Protecting Assets in a Florida Divorce
A divorce in Florida should result in an equitable distribution of property. Equitable does not mean equal. Rather, it means that assets are divided fairly, taking into consideration the age of the marriage, the contribution of each spouse to the finances of the family, the needs of a spouse, as well as the responsibilities toward child care after the divorce. The end result of the split may look drastically different from an equal distribution. [1] If you are facing a Florida divorce, you are probably wondering how to protect your assets during this financially turbulent time. Let’s look at some ways to do just that.
Separating Marital and Non-Marital Assets
Only assets that are considered martial property are divided, as non-marital property is not divided. Non-marital property is the property that was owned before the marriage, while marital property refers to assets acquired jointly after the marriage.
Non-marital property also includes assets acquired after marriage that are meant to stay separate. Some examples of non-marital property are:
- Anything owned by one spouse before the marriage.
- Inheritances or gifts given to one spouse only.
- Items specifically stated in a prenuptial agreement as non-marital.
Some examples of marital property are:
- Money that either spouse made while married.
- Houses, cars, or other property purchased during the marriage.
- Retirement plans, pensions, or savings that grew while married.
- Increases in the value of these assets, no matter who contributed.
If you have non-marital property, it is best to make any related payments from a separate account rather than from any shared accounts. For example, getting a mortgage for a house acquired through inheritance from the joint account of both spouses can change the nature of the property from non-marital to partially marital. This will make it susceptible to division in case of a divorce.
During a divorce, assets can get mixed together, making it difficult to decide what counts as marital or nonmarital property. Legal advice from a divorce attorney can be essential in protecting your non-marital assets and understanding how the court will likely divide the marital property.
Prenuptial and Postnuptial Agreements
Prenuptial and postnuptial agreements can help you protect your assets in the event of a divorce.
A prenuptial agreement is signed before marriage. It defines the distribution of assets if a divorce occurs. A prenuptial agreement should be signed to protect premarital property, such as businesses or inheritances.
If a couple divorces, all assets listed in the prenuptial agreement remain with the original owner.
A postnuptial agreement is signed after the marriage if the financial circumstances of the couple change. Examples can be one spouse inheriting money or starting a business. A postnuptial agreement can help protect assets but it is more complicated because the finances are now shared. For a postnuptial agreement to be valid the court ensures that it was voluntary, has fair terms and contains a full disclosure of all assets and debts.
Joint Accounts
The balance in a joint account is divided between the spouses if a divorce takes place. All debt on a joint credit card is to be shared between the spouses, even if one of them has more responsibility for the debt. The court will divide the debt after considering the income of the spouses, who benefitted from the spending and the overall contribution of the spouses.
If one spouse fails to pay their share of the debt on a joint credit card, the other can land in trouble. The creditors are only concerned with the agreement that you signed with the credit card company, and divorce does not alter that agreement. It is a wise decision to close the joint account if you are heading for a divorce to protect your assets.
Hiding Assets
You may be tempted to hide some assets as a protection measure, but being transparent and honest will result in an equitable outcome. Hiding assets can have serious legal and financial consequences. In Florida, the law requires full financial disclosure during divorce.
Hiding an asset is seen as dishonesty, which the court takes very seriously. It may decide that you forfeit the asset to the other spouse, or it may increase the shape of the other spouse when dividing assets. If the hidden assets are discovered after the divorce, the court can even re-open the case to adjust the asset division.
If you hide assets, you can face perjury charges leading to fines and jail time in the worst case scenario.
Creating a Domestic Asset Protection Trust
You can create a Domestic Asset Protection Trust (DAPT) to protect your assets in a divorce. The assets placed in the trust will be protected from creditors, lawsuits, or divorce settlements. Florida does not have laws for DAPT creation, so residents often choose states that offer strong protection for these trusts.
A DAPT can protect your assets in a Florida divorce as it marks the assets as non-marital. However, the court may invalidate the trust if it suspects that it was created at a time when signs of divorce were inevitable.
