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The marital and family law attorneys at Lyons, Snyder & Collin have represented over 500 individuals from teachers, nurses and police officers to high net worth executives, financial advisors, lawyers, doctors and professional athletes going through a divorce. Many of our clients are business owners and/or own multiple properties. Our attorneys have extensive experience in these matters and work diligently and creatively to avoid the sale of the home or your business, whenever possible.
Sean L. Collin, the head of the marital and family law division, has a Master in Business Administration in addition to his Juris Doctorate degree which provides him an edge in advocating and analyzing complicated financial issues, such as business evaluations, the sale of a privately held companies, business and real estate appraisals, tax implications, and high-net worth distributions, including retirement accounts.
Mr. Collin routinely engages a forensic accountant or business appraiser in cases where a business or property plays a central role in the divorce.
The equitable distribution of marital assets and liabilities plays an important role in divorce proceedings.
Please be advised that the presumption in Florida is the equal division of marital assets and liabilities.
Stated another way, it is presumed that the Husband and Wife split every marital asset and liability accumulated during the marriage 50%-50%. This presumption can be overcome at trial, however.
Additionally, how and when the Court should value a marital asset or liability is oftentimes disputed.
The million dollar question often becomes – what is considered a marital asset/marital liability and how and when are these assets/liabilities valued?
An asset is anything that can be converted into cash, including but not limited to, stocks, bonds, real property, and personal property.
Surprising to some, all benefits and funds accrued during the marriage in retirement, 401k, pension, defined benefit plans, profit-sharing, stock options, deferred compensation, and insurance plans are considered marital assets and subject to equitable distribution.
Non-marital assets (liabilities) – not subject to equitable distribution in a divorce – would include:
Any asset acquired or liability incurred by either party prior to the marriage
For example, the Wife may not be stuck paying for a student loan acquired by the Husband prior to the marriage.
Any asset acquired separately by either party by non-interspousal gift
For example, the Husband may not be able to claim an interest in a gold locket bestowed to the Wife by her grandmother (although accumulated during the marriage).
All income derived from non-marital asset during the marriage (unless the income was treated, used, relied upon by the parties as a marital asset)
Of note, the general rule is that an engagement ring is a gift made upon an implied condition that a marriage ensue and, as such, should not be considered marital property subject to equitable distribution.
Stated another way, the Wife keeps the ring.
The exception is if the engagement ring was “enhanced” during the marriage.
For example, Wife owns a home or business prior to marriage (non-marital asset).
During the marriage, Wife sells her home or business (non-marital asset) and deposits the proceeds in a joint bank account to pay for joint marital expenses.
A year later, the Wife uses the proceeds from the sale of her home or business to purchase a new home or business with Husband. The commingling of funds may transform the Wife’s non-marital asset into a marital asset.
Additionally, if title in real property is held jointly by both Husband and Wife, the marital residence is presumed to be a marital asset (even when the property is purchased by one spouse using their non-marital assets).
In many cases, Mr. Collin can negotiate that one of the parties keeps the home or business in exchange for a larger share of another asset. For example, if the parties jointly own a roofing company where the Husband is the CEO, Mr. Collin may seek to have the interest in the roofing company remain with the Husband in exchange for the Wife taking sole ownership of the marital residence.
The cut-off date for determining a marital asset or liability is the earliest date that the parties entered into a valid separation agreement or the date of filing for dissolution of marriage.
The date for determining the value of marital assets and liabilities is the date the judge determines to be just and equitable under the circumstances.
The rule of thumb is that when a marital asset “passively” appreciates or depreciates between the petition date and the trial date, the parties should equally share in the appreciation or depreciation; conversely, where one party’s efforts are responsible for the appreciation or depreciation from the date of the petition until the date of the trial, the filing date should be used so that the party whose effort resulted in the change in value should receive the benefit or detriment of those efforts.
Filing date of a Petition of Dissolution of Marriage is January 1, 2018.
Husband contributed to a 401k during the marriage which was valued at $100,000.00.
On the trial date of December 31, 2018, the Husband’s 401k increased in value to $200,000.00. The Husband did not make any contributions to his 401k after filing for divorce on January1, 2018. The increase in value was due to uptick in the economy and the stock market.
The Husband and Wife should both equally share in the passive appreciation of the Husband’s 401k.
On January 2, 2018, the Husband unilaterally decided to liquidate his 401k to gamble in Las Vegas for the month which completely depleted his 401k.
As the Husband’s efforts resulted in the dissipation of the asset to the Wife’s detriment, the Court should value the 401k on the date of filing before the Husband depleted for his gambling trip.
The Court determines equitable distribution of the marital assets and liabilities prior to determining alimony. Why? … For the Court to consider an award of alimony it first has to find that the requesting party has a need and the paying party has an ability to pay.
If the equitable distribution of the assets eliminates the need for alimony, the issue is moot.
For example, Husband and Wife incur $50,000.00 in credit card debt during a two (2) year marriage. If the trial court disproportionately or unequally distributes this liability to the Husband (i.e. he is responsible for paying off the entire debt), alimony may not be appropriate if this alleviates the Wife’s need for support.
Another example, Husband and Wife own their marital residence outright. If the trial court disproportionately or unequally awards the Wife the marital residence, alimony may not be appropriate if this alleviates the Wife’s need for support.
When the distribution of marital assets and liabilities (such as a business or real estate) plays an important role in divorce proceedings, it is important to retain an attorney with a business background familiar with the nuances of equitable distribution.
If you have any questions concerning equitable distribution of assets and liabilities in a divorce, please contact divorce attorneys Sean L. Collin or Nabeel K. Basit for a free consultation at 954.462.8035