One of the main aspects of the divorce process in Florida is dividing the assets and liabilities of a divorcing couple fairly. However, in Florida, courts use the equitable principle of property division instead of a 50/50 split. If you are navigating a divorce in Florida, understanding how this works can be key to preparing for negotiations and ensuring a fair outcome.
Legal principles such as equitable distribution can be complex, and, as a divorcing individual, you will want to understand what you are entitled to. At Melone Hatley, P.C., our experienced Tampa, Florida family law attorneys are here to be your partner every step of the way during your divorce process. Let’s explore equitable distribution and its potential implications in your divorce case.
What is Equitable Distribution?
Equitable distribution is a principle that Florida and many other states use to divide marital assets and debts in a divorce case. Unlike community property states, where assets are split evenly between spouses, equitable distribution aims for a fairer, but not necessarily even, division of marital property.
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Equitable Distribution Vs. Community Property
In the United States, family courts recognize two primary systems of property division in a divorce setting: community property and equitable distribution.
Community Property
Today, only a handful of states follow community property laws.
Community property means all assets and debts acquired during a marriage are considered jointly owned by both spouses, regardless of who acquired them or whose name is on the title. While property acquired outside the marriage is considered separate and retained by each party, anything acquired during the marriage – assets and debts – is divided 50/50 with few exceptions.
While this system offers simplicity, it doesn’t account for individual financial circumstances, contributions, or sacrifices made by each spouse.
Equitable Distribution
Most states, including Florida, take a more nuanced approach to marital property division by implementing the equitable distribution model.
Equitable distribution divides property based on fairness instead of an automatic 50/50 split. When the court makes these determinations, it considers many factors such as income, need, contributions to the marriage, and childcare responsibilities when deciding how to allocate property.
While community property states prioritize an equal division, equitable distribution states focus on what is fair and just, ensuring that one spouse isn’t unfairly disadvantaged because of financial disparities or sacrifices they made during the marriage. Furthermore, equitable distribution encourages negotiation and settlement between spouses, allowing them to agree on a fair distribution instead of being tied to a strict legal formula.
What is Considered Marital Property in Florida?
Under Florida law, only marital property is subject to equitable distribution in a divorce. Marital property includes all assets and debts a couple acquires during their marriage, regardless of whose name is on a title or account. What typically falls under marital property in Florida includes the following.
Income Earned During the Marriage
Any income earned during the marriage, whether one or both spouses worked, is considered marital property. This includes wages, salaries, bonuses, commissions, and investment income. Even if paychecks were deposited in an individual account, this income is still considered marital property and subject to division. Similarly, any income derived from income property purchased during the marriage or profits from business investments belongs to both spouses, regardless of who initiated or managed them.
Real Estate and Personal Property
Any real estate or personal property purchased by a married couple during the marriage falls under the marital property umbrella. A home, car, or other valuable property purchased during the marriage are generally considered marital property, even if only one spouse’s name appears on the deed or title. Even if a property is purchased solely by one spouse, the court will assess the circumstances of the purchase and if both spouses contributed to paying bills and maintaining it.
Retirement Savings and Investment Accounts
Any contributions made to a 401(k), IRA, pension plan, or investment portfolio during the marriage, regardless of whose name they are in, are considered marital property. Even if only one spouse was actively earning and contributing to the retirement fund, the other spouse still may have claim to a portion of it as marital property. This can be particularly important when one spouse left the workforce or took on a supportive role in the family.
Businesses and Professional Practices
A business or professional practice built or expanded during the marriage may also be considered marital property and subject to division.
If a spouse started the business after the marriage or significantly grew an existing business with the support of the other spouse, whether through financial contribution, unpaid labor, or managing the household responsibilities so the other could focus on the company, the increased value of that business may be considered a marital asset. While the spouse who actively runs the business may be awarded full ownership in the divorce, the other spouse might be entitled to compensation in the form of other assets or financial support.
Debts and Liabilities
In equitable distribution, debts are as important as assets in fair property division.
Any mortgages, credit card balances, car loans, student loans, or personal loans acquired during the marriage are typically considered shared responsibilities. Even if one spouse was the primary borrower, the debt is likely to be divided between both parties, particularly if it was used to support the household.
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What is Not Considered Marital Property?
While most property and debts accumulated during the marriage are considered marital property, anything owned by either spouse before the marriage generally belongs to that spouse and is not subject to division. Separate property is
- Any property owned before the marriage, unless it is later commingled with marital assets
- Inheritances and gifts received individually by one spouse during the marriage
- Assets specifically protected by a valid prenuptial or postnuptial agreement
- Compensation from a lawsuit that is personal in nature, such as a personal injury settlement
However, if separate assets become commingled with joint assets – for example, inheritance money is used to buy a family home – they may lose their separate property status and be considered marital property.
By understanding which assets and debts are considered marital property, divorcing spouses will better understand which property must be divided during the divorce process and which property remains separate property.
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How Do Florida Courts Decide What is “Fair” in an Equitable Distribution Decision?
