Articles Posted in Equitable Distribution

Unwed fathers may believe that it is unlikely or impossible to gain custody of their child when they were never married to the child’s mother.  Fathers with this attitude should think again, as the courts and society have realized that fathers can be every bit as responsible as mothers in rearing a child.  The court system may still have a few vestiges of what was known as “The tender years doctrine”.  Such is the idea that a young child should primarily be cared for by their mother.  However, most judges today that I have encountered no longer display any indication that this philosophy still exists.  The reality is that a caring father can be every bit as nurturing and responsible as a caring mother.

In Florida, paternity is established by filing an action in the Circuit Court.  The action is known as a paternity action.  The petition should be titled a Petition for Paternity and Related Relief or a similar name.  There is no legal presumption for or against a father obtaining what used to be called primary custody.  The court’s have changed from using the term custody to using the term timesharing.  It is supposed to promote the idea of the children being shared between parents.  I personally do not believe that much has changed because of the change in terminology.  That said, the law has changed regarding child support in that the non primary residential parent (the parent that has minority timesharing) can now receive a reduction in child support if he or she has the child for at least 20 percent of the overnights.  The prior rule required the non majority parent to exercise at least 40 percent of the overnights to get a reduction in child support.

In a paternity suit, a father attempting to obtain timesharing must request either shared parental responsibility or sole parental responsibility.  Sole parental responsibility is exactly what it sounds like and so is shared parental responsibility.  Even people with serious criminal histories frequently are awarded shared parental responsibility.  Florida has enumerated the factors that it considers important and that a judge must take into account in deciding custody issues between parents.  They can be found in Chapter 61 of the Florida Statutes.  In short, they equate to the best interests of the child.

Adultery can certainly be a factor in a divorce.  However, adultery is only relevant for limited purposes.  Florida is sometimes referred to as a no-fault divorce state.  This only means that proving fault is not required to obtain a divorce.  There are only two reasons that are acceptable in Florida to obtain a divorce.  The most common reason is that the parties have irreconcilable differences.  The other is that a spouse is mentally incompetent.

A Court can consider adultery from either spouse, as well as the circumstances involved in making a determination concerning alimony.  A considerable amount of discretion is placed in a judge’s hands in determining if alimony should be paid and if so, how much should be paid.  F.S. 61.13(3)(f).

Although technically, adultery is not a factor that the court considers in making custody (now know as timesharing) decisions, adultery can be a factor regarding custody issues.  The Florida Statutes do allow the court to consider the moral fitness of a party in making a custody determination.  F.S. 61.13(3)(f).  If a parent can show the court that a parent’s adultery will affect the child, the trier of the fact can consider whether a party’s adultery impacts the best interest of the child or children.  In the case Jacoby v. Jacoby, the court determined that the mere possibility of adultery having a negative impact regarding timesharing is not sufficient to make the adultery a consideration.  Packard v. Packard, 697 So.2d 1292 (1st DCA 1997).  The important dynamic is whether a party’s adultery will have a direct effect on the welfare of a child.  Dinkel v. Dinkel, 322 So.2d (Fla. 1975).

Family law clients always ask me, “What is a QDRO?”  (pronounced informally “Quad-Row”) QDRO is an acronym for Qualified Domestic Relations Order, which is a court order that grants a party a right to a portion of the retirement benefits his or her former spouse has earned through participation in an employer-sponsored retirement plan. Federal law states that a retirement benefit can only be divided between former spouses if there is a QDRO.  Retirement plans can be a huge asset in a marriage that may be forgotten in a divorce, so its key for clients to educate themselves on division of this marital asset.

QDRO divorceIn a divorce, a family law attorney needs to determine what retirement plan each party owns through mandatory disclosure by the formal, legal plan name.  It is important to know the value of each plan, the valuation date used to value the plan, what ancillary benefits are associated with the plan (for example, market fluctuations, survivor benefits, subsidies/supplements, and interest credits), the correct method of division for the plan, and will the retirement plan accept a QDRO.  Disclosure is important in obtaining this information and the plan’s summary description. It is also important to obtain the plan’s divorce transfer and QDRO guidelines, if available.  Obtaining a statement for the plan as of your desired valuation date will assist you in a smooth QDRO process.  For federal government employees, retirement plans are divided by a COAP, which stands for Court Order Acceptable for Processing.

Your divorce decree will not be enough to divide a retirement benefit in most cases.  A QDRO is a separate document from the divorce decree. It is always better to file a QDRO with the retirement plan as soon as possible.  If the former spouse retires after the divorce is final, and the QDRO has not been filed with the plan, the plan will begin paying out the benefit to the former spouse and only future payments will be affected.

