July 1, 2008, marks a significant milestone in the evolution of the law of equitable distribution in dissolution of marriage actions in Florida. That date is the effective date of the legislature's amendment of the equitable distribution statute in four significant respects: abrogating the special equity doctrine and replacing special equity claims with claims for unequal distribution or enhancement in value of nonmarital assets, defining the burden of proof to overcome the gift presumption as clear and convincing evidence, extending the gift presumption to personal property, and constructing a partial equitable distribution statute. (1) This article will review the statutory changes, provide a historical context in order to understand the rationale for the statutory changes, and offer practical considerations.
The cornerstone of the new legislation is the abolishment of special equity claims and the special equity formula set forth in Landay v. Landay, 429 So. 2d 1197 (Fla. 1983). (2) The new statute provides that the special equity doctrine is abrogated and that claims previously argued as special equity are now to be argued as claims for unequal distribution or enhancement of nonmarital assets. (3) Further, consistent with the legislature's intent to abolish special equity, the gift presumption that previously attached to real property titled by the entireties has been changed to reflect that if the presumption is successfully rebutted, the property will be treated as nonmarital rather than subject to a claim of special equity. (4)
In order to appreciate that the statutory amendment abrogating special equity is not just a semantics change, and in fact, represents resolution of a significant internal conflict in the prior statute, a brief history of the special equity doctrine is in order. The special equity doctrine was a property division mechanism created by the Supreme Court of Florida in 1932 in the case of Heath v. Heath, 138 So. 2d 796 (Fla. 1932), to correct a perceived unfairness created by Florida's divorce statutes at that time. (5) The law then in effect provided that a wife who was guilty of adultery and had no real property or other assets titled in her own name was not allowed to receive alimony or a property distribution. (6) The special equity doctrine was, therefore, created to allow a wife in such a case to obtain a property distribution from property titled in her husband's name and to avoid the gross inequity of that spouse leaving a longterm marriage penniless. (7)
The term "special equity" was further described in case law over the years as a vested interest in property brought into the marriage or acquired during the marriage from a source disconnected from the marital relationship, in essence, a vested interest that a party acquires because of a contribution of funds, property, or services made over and above the performance of normal marital duties. (8) Though the original underpinnings of the special equity doctrine relating to adultery became redundant even prior to the enactment of Florida's equitable distribution statute, F.S. [section] 61.075 (1988), the special equity doctrine remained firmly embedded in Florida law. (9) However, the statute and the accompanying case law failed to recognize that the special equity doctrine had become antiquated and anachronistic. (10)
Florida's equitable distribution statute has always defined assets as either marital or nonmarital. Under the prior statute, if real property was titled by the entireties (and currently, if real property or personal property is so titled), and the gift presumption was not overcome, the asset was deemed marital and potentially subject to unequal distribution pursuant to the statutory factors in Fla. Stat. [section] 61.075(1)(a)-(I). If the gift presumption was successfully rebutted, the party was entitled to a special equity.11 Thus, the former rule that provided a party was entitled to a "special equity" when the gift presumption was overcome was at odds with the statutory construct that assets are either marital or nonmarital. Further, given that the statutory underpinnings of the special equity doctrine had long been abolished, namely that adultery was a complete bar to alimony and property rights and that a wife had no claim to property in her husband's name, the special equity doctrine was a relic whose abrogation was past due.
As a result of the new changes, several practical considerations should be noted. First, the practitioner making a claim that certain property is nonmarital will need to examine the issue of the gift presumption. As discussed in detail herein, the new statute provides that an asset titled by the entireties, whether the property was acquired prior to or during the marriage, is presumed to have been a gift to both parties and is, therefore, a marital asset and that the burden of proof of establishing the contrary is on the party seeking to overcome the gift presumption. (12) The new statute provides that the burden of proof to defeat the gift presumption is clear and convincing evidence. (13) The practitioner will, thus, argue that the gift presumption has been overcome and that the subject property at issue is nonmarital and, therefore, should be returned to the party who originated the asset. At this stage, it should also be argued that any appreciation of the nonmarital asset is passive appreciation and, therefore, owned by the party who originated the asset.
However, even if the practitioner is unsuccessful in rebutting the gift presumption, the practitioner can argue that the subject property should be subject to unequal distribution based on the statutory considerations set forth in F.S. [section] 61.075 (1)(a)-(I). (14) Courts have long recognized the propriety of an unequal distribution of a marital asset to a party based on compelling factors. For example, in McMonagle v. McMonagle, 617 So. 2d 373 (Fla. 5th DCA 1993), the husband...