When Florida courts rule on property division in a divorce case, they consider a broad range of factors outlined in Florida Statute § 61.075. These factors include the following.
Each Spouse’s Contributions to the Marriage
The court will consider financial and non-financial roles, such as homemaking and child-rearing, when making property division decisions. Consequently, a spouse who may have stayed home with the children or supported the household while the other pursued an education may be entitled to a larger division of assets to compensate for that contribution.
The Economic Circumstances of Each Spouse
When making property division decisions, the court will evaluate each spouse’s financial standing post-divorce, including their income, employment opportunities, and earning potential. If one spouse is at a significant disadvantage economically, that spouse may receive a larger share of the marital assets.
The Duration of the Marriage
The length of the marriage usually plays a significant role in equitable distribution because a couple’s finances and assets become more intertwined over time. Furthermore, in long-term marriages, other considerations often come into play, such as the age and health of each spouse, social security and pensions, and maintaining a comparable standard of living for each.
Contributions to Career or Educational Advancement
If one spouse supported the other’s career or educational advancement, such as working while the other went to school or helped pay for medical school or law school, the supporting spouse may receive a larger share of assets to compensate for this support.
The Desirability of Keeping Particular Assets Intact
If one spouse wants to retain the family home, business, or investment, the court may consider compensating the other spouse with a different asset of equal value.
Intentional Waste of Marital Assets
If one spouse engaged in reckless spending, gambling, or financial waste of marital funds in an extramarital affair, the court may assign debt solely to that spouse or reduce their share of assets accordingly.
Custodial Responsibilities for Minor Children
If one parent is the primary caregiver, that parent may be awarded the family home or a larger share of assets to help provide stability for the children.
Can Spouses Agree to Their Own Property Division?
Divorcing spouses in Florida have the option of negotiating their own property division rather than leaving it up to the court. In fact, the court encourages couples to reach a mutual agreement as it can result in a faster and less costly divorce process. When spouses are able to work together to divide their assets and debts, they maintain more control over the outcome than if they relied on the court’s interpretation of what is fair.
Ensuring Your Property Division is Fair and Equitable
While the court encourages spouses to work together to reach mutual agreements, negotiating a property settlement without legal advice and guidance can be risky. These risks can include:
- Unequal or unfair division of property
One of the biggest risks of negotiating a settlement without legal guidance is that the division may be unfair to one spouse. This can happen if one spouse is more financially savvy and exploits the other’s lack of knowledge, the agreement heavily favors one spouse without ensuring the financial security of the other, or if one spouse feels pressured or rushed into signing without a full understanding of their rights. - Lack of full financial disclosure
Fair division depends on both spouses providing complete and transparent financial disclosures. However, when negotiating privately, there is a higher risk of one spouse hiding assets or failing to disclose important financial details. - Overlooking assets or debts
Couples without legal guidance may accidentally overlook marital assets or debts while negotiating, leading to disputes later on. Common missed marital property includes retirement accounts or pensions, stock options, business interests, investment properties, intellectual property rights, and debt responsibility. - Emotional decision-making
Divorce is usually an emotionally charged process, and decisions can be fueled by anger, guilt or the pressure to get it over with. This can result in one spouse giving too much, a spouse taking on an unsustainable financial burden because of an emotional attachment to the family home, or rushed decisions leading to regret and financial hardship. Without guidance, spouses may not fully consider the long-term impact of their agreements until it is too late. - Lack of clarity or enforceability
A settlement agreement must be clear and specific to be legally enforceable. Vague or poorly drafted agreements may result in confusion over who is responsible for what assets or debts, disputes over how and when assets should be divided, or the inability to enforce the agreement if one spouse fails to comply. - Future financial hardship for one spouse
Without legal guidance, a spouse may agree to terms that leave them financially vulnerable. This often happens when one spouse is the primary earner while the other is financially dependent. It can also occur if a spouse waives their rights to assets like retirement accounts or alimony without fully understanding the long-term financial impact, or when debt division is unequal, leaving one spouse unfairly burdened with financial obligations. - Future disputes
Even if both spouses agree to a settlement, future disputes can still arise, especially if the agreement was drafted without legal oversight. Court challenges often result in lengthy and costly legal battles, negating any money saved by avoiding legal oversight in the first place.
Protecting Your Financial Future in a Florida Divorce
Navigating equitable distribution in a Florida divorce can be complex. Furthermore, negotiating a property settlement without legal advice and oversight can pose significant risks.
Without a clear understanding of what equitable distribution entitles you to, what constitutes marital vs. separate property, and the long-term financial implications of agreeing to things that may not be in your best interest, you may unknowingly consent to a property settlement agreement that leaves you financially vulnerable.
Taking your time and getting skilled legal advice ensures your marital property will be divided fairly and legally. The experienced Tampa family lawyers at Melone Hatley, P.C. are here to provide personalized legal advice and guidance, protecting your rights and helping you negotiate a fair and legally sound property settlement agreement that doesn’t leave you at a financial disadvantage. Contact Melone Hatley, P.C. today at 813-400-1602 to schedule a free consultation with one of our Client Services Coordinators.
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