Asset Division Law in Florida
In Florida, asset division during divorce follows specific rules outlined in Florida Statutes section 61.075. This law ensures that all marital assets and debts are identified and then divided fairly between both spouses. The process begins by categorizing assets and debts into two main groups: marital and non-marital. [1]
Steps in Asset Division
1. Identifying Non-Marital Assets:
Before anything can be divided, the court must first separate non-marital assets and debts from the rest. These are things owned by just one spouse, and they will not be shared during the divorce. Examples include:
- Property or money each person owned before the marriage.
- Gifts or inheritances received during the marriage.
- Personal injury compensation.
- Assets listed in a prenuptial or post-nuptial agreement.
2. Dividing Marital Assets:
After non-marital assets are set aside, the next step is identifying what the couple acquired together. The court generally assumes that anything gained during the marriage—like property, earnings, or even debts—is shared. Once identified, these assets and liabilities will be divided between the two based on what the court considers fair, not necessarily equal.
Factors Considered While Dividing Assets
In Florida, while the starting point for dividing property during a divorce is a 50/50 split, the court can change that based on equitable distribution or what is considered fair. The court uses several factors to decide how to divide marital property. This can result in one spouse getting a larger share of the property if it makes sense to do so.
The court can adjust the share each spouse receives depending on a variety of factors. These factors include:
- Contributions to the marriage: Each spouse’s role in taking care of children, keeping the home, and even helping with each other’s education are all considered.
- Economic situation: The financial standing of both parties is important, as the court ensures that neither is left in an unfair position after the divorce.
- Length of marriage: How long the couple has been together may affect how assets are divided.
- Career disruptions: If one spouse had to pause their career or education to support the family, this is taken into account.
- Support for the other’s career: When one spouse helps the other advance in their job or schooling, the court might decide that the supporting spouse should receive more assets.
- Ownership of specific assets: Sometimes, one spouse might need to keep assets like a business. If that is the case, the court may allow them to retain ownership without sharing.
- Income and liabilities: How each spouse contributed to making money or took on debt during the marriage affects the division.
- Keeping the family home: If the home is essential for the children, the court might allow one spouse to keep it.
- Wasting marital assets: If a spouse wasted or spent significant marital assets right before the divorce, this will influence the court’s decision.
- Fairness overall: The court can consider any other relevant factors that ensure the division is as fair as possible.
This process allows the court to adjust asset division based on individual circumstances, ensuring that fairness, rather than strict equality, guides the final decision.
Equal Distribution of Assets
In Florida, the court begins by assuming that all assets and debts from the marriage will be divided equally between both spouses. This approach is called equal distribution, which applies unless there is clear evidence showing that one spouse contributed more than the other toward a specific asset. [2]
If no evidence is presented about who contributed more, the court considers the item as equally shared. This applies to things like stocks, bonds, mutual funds, and even cryptocurrency, regardless of whose name they are under. The court sees these as marital property and includes them in the division.
However, the court can choose to divide things unevenly if one spouse can show evidence that they contributed more to the marriage or to a particular asset. This evidence could also include showing that one spouse wasted or reduced the value of the marital property. Without this kind of evidence, the court will stick with equal division.
When facing a divorce, an experienced lawyer can be a critical ally in protecting your property. Having a skilled divorce attorney by your side makes a lot of difference to the outcome.
Sacks & Sacks can help you protect your financial interests during your divorce. Call or fill out the form for a free consultation today.
FAQs
Q. What is the difference between marital and non-marital property?
Marital property includes assets acquired during the marriage, while non-marital property is owned by one spouse before the marriage or assets kept separate.
Q. Can non-marital property become marital property?
Yes, if non-marital property is mixed with shared funds, like using a joint account to pay for a house acquired through inheritance, it can become partially marital property.
Q. What factors influence asset division in a divorce?
Factors include the length of the marriage, each spouse’s contributions, career disruptions, and the needs of any children.
Sources:
[1] Florida statutes title VI. Civil Practice and procedure § … (n.d.). https://codes.findlaw.com/fl/title-vi-civil-practice-and-procedure/fl-st-sect-61-075
[2] Lemos, N. S. (2023). EQUITABLE DISTRIBUTION. https://www.flcourts.gov/content/download/862618/file/2023-01%20AAML%20-%20Equitable%20Distribution%20Outline.pdf