Articles Posted in Division Of Property And Assets

The division of property and assets in a divorce proceeding cannot include property that was previously conveyed to the parties’ children. In a recently decided case captioned Perez v. Perez, the parties were married for twenty-three years. The husband and wife owned several pieces of real estate. During the course of the marriage, they conveyed four pieces of real estate to their sons. As part of the final judgment in the divorce proceeding, the trial court awarded some of the real estate that was conveyed to the children to the husband and some of this real estate to the wife.

During the course of this divorce proceeding, the wife sued her sons as third party defendants claiming that her husband and sons had engaged in a scheme to defraud her. The husband contended that the wife agreed to the transfer at the time that it was made. In point of fact, the wife signed the deeds conveying the property to her sons. In making its equitable distribution award, the trial court included the properties that the parties had conveyed to the children.

The Florida Court of Appeal reversed the trial court’s ruling on the division of property and assets. The appellate court stated that the lower court improperly awarded property to the husband and wife that they had previously conveyed to their children. The Florida statutes create a clear rule as to when property is deemed to be marital and nonmarital. Absent a separation agreement, the date to determine when an asset is marital or nonmarital is the date of the filing of the divorce. The lower court should have looked at what the parties owned when the divorce was filed. An asset that was previously conveyed to another person cannot be awarded to a spouse as part of an equitable distribution award in a divorce proceeding. The property deeded to the children was a nonmarital asset and should not have been part of the equitable distribution in this matter. Accordingly, the Court of Appeal held that the trial court’s distribution of the son’s property was improper and reversed the ruling.

In a Florida divorce, the value of a business is determined by valuing all of its assets and the amount of its liabilities.  In Florida, businesses are valued according to their fair market value.  Fair market value is the amount that a willing buyer would pay and a willing seller would accept.  Enterprise value is the value of a businesses’ tangible assets and the willingness of customers to return (business goodwill).  Personal goodwill is based upon the skill and the continued participation of the current owner in the business.

In a Florida Court of Appeal case captioned Soria v. Soria, the husband and wife were married in April 1988. The husband was the founder of a start-up limited liability company. At the time of trial, the company was carrying approximately $400,000.00 of debt. The company’s liabilities varied from $9,000.00 to $76,000.00 and the company’s assets varied from $147,000.00 to $190,000.00. The husband testified that he was essential to the operation of the business and that the business could not operate without him. The husband owned approximately 64% of the business and investors owned the remaining 36% of the business. After the divorce was filed, the husband transferred 30,000 of his shares in the company to his girlfriend in order to compensate her for her work for the company.

The par value of the company stock was a dollar per share. The trial court used the par value of the company’s stock to value the company. The Florida Court of Appeal reversed the trial court. The Florida Court of Appeal held that in making a division of property and assets determination involving a business, the value of the business is determined by assessing its fair market value. The Florida Court of Appeal stated that the fair market value of the business in question was the amount of money that a willing buyer would pay for the business and a willing seller would accept for the business when both parties have knowledge of the value of the business and neither is under duress to enter into the transaction. The value of a business is the value of the company’s assets plus the value of its goodwill. Enterprise goodwill is the value of a business that exceeds its assets. It constitutes the tendency of patrons to return to a business irrespective of the presence of its owner. Professional goodwill of a doctor, lawyer or business owner is distinct from enterprise goodwill. It is based on the skill and continued participation of the owner in a business. Although, enterprise goodwill is considered to be a marital asset in divorce proceedings, a doctor, lawyer or business owner’s personal or professional goodwill is not considered to be a marital asset.

A Division of Property and Assets case was recently decided by the Florida court of Appeal. In a case captioned Ramos v. Ramos, the Court ruled that, under Florida law, the appreciation in the value of a nonmarital asset that results from the expenditure of marital funds or from marital labor is a marital asset. For example, if a $500,000 home is owned by one of the parties prior to the marriage and the value of that home is increased to $1,000,000 as a result of marital efforts, the increase in the value of the home is considered to be a marital asset subject to division by the Court.

In the Ramos case, the parties married in 2000, and the Husband filed for divorce in 2014. The Husband maintained that his vending machine business was a nonmarital asset because the business was started ten years prior to the date of the marriage. The Husband contended that because the business was a nonmarital asset, it was not subject to equitable distribution by the Court. The Wife contended that the business was a marital asset. The evidence at trial showed that the Husband’s business lost value during the course of the marriage. The trial court agreed with the Wife and found that the business was a marital asset. The Husband appealed the trial court’s ruling. The Florida Court of Appeal agreed with the Husband and reversed the trial court.

Regarding the Division of Property and Assets, the Florida Court of Appeal ruled that the business was a nonmarital asset. Since it was a nonmarital asset, only the enhanced value of the business during the marriage was subject to equitable distribution by the Court. The enhanced value of a premarital asset that results from efforts by either party during the course of the marriage is marital property. Since the Husband proved that the business was formed ten years prior to the date of the marriage, the burden of proof shifted to the Wife to prove that the business became partially marital through the efforts of the Husband during the course of the marriage. Since the value of the business actually went down during the course of the marriage, the Wife was unable to meet this burden of proof. Accordingly, the business was found to be a nonmarital asset that was not subject to equitable distribution.

