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The Mills v. Mills Appeal: A Dispute About Misconduct and Marital Liabilities

Florida’s laws are quite clear about the fact that all assets acquired and liabilities incurred during the marriage should be considered marital property. Since Florida is an equitable distribution state, Florida divorce courts divide marital property according to the needs of each spouse. It is rare for a judge to classify an asset or liability taken on during the marriage as non-marital property. In the Mills v. Mills case, the former wife successfully convinced the appeals judge to re-classify a home equity loan as a non-marital liability, on the grounds that her then-husband had forged her signature on the loan documents.

Details of the Mills v. Mills Case

During the 37 years that he was married to his wife Brenda, Barry Mills entered into a number of investments, many of which turned out to be profitable. In 2007, Barry and several other investors attempted to form a startup bank. In order to cover his share of the startup capital, Barry took out a home equity loan in the amount of $100,000 dollars; as per the terms of the loan agreement, he pledged the couple’s house as collateral to secure the loan. Certain that Brenda would refuse to sign for the home equity loan, and knowing that he would not have sufficient funds to participate in the startup bank project without the loan, Barry signed Brenda’s name on the loan documents without her knowledge. When the startup bank applied for a state charter, the state refused to issue one, meaning that Barry lost his investment, which totaled more than $245,000. When the lenders required the Mills family to repay the loan, they repaid it using money from Barry’s retirement funds.

When the couple divorced, the trial court classified the loss resulting from the startup bank project as a non-marital liability. The court’s reasoning was that, except in cases of misconduct, all assets and liabilities taken on during the marriage count as marital property. Brenda appealed the decision, arguing that a forged signature qualifies as misconduct.  Barry did not deny forging Brenda’s signature on the loan documents. The appeals court sided with Brenda and re-classified the loss as a non-marital liability.

What is Misconduct in the Context of Equitable Distribution?

One of the only reasons that a Florida court will classify a debt incurred during the marriage as a non-marital liability is if one spouse can prove that the debt is the result of misconduct on the part of the other spouse. This often takes the form of one spouse sabotaging the couple’s finances in order to reduce the amount of spousal support that he or she will have to pay when the couple divorces. Another type of misconduct commonly cited in divorce cases is when one spouse spends or borrows money to support an extramarital affair partner. The appeals court in the Mills v. Mills case ruled that forging a spouse’s signature in order to obtain a loan without the spouse’s knowledge qualifies as misconduct.

Contact Alan R. Burton About Division of Property

Finding out that your spouse has been deceiving you about finances can be one of the worst parts of divorce. Contact Alan R. Burton in Boca Raton, Florida with questions about the classification of marital and non-marital property.