Appreciation in Value of Non-Marital Property May Be Considered Marital Property for Purposes of Equitable Distribution in Florida Divorce Proceedings
Florida is an “equitable distribution” state when it comes to the division of marital property during dissolution of marriage, or divorce, proceedings. In this context, “equitable” does not necessarily mean “equal,” but rather “fair.”
Most people know that marital property typically includes assets acquired during the marriage, individually by either spouse, or jointly by both parties. However, 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, is also considered a marital asset, and therefore subject to equitable distribution in divorce proceedings.
When it comes to real property, any increase in value to non-marital property as a result of improvements made using marital funds is considered by the courts to be marital property, and therefore, subject to equitable distribution. This includes including funds which are held in an account in only one party’s name, but which account includes marital and non-marital funds, often referred to as the “co-mingling” of funds.
For example, in one case, the court found that funds used to increase the value in the husband’s pre-marital home were marital due to co-mingling of marital and non-marital funds in a certain account. In other words, marital funds were used to make improvements and enhance the value of the husband’s pre-marital home. The court held that the increase in value attributable to the improvements must be considered marital property and subject to equitable distribution. Thomas v. Thomas, 776 So.2d 1092, 1095 (Fla. 5th DCA 2001)
In another case where comingling of marital and non-marital funds occurred in a certain account, thereby rendering the account marital, the court found that the enhanced value to the home as the result of improvements made using funds from that account was considered a marital asset and subject to equitable distribution.
Moreover, the court also found that the increase in equity in the home due to mortgage payments paid out of the same account was also considered a marital asset and subject to equitable distribution.
However, the court also held that any purely passive appreciation to the home, such as that due to increase in land value, is not considered marital, and therefore, not subject to equitable distribution. It is the owner spouse’s burden to show whether any part of the enhanced value should be exempt from equitable distribution, but instead due solely and purely to passive appreciation. Adkins v. Adkins, 650 So.2d 61 (Fla. 3d DCA 1994)
It is worth noting that it is not just the expenditure of marital funds in relation to the non-marital property, but how those expenditures enhance the value of the property. Routine maintenance may or may not enhance the value of such non-marital property. “It is only where appreciation occurs as a result of the marital effort or funds that the enhancement of non-marital property may be considered a marital asset.” Barner v. Barner, 716 So.2d 795, 797-98 (Fla. 4th DCA 1998).
For more information regarding the equitable distribution of marital assets and liabilities in Florida, please see https://www.flsenate.gov/laws/statutes/2011/61.075.
If you have questions regarding the equitable distribution of marital property in your case, or what constitutes marital versus non-marital property, assets and/or liabilities, contact experienced Winter Park marital property attorney Jennifer Dane today at 407-260-0500.