One of the most difficult and complex areas of the dissolution process is the division of marital property, sometimes called the marital estate. Marital property may include cars, houses, retirement benefits (pensions), business interests, cash, stocks, bonds, bank accounts, personal property and any other things of value that have been accumulated during the marriage. Florida divorce laws provide for an “equitable distribution” of marital property.
In essence, the marital property should be divided fairly or equitably (not necessarily equally) between the parties regardless of how the property in question may be titled. The division is based upon all facts of the case and the contribution of both spouses to the marriage.
The division of marital property or estate as sometimes called is any asset acquired during the marriage by the efforts of one or both parties. This property is considered in conjunction with all other monetary awards such as alimony and interests in property.
There is no fixed way to determine how you or the court should divide the property. Liabilities (debts) as well as assets must be considered. Other factors include the nature and extent of the property and whether it is marital property or non-marital property; the duration of the marriage; and the economic circumstances of each spouse. If you and your spouse can agree, and if your agreement is reasonable, it will be approved by the court. If you cannot agree, the court will divide the property after a trial.
Florida courts consider the following factors in making a property award:
Property is either marital or non-marital property, which is also called separate. Marital property means property purchased during the marriage or property purchased prior to the marriage but paid for by both parties during the marriage. Non-marital property includes, but is not limited to, property purchased prior to the marriage, in some cases, property inherited by a spouse and, depending on the court, property purchased after a separation or the filing of a petition for dissolution of marriage.
Separate property that is commingled with marital property becomes marital. Untainted separate property obtained before or during the marriage remains immune to distribution. The separate property includes, but is not limited to, gifts and inheritances.
Depending upon the asset and the agreement of the spouses, different methods of valuation are used to determine the value of a marital asset. When the spouses agree, courts generally accept what they say about the value of an asset. Absent agreement, experts may be retained by the parties or by the courts to determine the value of marital assets. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.
Florida courts classify assets and liabilities as marital or separate. Then it assigns a dollar value to the marital property and debt. Finally it distributes the marital assets between the two parties in an equitable fashion.
In Florida, as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) are deducted from the market value to arrive at the equity to be divided. Normally, making this calculation requires a paid real estate appraisal..
From there, couples choose one of three options to divide the equity:
In Florida, vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension.
In Florida, the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Retirement benefits vary greatly but can generally be divided into two groups: Defined Contribution Plans: A defined amount of money belonging to the employee. The employee and/or the employer make defined contributions. The balance of the plan is constantly changing, but its value is definable at any given point. 401(k)s, 403(b)s and profit sharing plans fall into this category.
Defined Benefit Plans: A retirement benefit where an employer promises to pay a benefit to an employee sometime in the future, based upon some type of formula. Normally, this formula is based on the employee’s salary near the end of his or her career and the number of years he or she worked for the employer before retirement. Defined benefit plans are much more complicated to value and often require the professional evaluation of an actuary to determine exact values.
In Florida, if spouses share in each other’s retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution – how much of the benefits are to be paid to each party, when such benefits can be paid, how such benefits should be paid, etc.