A seven-step analysis of equitable distribution in Florida.

• Author: Ho, Victoria M.

Part 1: Classification and Valuation of Marital Property

Florida's equitable distribution scheme is set out in F.S. [sections] 61.075. The statute gives the trial court the power to divide the parties' marital assets in or after a dissolution proceeding. To perform a distribution, the court first must classify the parties' property as either marital or nonmarital. The court then must value the assets as of a date determined by the court. Finally, the court must distribute the marital assets equitably between the parties, starting from the premise that any distribution will be equal:

In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, or in a proceeding for disposition of assets following a dissolution of marriage by a court which lacked jurisdiction over the absent spouse or lacked jurisdiction to dispose of the assets, the court shall set apart to each spouse that spouse's nonmarital assets and liabilities, and in distributing the marital assets and liabilities between the parties, the court must begin with the premise that the distribution should be equal....[1]

Taken in a different order, the subparts of [sections] 61.075 lend themselves to a logical, chronological guideline which we hope will define the distribution process more clearly. As an overview, the process can be illustrated through the following seven steps:

1) Set the cutoff date relevant to which the court will classify assets and liabilities as marital or nonmarital: i.e., assets acquired or liabilities incurred after the marriage began but before this cutoff date will be presumed marital, and assets acquired or liabilities incurred after the marriage began but after this cutoff date will be presumed nonmarital. F.S. [sections] 61.075(6).

2) Classify the parties' assets and liabilities as marital or nonmarital. F.S. [subsections ]61.075(5) and 61.075(7).

3) Set the date or dates at which the parties' assets and liabilities will be valued. F.S. [sections] 61.075(6).

4) Assign value to the parties' marital assets and liabilities. F.S. [sections] 61.075(3)(b) and (c).

5) Distribute the parties marital assets and liabilities, keeping in mind that any distribution should be equal unless one or more of the factors in [sections] 61.075 (1)(a)-(j) justifies an unequal distribution.

6) Structure the distribution award:

1. An unequal distribution must be supported in the order by written findings based on competent substantial evidence as to any factors justifying the inequality. F.S. [sections] 61.075(3).

2. Regardless of whether the distribution is equal or unequal, the order must include specific written findings as to the clear identification of nonmarital assets and liabilities, the identification and valuation of marital assets and liabilities and which spouse is entitled to each, and any other factors which may be necessary to explain the rationale for the distribution scheme to an appellate court or a party. F.S. [sections] 61.075(3)(a)-(d).

3. To effect the judgment, a court can order lump sum or periodic payments. F.S. [sections] 61.075(9).

7) Consider whether alimony is appropriate. F.S. [sections] 61.075(8).

Part one of this article covers the first four steps in the process: 1) getting to the point of distribution by setting the date relevant to classification of assets and liabilities; 2) classifying assets and liabilities as marital or nonmarital; 3) setting dates relevant to valuing the assets and liabilities; and 4) assigning value to the marital assets and liabilities. Our main emphasis in part one will be on classification. In part two we will discuss steps five through seven: 5) the actual distribution process (including circumstances which have justified unequal distributions); 6) structuring the distribution award; and 7) the interplay between distribution and alimony.

Step 1: Establishing Duration of "Partnership"

For purposes of classifying the assets and liabilities as marital or nonmarital, one important piece of information a court needs to know is whether assets and liabilities were acquired or incurred before, during, or after the marriage. So, before the court can begin the classification process, it makes sense that it would have to determine the duration of the "partnership." Obviously, establishing the beginning of the marriage is easy; it is setting the ending date which sometimes is complex. It might not be equitable to use the date the parties formally dissolved the marriage, since the final order might not be entered for a substantial period of time after the parties officially decided to divorce. It would be illogical to presume that assets acquired during this period were marital. Section 61.075(6) addresses this concern by providing that the "cut-off date for determining assets and liabilities to be identified or classified as marital assets and liabilities" is the earliest of the date the parties entered into a valid separation agreement, any other date expressly established by a valid separation agreement, or the date of the filing of a petition for dissolution of marriage.

Step 2: Classification of the Assets

After the court has established the "cut-off date" in step 1, it can begin the difficult process of identifying the parties' assets and liabilities and classifying them as marital or nonmarital. This is one of the most important steps in the distribution process, since [sections]61.075(1) makes it clear that only marital property can be distributed. Sections 61.075(5)(a) and (b) and [sections]61.075(7) provide some definition for what constitutes marital and nonmarital property. The sections, taken together, establish types of property and suggest how each should be classified, which we describe in the following major four categories:

* Marital property: Property "created" * during the marriage (real property held as tenants by the entireties, assets acquired, and liabilities incurred individually or jointly during the marriage, and pension and retirement plans).

Section 61.075(5)(a)(5) mandates that real property held by the parties as tenants by the entireties is to be treated as marital, regardless of when the property was acquired. Prior to the Florida Supreme Court's decision in Robertson v. Robertson, 593 So. 2d 491 (Fla. 1991), there was a presumption in favor of awarding the property to one party when a party could establish that he or she purchased the property with nonmarital funds. (See Ball v. Ball 335 So. 2d 5 (Fla. 1976)). In Robertson, the court held that even when a party could show nonmarital funds were used to purchase entireties property or when premarital property was later conveyed to entireties ownership, the statute created a presumption that the property was marital and subject to equitable distribution.[2] It is up to the spouse seeking to have the property classified as nonmarital to prove that a gift was not intended.[3]

The First District Court of Appeal has expanded on this to hold that when property is held by the entirety, expenditures made on the property during the marriage are presumed to be "in furtherance of the marriage" and are presumed to be from marital funds unless proved otherwise.[4] That court has also held that even when a party can clearly show that inherited or nonmarital funds are the source of money paid for...