Divorce 101: How are assets and liabilities distributed in a divorce?
During a divorce, assets and liabilities must be divided. This can include the home you live in, the car you drive, and even the utensils in the kitchen. The question is how are assets and liabilities distributed in a divorce?
Before making a distribution of marital assets and liabilities, the trial court must first determine which assets are marital and which are non-marital and their values. See Fla. Stat. § 61.075 (2015). Marital and non-marital assets and liabilities are defined by statute in Florida. See Fla. Stat. § 61.075(6)(a)1 and (b). The court does not distribute non-marital assets as part of equitable distribution, except in extreme cases where the court finds dissipation of assets.
Am I responsible for debt acquired during the marriage, even if it wasn’t mine?
Yes, if one spouse took out a credit card without the other spouse’s knowledge during the marriage, the debt is marital. See Kranz v. Kranz, 737 So. 2d 1198, 1202 (Fla. 5th DCA 1999) (finding that fact that wife incurred credit card debt independently and without husband’s knowledge did not necessarily warrant treating all of the debt as nonmarital or as subject to unequal distribution). Florida statutes define liabilities as those incurred during the marriage, individually by either spouse or jointly by them.” Thus, the fact that the parties had separate credit cards is irrelevant as all of the debt is deemed to be marital if it was acquired during the marriage. However, there are certain exceptions where the court finds misconduct. See Roth v. Roth, 973 So. 2d 580 (Fla. 2d DCA2008).
What constitutes a marital asset?
Marital assets include any enhancement in value and appreciation of non-marital 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. For example, if the one spouse owned a home prior to the marriage and the parties resided in the home during the marriage and used marital funds to maintain the home, then the increased value (assuming there is any) in the home is marital. See Pfleger v. Pfleger, 558 So. 2d 198 (Fla. 2d DCA 1990) (when separately owned assets increase in value during a marriage due to the expenditure of marital labor or funds, the amount of the increase is subject to equitable distribution. Once the expenditure of marital labor or funds has been established, increases in value attributable to marital labor, funds, inflation, and market conditions will all apply).
How are the assets distributed?
In Florida, the law requires that the court begin with the premise that the distribution of marital assets and liabilities should be equal unless there is a justification for unequal distribution based on all relevant factors. “Unequal distributions must find their authority in specific facts relating to statutory factors rather than in generalized and indeterminate notions of equity.” Robbie v. Robbie, 788 So. 2d 290, 294 (Fla. 4th DCA 2000) (citations omitted). The relevant factors are enumerated in Florida Statute section 61.075.
Typically, the courts look to an equitable distribution worksheet to determine how to value assets. All the assets and liabilities distributed to one party are put in column “A” and the assets and liabilities distributed to the other party are listed in column “B”. The totals for each column are added and an equalization payment is calculated, so that each party walks away with 50% of the value of the assets and liabilities.
The courts are required to make specific written findings to show that the equitable distribution is supported by competent, substantial evidence. Failure of the court to make specific written findings constitutes reversible error. See Spitulski v. Spitulski, 816 So. 2d 1251 (Fla. 5th DCA 2002).