That dreaded word in a divorce:  Alimony. Alimony is determined by the court after looking at one party’s actual need versus one party’s ability to pay. After equitable distribution is determined, the court reviews what money is left over, if anything, and considers the parties’ circumstances to come up with a fair award.  Some questions to answer:

  • Length of the marriage
  • Standard of living the parties are accustomed to

Divorces in Florida typically split the parties’ assets and liabilities down the middle as much as possible.  Determining what is a marital asset or liability or a non-marital asset or liability can be key to whether an asset or liability will be considered in the calculations.  Before filing for divorce, you should consider the following items when thinking about equitable distribution:

  • Previous Inheritance
  • Marital Home

In Florida, the enhancement of value of a nonmarital asset could be declared by a divorce court to be a marital asset.  Most of the time you see this when one spouse’s nonmarital asset is alleged by the other spouse to be a marital asset.  If it cannot be declared a marital asset any other way, the court may look at enhancement of value of the nonmarital asset and award the other spouse an interest of that enhancement of value.  The Mitchell case illustrates this concept.

divorceIn Mitchell v. Mitchell, 841 So.2d 564 (Fla. 2ndDCA 2003), the husband owned a Tampa Carrollwood home prior to the marriage and kept it titled in his name so it was nonmarital property.  The trial court found that the home had been enhanced due to marital funds and efforts. Typically, the enhancement in value of a nonmarital asset resulting from either party’s nonpassive efforts or the expenditure of marital funds is a marital asset.  The appellate court found that such enhancement in the Mitchell case was negligible.  They performed primarily cosmetic or maintenance-related improvements, such as wallpapering.  The most important factor in the increase in the value of the property was passive market appreciation, about 5 to 6 % annually.  This produced a market value of $185,000.  The appellate court found that where the increase in market value is attributable to inflation or “fortuitous market forces,” the expenditure of marital funds on the nonmarital asset does not transform the appreciated asset into marital property.  However, an increase in equity due to the use of marital funds to pay down a mortgage balance is a marital asset subject to equitable distribution.  The appellate court found that the wife’s interest in the home was limited to her one-half share of the amount by which the mortgage was reduced with marital payments.

The husband in Mitchell also had 41 acres of unimproved land in North Carolina that was solely titled in his name alone throughout the marriage.  The circuit court characterized the entire appreciation in the value of the nonmarital North Carolina property as a marital asset subject to equitable distribution despite the fact that the appreciation was entirely attributable to passive inflation.  As in the case of the Carrollwood home, this was error according to the appellate court.  It was undisputed that the property was unimproved.  It had no sewer, septic, electric, or water connections.  The record showed that the parties used marital funds to pay mortgage payments, taxes, and a road assessment fee. The increase in the husband’s equity due to the use of marital funds to pay down the mortgage was a marital asset to be divided between the parties. Otherwise, the North Carolina property was found to be husband’s nonmarital asset.

In some marriages, a spouse’s parents may supplement the family income with monetary gifts, which may be an issue later on if the husband and wife divorce.  Can one spouse argue that the other spouse will have higher income due to the monetary gifts from family members thereby raising alimony and child support payments?  According to Florida law, it depends.

SupportIn Oluwek v. Oluwek, 2 So.3d 1038 (Fla. 2ndDCA 2009), Jonathan Oluwek, the husband, appealed an amended final judgment of dissolution of his marriage to Linda Oluwek, the wife.  The trial court imputed $1500 per month contributed regularly by the husband’s parents to husband for alimony and child support.  The husband argued the trial court erroneously imputed the $1500 per month as income to the husband.  The record indicated his parents made regular monthly payments of $1500 over the last five years of marriage.

The Oluwek court held that as a general rule, the trial court may not consider financial assistance from family or friends in determining a party’s ability to pay alimony or child support.  However, there is an exception that allows the court to impute income based on gifts “if the gifts are continuing and ongoing, not sporadic, and where the evidence shows that the gifts will continue in the future.”  In Vorcheimer v. Vorcheimer, 780 So. 2d 1018 (Fla. 4thDCA 2001), the appellate court held that the trial court erred by imputing $1500 to the husband as income where there was no evidence that the payments would continue. The $1500 payments had been made on a monthly basis for twelve years, but the husband’s father testified at trial that he had stopped making the monthly payments and would not make them in the future.  The court distinguished that case from Ordini v. Ordini, 701 So.2d 663 (Fla. 4thDCA 1997), in which regular monthly payments from the husband’s parents continued through trial and the husband’s mother testified that she would continue to make them in the future.

