What is the difference between community and non-community property in Florida?
As opposed to community property states, Florida is an equitable distribution jurisdiction. That means we start with a presumption of a 50/50 split but then apply hundreds of rules in an effort to make the division fairer.
In order to be guided in the property division during a divorce proceeding, the court first determines what is a marital and a non-marital property.
Marital property is divided by the court in a Florida divorce. Florida Statute 61.075 describes what constitutes marital property. It includes:
- Assets acquired during the marriage. If a particular property or asset was purchased or otherwise acquired (in most cases) during the marriage, it is considered marital property. It does not matter if the property or asset was acquired by one or both spouses. For instance, if a husband purchases a classic car during the course of his marriage to his wife, the classic car will be considered marital property, even if the husband purchased the property with money from his own paycheck and only his name appears on the title, the car is still likely to be treated as marital property. A common myth is that a spouse can protect an asset by keeping it in his or her name. That is not true in Florida.
- Enhancement in value and appreciation of non-marital assets. If a non-marital asset becomes more valuable because one of the work of one or both of the spouses, or because one or both spouses spent marital funds or assets on improving it, the “enhancement” – that is, the difference between the present value of the asset and the value of the asset prior to the marriage – can be considered marital property. But it is important to keep in mind there are different rules that look at whether the enhancement was due to active labor, marital money investment, or passive appreciation.
- Inter-spousal gifts during the marriage. When one spouse gives another spouse a gift, that gift would be treated as marital property. Suppose Jesus gives Juana a new car for their tenth wedding anniversary. Regardless of where Jesus obtained the money for the gift – and regardless of whose name appears on the title or who primarily drives the car – the car can be considered marital property and subject to division by the court.
- Real and personal property held as tenants by the entireties. If the parties hold property as tenants by the entireties, then that property is presumed to be a marital asset. Tenants by the entireties are a special form of ownership available only to married couples. In order to be held as tenants by the entireties:
o The property must be subject to joint control and ownership;
o Both spouses must have an identical interest in the property;
o The parties must have been married at the time they acquired the property;
o The spouses’ interest must have been granted by the same instrument; and
o The spouses’ interest must have begun at the same time.
Tenants by the entireties offer certain protections and benefits for married couples; however, owning property in this manner will result in the court presuming the property so held is a marital asset. If one spouse wants the court to treat the property differently in a divorce, he or she has the burden of showing that the presumption is incorrect and that the property is, in fact, separate, non-marital property. He or she must do so by “clear and convincing evidence.”
- Certain retirement benefits. The statute also includes “vested and nonvested” benefits, rights, and funds that accumulated during the marriage in any sort of retirement or insurance plan will be considered marital property. Suppose Jesus works for an employer who provides a 401k. Before marriage, Jesus had accumulated $10,000.00 in that 401k plan. After marrying Juana, he accumulated an additional $25,000 in his retirement plan before he and Juana divorced. While the $10,000 was acquired before the marriage (and will likely be treated as non-marital property), the $25,000 would be considered marital property. Retirement plans end up being divided in the majority of divorce cases.
Non-marital property (sometimes called separate property) is a property that is not included in the marital estate and is thus not subject to division by the court. Instead, whichever party owns the non-marital asset will keep that asset after the divorce. Non-marital property includes:
- Assets acquired prior to marriage. Those assets and property acquired by either of the spouses before they become married are to be treated as separate property not subject to division. Suppose Jesus purchases a Cadillac as a gift to himself after getting his first new job. A few years later, he marries Juana. Because Jesus acquired the Cadillac before his marriage, it will likely be treated as separate property. What is more, if Jesus later decides to trade in his Cadillac for a different car, that too can be considered a non-marital asset.
- Property acquired by interspousal gift or inheritance. Continuing with the example of Jesus and Juana, suppose that Jesus’ brother gives him a Cadillac while Jesus is married to Juana. Or suppose that the Cadillac belonged to Jesus’ grandfather, who then gifts the Cadillac to Jesus as part of the grandfather’s will. In these situations, the court is likely to treat the property as Jesus’ separate property.
- Income derived from nonmarital assets. This situation typically arises when one spouse owns rental property prior to the marriage. So long as the spouse that owns the rental property keeps the proceeds separate from marital property or joint accounts, the income produced will be considered non-marital property.
- Assets and property excluded by agreement. Through a valid prenuptial or postnuptial agreement, the parties can exclude assets and property from the division, even if the property would otherwise be considered marital property. Suppose Jesus and Juana enter into a postnuptial agreement. They agree, amongst other things, that Jesus’ car will be treated as his own separate property and Juana’s car will be treated as her own separate property. Assuming that they complied with the requirements for a legally enforceable agreement, the court will honor their agreement and exclude those items from the marital estate.
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