Division of Appreciated Nonmarital Assets in Florida Divorce Cases

The allocation of property is one of the most contentious areas in Florida divorces. Even though some property is classified as marital property that is eligible for equitable distribution, other forms of property may be considered non-marital property owned by one spouse prior to the marriage. It can become confusing when non-marital property appreciates in value during the marriage. The appreciated value is considered part of the marital estate, while the initial value is considered personal property.

Background of the case

In the aforementioned case, the issue emerged around the categorization and division of the marital home’s appreciation. The house was owned by the husband before the marriage. At the time of the marriage, the husband owned the house exclusively in his name. However, during the course of the marriage, marital funds were used to make mortgage payments and improvements on the home. This is important.

At the time of their divorce, the value of the marital home had greatly increased. The wife contended that since the couple used marital funds to help pay off the mortgage and maintain the home, the appreciation belonged to the marital estate, not the husband.

The husband, on the other hand, disagreed, asserting that the actual property was not marital since it had been purchased before the marriage and therefore, the appreciation in value should also be categorized as separate property.

In this case, the court decided in favor of the husband, allowing him to retain much of the appreciation. The wife ultimately appealed the court’s ruling.

The appeal

The matter was finally brought before the Florida Supreme Court. The Court took into consideration how an appreciation in the non-marital asset would be treated in cases where there were contributions by both parties and the use of marital money during the marriage.

In this case, the Florida Supreme Court sided with the wife. The court concluded that passive appreciation of the non-marital asset, if marital funds were applied towards reducing the mortgage principal or if other contributions were made toward enhancing the value of the house.

Most importantly, however, the court created a formula that would determine what portion of the appreciation constituted a marital asset. It is clear that the decision recognized contributions from the marital estate were made to pay for the home. Its appreciated value was thus part of the marital estate and subject to equitable distribution.

This case is one of the most important for determining equitable distribution when an asset is brought into a marriage. Ultimately, if marital funds were used to pay for and improve the home, some of the home will belong to the marital estate.

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Source:

law.justia.com/cases/florida/supreme-court/2010/sc08-1614.html