The Division of Property and Assets statute in Florida classifies property as marital assets and nonmarital assets. A divorce court divides marital assets between the parties. However, nonmarital assets are retained by their owner. When a nonmarital asset is enhanced in value by marital labor or by marital money, the enhancement in value itself becomes a marital asset. In a recently decided case captioned Higgins v. Musso, the wife received a home as part of her divorce from her first husband. She borrowed money from her parents to buy out her first husband’s interest in the property. The wife’s mother filed a lien on the property which proved that the wife borrowed money to purchase and renovate the home. The wife also utilized marital funds to fix the property after it was damaged by two hurricanes. The wife painted the ceiling, installed new carpet, and put in a new roof. Insurance proceeds paid for some of the repairs. The parties took out a line of credit to build the marital home and took out a loan to repay the line of credit. The home sold for over a million dollars. The sale proceeds were deposited into a bank account. The trial court ruled that the entire proceeds from the sale of the home were marital assets.

The Florida Court of Appeal reversed the trial court and ruled that the expenditure of marital funds to improve a nonmarital asset does make the entire asset a marital asset. Only the increase in the value of the asset is considered to be a marital asset. The party that asserts that they are entitled to receive the benefit of the increase in value of the home has the burden to prove that an enhancement to the value of the home occurred. Once that party proves that marital funds or marital labor were used to enhance the value of the property, the other party has the burden to show that a portion of the increased value should not be included in the division of property and assets. The trial court must determine the amount of the enhancement and must determine which part of the enhancement was attributable to marital money or marital labor. The court should look at the value of the property prior to the enhancements and the value of the property after the enhancements were made. The court should then determine the amount of the appreciation that is attributable to marital labor or and the amount of the appreciation that is attributable to marital money.

To speak with a division of property and assets attorney in Jupiter, Florida, contact Matthew Lane & Associates, P.A. at (561) 363-3400.

In a recent division of property and assets case, captioned Gotro v. Gotro the Florida Court of Appeal held that a trial court should not include expended assets in an equitable distribution scheme unless these assets were dissipated as a result of one of the parties’ misconduct. In this case, the parties had a 39 year marriage and had 4 adult children. The husband was the primary breadwinner. The husband had a number of bank accounts which were marital assets. The significant bank accounts, for purposes of this appeal, were two accounts at BBVA Compass Bank. By the time that the final hearing took place, the balances in these two bank accounts was significantly lower than they had been at the time of the filing of the divorce. The husband testified that he had used the money in these accounts for his living expenses. The husband requested that the trial court distribute these accounts based upon their value at the time of the final hearing and not as of the date of the filing of the dissolution of marriage. In fashioning its final judgment, the trial court used the values in the accounts as of the date of the filing of the divorce.

In fashioning a division of property and assets the trial court can utilize any date of valuation that the court decides is equitable and just. Different assets can be valued as of different dates. However, it is usually inappropriate to include assets that no longer exist in a division of property scheme. The exception to this rule is when one of the parties’ misconduct results in dissipation of the parties assets during the pendency of the proceedings. A parties’ misconduct may become the basis for assigning an expended asset to that spouse. If the trial court decides to do this, in its ruling, the court must make specific findings that spouse engaged in intentional misconduct. The court must find that the parties’ expended asset was used for a purpose unrelated to the marriage during a time when the parties’ marriage was undergoing a breakdown.

If your spouse has used marital assets to support a girlfriend or a boyfriend, contact Florida divorce attorney Matthew Lane, Esq. at Matthew Lane & Associates, P.A. at (561) 363-3400.

The division of property and assets in a Florida divorce begins with the division of the parties’ assets into two categories, marital assets and liabilities and nonmarital assets and liabilities. Marital assets are those assets accumulated during the marriage by the parties from their work, earnings and services. In determining whether property is a marital asset, the question is not which party holds title to the asset. The trial court divides the marital assets and liabilities between the parties. In a recently decided case captioned Hooker v. Hooker, the Florida Supreme Court stated that although the trial judge possesses discretion to reach an equitable distribution of the parties’ marital assets, there is a presumption that an even division is equitable, unless one of the parties shows otherwise.

Gifts made between the parties during the course of the marriage are marital assets. In order for one spouse to prove that a gift was made during the course of the marriage the recipient must prove: (i) a donative intent, (ii) possession or delivery of the property, and (iii) surrender of control and dominion over the property. In other words, a gift is made when a spouse intends to make a gift, the gift is given to the other party, and the donor relinquishes possession and control over the property. Where the evidence shows that an a gift was made, the property is then subject to distribution as a marital asset.

To speak with a divorce attorney in Wellington, Florida about the division of property and assets in Florida, contact Matthew Lane & Associates, P.A. at (561) 363-3400.