Former New York City Mayor Rudy Giuliani and his third wife, Judith, are currently involved in a heated divorce.  A day after filing for divorce on April 4, 2018, the parties filed for each other to produce a statement of net worth to determine assets.  The Giulianis have been married for 15 years and they do not have a prenuptial agreement.

prenupIn 2007, when Rudy Giuliani submitted his financial disclosure to the Federal Election Commission while running for president, he was worth an estimated $30 million.  The couple own properties in Manhattan and Palm Beach, Florida.  It is estimated that there is currently an estimated $60 million in assets at stake. When he married Judith, Rudy was pretty much insolvent and the money he has now was earned while he was married to Judith.  New York is a separate property state, but her participation in his success could be a factor for the assets to be split 50/50.

In Florida, mandatory disclosure applies so the Giulianis would not need to file for a statement of net worth.  Mandatory Disclosure is the procedure where financial information is automatically disclosed by the parties upon the filing of a divorce.  The parties must exchange financial information in the form of a financial affidavit and additional documents such as tax returns, bank statements, credit card statements, deeds, vehicle titles, insurance policies, etc. Mandatory disclosure must be completed within 45 days after service on the respondent.

The Florida Supreme Court, on March 30, 2017, issued an opinion in Hooker v. Hooker, 220 So.3d 397 (Fla. 2017) finding a Florida horse farm and a New York summer home interspousal gifts and, therefore, subject to equitable distribution as marital property despite a prenuptial agreement in existence.  The prenuptial agreement provided that, upon divorce, each party would retain his or her premarital assets and any appreciation of those assets. Both parties had independent sources of income from family inheritances and they maintained separate finances throughout the marriage.  The parties were married for 23 years.

giftThe Florida horse farm, “Hickstead,” was purchased in 1989 and the Hickstead deed listed “Alice I. Hooker Trust FBO, for the benefit of, Timothy I. Hooker” as the grantee.  Husband and Wife signed the mortgage on Hickstead.  When Hickstead was purchased, it was vacant land and it later became through the course of the marriage a working horse farm with 16 stalls, etc. and the marital home in one wing upstairs and the other wing was the staff apartment.  Wife was “extremely and directly involved in all aspects of the Hickstead residence which was the family’s primary home for approximately 20 years,” according to the findings of the trial court.  Wife was not limited or restricted in any way from incurring the costs and expenses of maintaining and operating a family home at Hickstead, from the Husband’s assets. Wife was provided unfettered access to the stables and horses to pursue her lifelong passion.

The New York summer home, “Lake George,” was purchased in 1997 and was titled only in the Husband’s name and only Husband signed the mortgage.  It was purchased, built and maintained as a summer residence for the family.  The Husband paid the expenses for Lake George with his independent funds and Wife was never a signatory on that account and never had access to that account. However, the Husband sent Wife a card for their tenth wedding anniversary with a picture of the property after the Wife had expressed a desire to have a home up north and both parties searched for a suitable property.

Equitable distribution of assets in Florida divorces can be a complex and divisive issue.  Regarding trusts and divorces, you can walk a fine line between a marital asset and a non-marital asset.  Enhancement in value and appreciation can be a marital asset in certain situations.

Oxley v. Oxley, 695 So.2d 364 (Fla. 4th DCA 1997) is a case that is especially relevant regarding a person placing their property in a revocable trust with themselves as trustee, hiring a financial manager to make the daily investment decisions, and thereby protecting themselves from the Florida Statute § 61.075(6)(a)(1).  This section provides marital assets and liabilities to include the enhancement in value and appreciation of non-marital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.  Meaning, technically, a non-marital trust’s appreciation of value could be considered marital property unless specific requirements are followed.  Oxley spells out how to avoid appreciation being considered in the dissolution of marriage.Tightrope distribution

In Oxley, the parties’ marital income was primarily from trust distributions to the husband which he supplemented with a salary taken as president of a family holding company.  The trust is revocable and was established prior to the marriage by the husband that provides that all income is payable to husband.  The investment decisions for the trust was made for the husband’s exclusive benefit by the trustee based on the advice of the husband’s father and brother.  It had multiple, active investments such as several working oil wells.  On one occasion the husband invested $400,000 of trust funds through a separate money manager.  At the time of the marriage, the trust was valued at $2 million and then increased to $7 million at the time of dissolution; and the increase was attributable to undistributed income that has accumulated during the marriage and upon which he paid personal income tax.  The trust also owned and paid the expenses on the marital home.  The husband also owned 50% of a corporation found to be a gift (technically purchased for a nominal amount) from his father.  As company president, the husband’s activities were largely ministerial and ceremonial, and he left the management and investment decisions to others.  The trial court in Oxley ruled that the trust, including the undistributed income, were non-marital assets, which significantly limited the wife’s equitable distribution.

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