The commingling of nonmarital and marital funds: untangling the changing character of assets in equitable distribution.

• Author: Savard, Susan W.
• Position: Florida

During the course of an intact marriage, the parties enjoy a relationship of trust, and many financial decisions are made without regard to the full impact of those decisions should the marital relationship fail. For example, an inheritance by one of the parties during the marriage is placed into the parties' joint savings account. Does placing the inheritance into joint names change the character of the funds from nonmarital to marital? Perhaps the inheritance was received before the marriage and placed into the premarital account of one of the parties. The account remained in that spouse's sole name, but earnings during the marriage were deposited into the account and the funds in the account utilized for the payment of marital obligations and living expenses. Does the deposit of earnings during the marriage change the character of the funds from nonmarital to marital in nature even though the account remains in the sole name of one of the parties? Does the payment of marital obligations and living expenses from the mixture of nonmarital and marital funds change the character of the entire asset? Does the length of marriage have any impact on how the court views distribution of the asset upon dissolution?

This article explores the various legal theories concerning commingling of nonmarital and marital funds, discusses Florida's recent statutory amendment and cases concerning this issue and, hopefully, provides some insight into untangling the changing character of commingled as sets. This article focuses primarily on commingling of marital and nonmarital funds and does not specifically address marital efforts, enhancement, or other areas of potential hybrid assets.

Florida's Statutory Scheme

The court must begin with the premise that the distribution of marital assets, including interspousal gifts (1) and liabilities should be equal. (2) If the presumption of a gift cannot be overcome and what were once nonmarital funds are classified as marital due to joint title, an argument could be made that there is justification for an unequal distribution of the marital assets. The court must consider such factors as the contributions to the marriage by each spouse, (3) the economic circumstances of the parties, (4) the duration of the marriage, (5) or any of the other statutory factors (6) that may be relevant in the particular factual scenario presented.

Prior to 2008, Florida's equitable distribution statute provided that the presumption of a gift arose only relating to real property held by the parties as tenants by the entireties regardless of whether the property was acquired before or during the marriage. Accordingly, if a premarital home was placed in the joint names of the parties during the marriage, the transfer of title was presumed to be a gift to the marriage. In 2008, the statute was amended to provide that the presumption of a gift applies not only to real property, but also to personal property titled as tenants by the entireties. The burden of proof necessary to overcome the gift presumption for either type of asset is by clear and convincing evidence that a gift was not intended. (7) Clear and convincing evidence is an intermediate burden of proof standard that requires the evidence be credible, clear, and lacking in confusion such that the trier of fact is convinced of the matter's truthfulness without hesitancy. (8) It is the highest burden of proof in civil matters. (9) Accordingly, with the statutory amendments of 2008, once nonmarital funds are placed into the joint names of the parties as tenants by the entireties, an extraordinary burden exists to overcome the presumption of a gift to the marriage, and, thus, classification of the funds as marital in nature.

The statutory change seems to resolve the problem raised by the Fifth District in Archer v. Archer, 712 So. 2d 1198 (Fla. 5th DCA 1998), and Crouch v. Crouch, 898 So. 2d 177 (Fla. 5th DCA 2005), holding that F.S. [section]61.075 did not create the presumption of a gift when personal property was titled in joint names. These decisions were contrary to a body of caselaw that applied a gift presumption to bank accounts held jointly by unmarried couples. (10) The person contributing the property had the burden of proving that a gift was not intended. For some reason, when the parties married, courts looked more to the parties' conduct in deciding this question. (11)

The 2008 statutory revision addresses tenancy by the entireties, but does not address other forms of ownership, such as tenants in common or joint tenants with the right of survivorship. When the real or personal property is owned jointly by a husband and wife, there is virtually no difference between a joint tenancy with right of survivorship and a tenancy by the entireties. (12) However, it is possible for a husband and wife to own real or personal property as tenants...