Divorce Equitable Distribution: Worse Than E.D.?
By Thor Hartwig, a Divorce Attorney in Tampa, FL
What is Equitable Distribution
In Florida divorces, a major part of the process includes identifying marital assets and debts, separating them from nonmarital debts and assets, and then figuring out who gets what. This is referred to as Equitable Distribution. As the name suggests, the idea is for each party to receive a fair share.
And this is generally where the court starts its presumption, but then can award an unequal share of assets and liabilities based on certain statutory factors that are very broad and leave a large amount of discretion with the judge.
What counts as an asset or debt is very broadly defined by Florida statute and is interpreted liberally in family courts. Assets often include cash, stocks, bonds, 401ks, home equity, pension plans, airline mileage or any other tangible or intangible thing of value that was obtained or grown during the marriage by either spouse, jointly or individually.
The value of your successful business grown during the marriage? Yep, probably that too.
It’s the same for debt: Obtained by either spouse during the marriage, jointly or Individually. And individually can mean unbeknownst to you.
Further, even nonmarital assets—those obtained before the marriage date or after the divorce filing date—are not 100% immune from Equitable Distribution. Florida statute loosely addresses this as:
“The enhancement in value and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.”
An example of this could be a rental home owned before the marriage that is then maintained and repaired with marital funds and not funds exclusively from the rental income.
Equitable Distribution Nightmare
Maybe hearing the words or reading them on paper suggests some semblance of fairness, but in real-world application Equitable Distribution in Florida divorces can really play out in an unfair way.
Here is one scenario that could showcase this.
Husband and Wife have been married for 10 years. They have no children.
Husband is a successful businessman that has owned his company for 15 years. He carries minimal debt, believing that a man should only buy what he can presently afford. 9 years into his marriage, he receives a large family inheritance of $100,000 and deposits it into a joint savings account. He occasionally deposits money from his business profits, but otherwise it is not touched.
He purchased the current marital home a few years before they got married and had saved for years to afford the down payment. Husband has also invested heavily in a personal retirement fund since getting married.
Most business valuation “experts” would agree that the business has increased in value by $200,000 during the course of the marriage.
Wife never really had a job, but she does the Husband’s business taxes once a year and light bookkeeping here and there. A few years ago, she decided to go back to school. She got a Masters then pursued a P.H.D. She graduated a year ago and has $200,000 in federal student loan debt from these degrees.
The final year in her P.H.D. program, she fell in love with her supervising professor and they had an affair. It’s ongoing. Two years ago, she got a $50,000 inheritance from her late grandma. She deposits it into a new savings account that is solely in her name and has not put in any money since.
Wife also has a shopping habit that is unrelated to her affair. She currently has credit card debt totaling $20,000. Husband knows nothing about these cards or the debt.
A few months after getting a $10,000 breast enhancement surgery, Wife leaves Husband for the professor and files for divorce.
At the court-mandated mediation, her attorney presents a proposed Marital Settlement Agreement.
Husband skims it. He sees the alimony demands. He sees the demand for attorney fees and the cost of the valuation expert of his own business.
Then he sees the Equitable Distribution. Wife wants:
- Half of all joint accounts, including the 100k inheritance Husband received because it has become commingled funds
- Half of the home equity that has accrued during the marriage, plus half the furniture
- Half the value of the business accrued during the marriage
- Half of Husband’s retirement plan
- To keep her 50k inheritance because she put it in an account in just her name and never added marital funds to it
- Husband to assume half of her credit card debt and half of her federal student loan debt (110k total)
- Husband to assume half the liability on her breast implant bill
Husband is stunned. He thinks that if he agrees to this she would be walking away with more than enough money to pay all of her debt and he would be stuck with just her debt and half of his assets.
He also knows that she plans on getting a job at a 501(C)(3) non-profit and will make 120 income-based payments and then get the remaining balance of her federal student loan debt discharged through the Public Service Loan Forgiveness Program and he’ll still be making payments on his half of her student loans!
Husband looks at his attorney for answers. He says it’s what he would have demanded too.
While this may seem unfair, and even though Florida is an Equitable Distribution state and not a Community Property state (everything marital strictly down the middle 50-50), a strong argument could be made that every one of her demands falls within the discretion of a judge to award if it were to go to trial.
That’s the reality of Equitable Distribution in Florida, and there isn’t a pill to cure that type of E.D.
Some steps men can take to protect themselves from this scenario are:
- Don’t comingle your jingle: Keep nonmarital assets separate from your marital assets
- If you get an inheritance, put it in an account in your name and do not add marital funds to it
- Get a good prenuptial agreement
- If your wife wants to take out substantial student loan debt or other forms of debt, get a post-nuptial agreement allocating responsibility of the debts in the event of a divorce
- Don't marry a woman that has no assets and lots of debt, especially if you have a lot of assets
- Don’t get married
*This post is meant to give a broad overview of the law and is not to be considered legal advice
if you have questions regarding divorce or other family law issues and live in the tampa bay area, then contact attorney thor Hartwig at the link below:
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