accurate documents will protect you in case your spouse attempts to claim that the assets are not worth as much.
There are many various types of debt that couples may have such as credit card statements, car payments, mortgages, student loans, owed taxes, past due utility and cellphone bills, loans from relatives and close friends, and unpaid tickets and fines. During the divorce process, these financial burdens must be split up between spouses just as assets are divided. There are three different ways this can be decided including who brought the debt with them into the marriage, who has more financial ability to pay it off or who stands to benefit. The third option is used in cases that will only affect one spouse. For example, if one person chooses to stay in a house that was previously owned by the couple, the spouse who decides to stay would take full responsibility for the mortgage payments because they are the only one living there.
Issues do arise when one or both spouses are unable to pay off their debt. Though the divorce agreement has legally divided up the responsibility, the company or organization to which you owe money will not recognize this agreement. Therefore, if one spouse does not make their payments, the other ex-spouse will be held accountable for this debt, which may result in poor credit ratings. A divorce attorney in Gainesville, FL may recommend that you and your ex-spouse attempt to pay off your debt before your divorce is finalized so that you are both truly free.
Wasting / Dissipation of Assets
Dissipation of an asset is when one spouse uses money to solely benefit themselves, without the consent of their spouse, because of an impending divorce. In other words, one spouse recognizes the relationship is ending and therefore, chooses to spend money so that this resource can not be evenly divided during the divorce proceedings. Examples of wasteful spending include gambling, extravagant shopping sprees, new car purchases, money spent on boyfriend or girlfriend, or large stock investments.
A family law attorney Gainesville, FL, residents recommend can help by applying a restraining order on joint finances so that while spouses can access money during the divorce, your spouse will not be able to unnecessary dissipate funds. If your ex-spouse is guilty of dissipating your assets, a judge will compensate these losses with other assets or property.
Business & Divorce
Another issue is that some assets may just be difficult to value, such as a small business. A small business should be valued for purposes of equitable distribution but there are certain factors that can be considered and others that are not important when valuing the asset in a dissolution of marriage case. The value of a small business should be considered apart from the worker spouse’s contribution to the business on an ongoing basis. In other words, the value of the business should take out the labor required by the worker spouse or else the other spouse would benefit from the continued labor of the worker spouse. Therefore, there may be times when a party has a small business and earns a good income but the value of the business would be zero for purposes of a dissolution of marriage case.
Gainesville Divorce Attorneys
These are only some of the issues that could affect the distribution of assets and debts in your case. A mistake in distributing assets and debts could be costly. Contact one of our experienced divorce lawyers in Gainesville, FL at the Law Office of Silverman, Mack & Associates for more information about this topic specific for your case.