The division of property and assets in a Marital Settlement Agreement can be contested in two ways. The first basis to challenge a Marital Settlement Agreement is for fraud, coercion or misrepresentation. The second basis to challenge a Martial Settlement Agreement is for unfairness. In a recent case captioned Hall v. Hall the Florida Court of Appeal stated that a Marital Settlement Agreement could be set aside for fraud, duress, misrepresentation, or coercion. The second basis for setting aside a Martial Settlement Agreement contains three elements. First, the spouse that wants to set aside the agreement must prove that the Martial Settlement Agreement is unfair to the recipient spouse in light of the parties’ financial circumstances. The trial court will then look at the financial situation of the parties, their ages, their education and their health. The trial court may then decide that the agreement is unfair to the recipient spouse in light of the payor spouse’s financial circumstances.

Once the trial court determines that the division of property and assets in the agreement is unreasonable, it is presumed that the payor spouse either concealed assets or that the recipient spouse did not have accurate knowledge of the payor spouse’s financial situation at the time that the agreement was entered into. The payor spouse can then defend by demonstrating that there was full disclosure to the recipient spouse or that the recipient spouse had knowledge of the approximate amount of income that the payor spouse earned and the amount of the payor spouse’s wealth. The fact that the recipient spouse made a bad deal is not sufficient by itself to defeat a Martial Settlement Agreement. The issue is whether the recipient spouse did not have adequate knowledge of the income and assets of the payor spouse at the time that the agreement was entered into.

To speak with a divorce attorney in Wellington, Florida, contact Matthew Lane & Associates, P.A. at (561) 363-3400.

On Behalf of Matthew Lane & Associates, P.A. | Jan 15, 2016 | Division Of Property And Assets

To modify a division of property and assets, there must be a specific reservation of jurisdiction in the final judgment to make a later adjudication of property rights. In Daoud v. Daoud the Florida Court of Appeal recently stated: “Dora S. Daoud, the former wife, raises four issues in this appeal of a contempt order resulting from her failure to comply with the final judgment dissolving her marriage to Khader Daoud, the former husband. We find merit in her challenge of the trial court’s modification of property rights previously adjudicated in the dissolution judgment, and reverse and remand on that issue. We affirm without comment the balance of the appealed order.

Absent appropriate pleadings by the former husband, a trial court lacks jurisdiction to alter or modify the property rights awarded to the former wife in the dissolution judgment. Work v. Provine, 632 So. 2d 1119,1121 (Fla. 1st DCA 1994) (“Generally speaking, in the absence of a specific reservation of jurisdiction to make a later adjudication of property rights, a lower court does not have jurisdiction to modify property rights after an adjudication of those rights has been made in a judgment of dissolution.”). Further, the general reservation of jurisdiction for the enforcement of its dissolution judgment does not empower a trial court to address or redistribute vested property between the parties. Id.; Fort v. Fort, 95l So.2d 1020, 1022 (Fla. 1st DCA 2007). Based on our review of the record, the former husband failed to properly plead for modification of the real property distribution contained in the dissolution judgment, and the trial court failed to specifically reserve jurisdiction to alter the prior distribution of property.”

To speak with a divorce attorney in North Palm Beach, Florida, contact Matthew Lane & Associates, P.A. at (561) 651-7273.

In cases involving the division of property and assets, the Court will identify and value all marital assets. Debts to cover nonmarital expenses should not be classified and allocated as marital debts. “Section 61.075(3), Florida Statutes (2012), requires the trial court to identify and value all marital assets and liabilities. Distribution of the marital assets and liabilities must be supported by factual findings in the judgment or order based on competent, substantial evidence. Kovalchick v. Kovalchick, 841 So. 2d 669, 679 (Fla. 4th DCA 2003). We review such findings for an abuse of discretion. See Steele v. Steele, 945 So. 2d 601, 602 (Fla. 4th DCA 2006). However, we review de novo the trial court’s legal conclusion that an asset or liability is “marital” or “nonmarital,” as defined in the statute. Mondello v. Torres, 47 So. 3d 389, 392 (Fla. 4th DCA 2010)

However, to the extent that a party incurred debts to cover nonmarital expenses, the debt should not be classified as marital debt for the purpose of equitable distribution. Fortune v. Fortune, 61 So. 3d 441,445 (Fla. 2d DCA 2011) (reversing because the trial court classified the entire amount of a loan as a martial debt without making a finding as to when the debt was incurred or what the debt was used to pay); Walker v. Walker,827 So. 2d 363, 364-65 (Fla. 2d DCA 2002) (reversing because the trial court classified the entire amount of a debt as a marital debt without determining which portion of the debt was used to pay the husband’s litigation and living expenses versus paying his personal income tax and property taxes). Here, based on the former husband’s own testimony, the trial court determined that the credit card debt in the former husband’s name was nonmarital. His testimony concerning the nature and purpose of his credit card expenses sufficiently overcame the presumption that the liability was marital. Because we find no error in the trial court’s classification of the former husband’s credit card debt as nonmarital, we affirm.

To speak with a divorce attorney in Jupiter, Florida, contact Matthew Lane & Associates, P.A. at (561) 651-7273.