Under Florida Law, all “marital assets” and “marital liabilities” have to be equitably divided between the parties. Distribution of assets and liabilities is governed by Florida Statute 61.075. The Court must begin with the premise that the distribution should be equal and must consider the following factors in making a distribution:
- The contribution to the marriage by each spouse, including contributions to the care and education of the children and services as homemaker.
- The economic circumstances of the parties.
- The duration of the marriage.
- Any interruption of personal careers or educational opportunities of either party.
- The contribution of one spouse to the personal career or educational opportunity of the other spouse.
- The desirability of retaining any asset, including an interest in a business, corporation, or professional practice, intact and free from any claim or interference by the other party.
- The contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.
- The desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so, it is in the best interest of the child or that party, and it is financially feasible for the parties to maintain the residence until the child is emancipated or until exclusive possession is otherwise terminated by a court of competent jurisdiction. In making this determination, the court shall first determine if it would be in the best interest of the dependent child to remain in the marital home; and, if not, whether other equities would be served by giving any other party exclusive use and possession of the marital home.
- The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within 2 years prior to the filing of the petition.
- Any other factors necessary to do equity and justice between the parties.
Oftentimes, however, distribution is not as easy as splitting a bank account in half. There are other issues such as business valuation, appraisals, forensic accounting and pension and retirement valuation. Having an attorney who understands how to value and split these complicated assets and liabilities is crucial to obtaining a fair result in your divorce.
1. My spouse and I have a business that we started during the marriage, how will in be valued and distributed?
Oftentimes, it is necessary to hire a business valuation expert to determine what value a marital business may have. There are two common approaches that most experts use to value a business. The first is a valuation of the business as an "ongoing concern". This method typically involves assigning a value to the business under the assumption that an employee would have to be hired to replace one or both spouses. The value of the business as an ongoing concern would then be the expected profit after the hiring of replacement employees. This approach gives the Court an idea of how much value a spouse's labor has in the marital business. The second approach assumes that the business needs to be liquidated and sold. This is also referred to as an asset-valuation approach. The value of the business would then be the sum of the physical assets of the business plus the value of the business's client base. As far as distribution is concerned, the Court has to consider which spouse may keep the business or whether the business may be liquidated. The Court then has to award a party the asset which may require an equalization payment to the other spouse.
2. My spouse and I have 401(k) plans and other defined benefit contribution plans, how are these valued and distributed?
A 401(k) plan is a fairly simple valuation. Most plan administrators can easily provide an account valuation as of the close of business on a specific date. A pension plan is more difficult to value. Most pensions can not be cashed out prior to the holder reaching retirement, so the Court will determine a "marital fraction" of the pension benefit and then award the non-holder spouse a percentage of the holder's future benefits. For example, if a couple is married for 10 years, but the holder has 20 years of contributions to the pension, the Court will award the non-holder 25% (50% marital fraction * 50% distribution) of the future monthly benefit from the pension. For annuities or cash surrender life insurance, an expert will need to be called about to assign an actuarial value to these assets as of the date of valuation that the Court will choose. In is important to note that these assets cannot be simply divided by a Final Judgment of Dissolution like cash accounts. A Qualified Domestic Relations Order ("QDRO") is necessary to distribute these accounts. QDROs are very complicated legal documents that often span 10 to 20 pages in length. In our experience, most family law firms will not handle the drafting and submission of QDROs due to their complicated nature. The Orlando Family Firm, however, drafts all of our QDROs in house and it is part of the service we provide in divorce cases.
3. Can the Court force the parties to sell their marital home?
Yes. There is a separate count that must be pled in your Petition for Dissolution call Partition. A Partition count requests that the Court force the sale of your marital home and any proceeds be distributed between the parties. Partition is usually a last resort for the Court as there are many other ways to distribute the equity in the marital home. For example, you and your spouse may agree at mediation that one party may remain in the marital home and "buy-out" the other spouse's share of the equity. We can also award other assets to the non-residing spouse to compensate them for their share of the equity in the marital home. All things being equal, the Court will strive to make an equal division of all the marital assets and liabilities without forcing the sale of your marital residence.
4. The Court awarded the marital home to my spouse, am I still liable for the mortgage?
It depends. The bank who holds your note will not care whether the Court has awarded your spouse possession of your marital home. If you are both jointly liable on the note, you will both continue to be financially liable on the note. The can result in collections actions against you by the bank. The easiest way to avoid this situation is to require the spouse who is retaining the property to refinance in their name only so that you do not need to worry about a future default.
The Orlando Family Firm, located conveniently in downtown Orlando is a full-service family law firm dedicated to providing compassionate and aggressive representation for our clients. As Orlando Divorce lawyers we are focused on representing you in legal matters including distribution of assets and liabilities. Our firm typically handles family law cases throughout Central Florida in Orange County, Osceola County and Seminole County. We have significant trial experience in handling distribution of complex asset cases. We believe that communication with our clients is of utmost importance so that our clients know exactly what is going on in their case and to help take the mystery out of the legal process. Going through a divorce or other family law proceeding is a trying time for our clients and we provide the peace of mind to help our clients resolve and move past their family legal issues. Contact The Orlando Family Firm today for a Free Consultation to help you understand more in-depth how Complex Asset Distribution cases work throughout Florida.