5.2 Equitable Distribution and Financial Disclosures

In Florida, the division of property in a dissolution of marriage is governed by the principles of equitable distribution, set forth in Section 61.075, Florida Statutes. Unlike community property jurisdictions, Florida does not mandate an equal split of all marital property. Instead, the court must start with the presumption that the distribution of marital assets and liabilities should be equal. However, if there are relevant factors that justify an unequal distribution, the court may distribute the property unequally, provided it makes specific written findings of fact explaining its decision.

Statutory Factors for Unequal Distribution

When deciding whether to depart from the presumption of an equal (50/50) split of marital assets and liabilities, the court must consider several statutory factors:

• Each spouse's contribution to the marriage, including care and education of children and homemaking services.
• The economic circumstances of the parties.
• The duration of the marriage.
• Any interruption of personal careers or educational opportunities of either party.
• One spouse's contribution to the career or education of the other.
• The desirability of retaining a major asset, such as a business or professional practice, intact and free from interference by the other party.
• Each spouse's contribution to the acquisition, enhancement, and improvement of both marital and non-marital assets.
• The desirability of retaining the marital home for a dependent child.
• The intentional dissipation, waste, or destruction of marital assets after filing the petition or within two years prior to filing.
• Any other factor necessary to do equity and justice between the parties.

Classification: Marital vs. Non-Marital Assets

Before a court can distribute property, it must first classify every asset and liability as either marital or non-marital. Only marital assets and liabilities are subject to equitable distribution.

Non-Marital Assets

Under Section 61.075(6), Florida Statutes, non-marital assets and liabilities include:

1. Assets acquired by either party prior to the marriage.
2. Assets acquired separately by either party by non-interspousal gift, bequest, devise, or descent.
3. Income derived from non-marital assets during the marriage, unless treated, used, or relied upon by the parties as a marital asset.
4. Assets and liabilities excluded from marital assets by a valid written prenuptial or postnuptial agreement.
5. Liabilities incurred by either party prior to the marriage.

Marital Assets

Marital assets and liabilities include:

1. Assets acquired and liabilities incurred during the marriage, individually or jointly.
2. Interspousal gifts during the marriage.
3. The enhancement in value and appreciation of non-marital assets resulting from either spouse's efforts during the marriage or from the expenditure of marital funds.
4. Vested and non-vested benefits accumulated during the marriage in retirement, pension, profit-sharing, annuity, and insurance plans.

Active vs. Passive Appreciation and Commingling

A frequent issue on the Florida Bar Exam is determining when non-marital property becomes marital or when its appreciation becomes marital.

Active vs. Passive Appreciation

Appreciation of a non-marital asset can be marital or non-marital, depending on the cause of the appreciation:

• Active Appreciation: If a non-marital asset increases in value during the marriage due to the active efforts, labor, or management of either spouse, or due to the contribution of marital funds, the appreciation is a marital asset. For example, if a wife owns a business before marriage and runs it during the marriage, the appreciation during the marriage is a marital asset.
• Passive Appreciation: If the appreciation is due solely to market forces, inflation, or third parties, it remains non-marital. For example, if a husband owns land before marriage and its value increases solely due to market forces, that appreciation remains non-marital.

Commingling and Retitling

Non-marital property can lose its separate identity and become marital through commingling or retitling:

• Commingling: When non-marital cash or assets are mixed with marital assets such that they can no longer be traced, they are classified as marital. For example, depositing inherited funds into a joint account commingles the asset, converting it to marital.
• Retitling: If a spouse transfers title of a non-marital asset into joint names as "tenants by the entireties," there is a strong statutory presumption that a gift of the asset was made to the other spouse, converting it into a marital asset. The donor spouse can overcome this presumption only by showing clear and convincing evidence that no gift was intended.

Valuation Date and Disclosures

Valuation Date

The date for determining which assets and liabilities are marital is the earliest of: the date the parties enter into a valid separation agreement, the date of filing the petition for dissolution, or another date established by agreement or determined by the court. However, the date for valuing the assets and liabilities is the date the court determines is just and equitable under the circumstances. Different assets can have different valuation dates. For example, a volatile stock portfolio might be valued at the date of the final hearing, while a business might be valued at the date of filing.

Mandatory Financial Disclosures

Under Florida Family Law Rule of Procedure 12.285, mandatory financial disclosures are required in all dissolution cases except for simplified dissolutions. Within 45 days of service of the petition, both parties must exchange a family law financial affidavit, tax returns, pay stubs, bank statements, credit card statements, deeds, and retirement plan statements.

The duty to disclose is continuous throughout the litigation. If a party conceals assets or files a fraudulent affidavit, the court can impose severe sanctions, including striking pleadings or awarding attorney's fees. Additionally, under Florida Family Law Rule of Procedure 12.540, there is no time limit to set aside a family law property settlement or final judgment based on active financial fraud or non-disclosure.