Articles Posted in Equitable Distribution

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News stories about the complicated divorce proceedings of high-powered couples are nothing out of the ordinary in Florida. In many cases, the main complicating factor is the couple’s wealth.  It is not simple to divide a couple’s assets when they own many millions of dollars of property together. In the divorce of Alan Grayson (D-FL), a former member of the United States House of Representatives, from his ex-wife Lolita, division of property ended up being the least of the complicating factors in the case. In 2015, their marriage ended by annulment, not by divorce.

The Marriage(s) of Alan and Lolita Grayson

Alan Grayson and Lolita Carson married in 1986; it was a second marriage for both. The couple went on to have five children together. In 1990, Lolita Grayson applied for United States citizenship, and Alan Grayson saw her citizenship application before she submitted it. On the application, she listed her marital status as “separated.” More than 20 years later, during the couple’s divorce proceedings, it was revealed that Lolita was still legally married to her first husband at the time that she married Alan Grayson. In 2015, a judge annulled their marriage, declaring it void because of bigamy. In other words, the court declared that the couple had never been legally married because Lolita was legally married to someone else when she and Alan Grayson married each other.

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Even people who do not have a romantic bone in their bodies find it heartwarming to see elderly couples who have been married for many decades. For example, after Hurricane Irma wreaked havoc on Florida, readers all across the country took comfort in the news story about Harvey and Irma Schluter, a Washington state couple who have been married since 1942. Florida’s divorce lawyers know, though, that not all long marriages result in couples living happily ever after.  Divorce cases involving couples who have been married for more than two decades are often the most complex when it comes to property division, especially if the couple is wealthy. The divorce case of Burt and Lucille “Lovey” Handelsman, which has made news headlines recently, practically sets records for complex divorce, both because of the length of the marriage and because of the high value of the couple’s jointly owned assets.

Who are Burt and Lovey Handelsman?

Even if you have not heard the names Burt and Lovey Handelsman, their business dealings play a role in the lives of many Floridians. The Handelsmans own approximately $750 million in commercial real estate in Florida and New York state. Among their most famous holdings are the upscale shops on Worth Avenue in Palm Beach. Burt and Lovey are both in their late 80s; they have gradually built their real estate empire over the course of their 67-year marriage, and their three children are also involved in the family business.

In 2016, Lovey filed for divorce, convinced that Burt was having an extramarital affair with Jane Rankin, a friend of the Handelsmans who has also been involved with the family real estate business.  Burt denies the affair; he believes that the couple’s children have intentionally alienated Lovey from him, thinking that they will gain more of the family wealth sooner if their parents divorce. The couple’s son and two daughters deny these claims. Continue reading

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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. Continue reading

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Florida is one of only a few states that still allow permanent alimony, and for that it has gained some notoriety. Of course, the requirements for awarding permanent alimony are quite strict, and the cases that involve it tend to be complex. The guiding principle that Florida courts use in determining spousal support and other matters related to property division is equitable distribution. Equitable distribution means assigning to each spouse the assets and obligations that the court deems fair based on the couple’s unique circumstances. As you might imagine, there is plenty of room for disagreement about what is fair. The Wayne v. Einspar appeal is a recent Florida family law case in which a former spouse challenged the court’s decision regarding equitable distribution.

Background of the Wayne v. Einspar Case

Matthew Wayne and Susan Einspar divorced in 2013, after their son had reached adulthood. At the time of their divorce, both parents had separately cosigned for various loans for their young adult son. Wayne was a cosigner on the student loans, and Einspar was a cosigner on the car loan. In the original divorce decision, the court did not count the loans as marital property.  Additionally, the court required Wayne to pay permanent alimony to Einspar and to keep a life insurance policy with Einspar as the beneficiary in order to secure this alimony. Wayne filed an appeal, challenging the court’s original decision on 10 counts, many of them related to alimony. Continue reading

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The longer a couple has been married, and the more assets they have, the more complicated the case tends to be if they divorce. Perhaps the most bitter divorce battles center around the physical custody of minor children and the right to make decisions related to their upbringing. When a couple does not have minor children, the biggest disagreements usually have to do with the division of property. Florida courts have clear rules about what is marital property and what is non-marital property, but there is still room for complicated situations to arise in which each spouse can make a claim to a certain asset. For example, if one spouse earned a lot more money than the other during the marriage, how should that money be divided? If one spouse used the couple’s money irresponsibly, how does that affect the court’s decision about how to divide the property?

Florida’s Equitable Distribution Doctrine

Florida courts divide divorcing couples’ property according to the principle of equitable distribution. In other words, they go by what is fair. They do not always divide marital property evenly, and they do not simply take into account how much income each spouse brought in and then let each spouse keep only the money he or she earned. Florida law also considers unpaid contributions to the marriage as reasons a person is entitled to a certain share of the marital property. For example, time spent as a stay-at-home parent also counts as a contribution. The logic is that, when taking care of the children full time, the stay-at-home parent spouse was freeing up the other spouse to concentrate more on earning money.

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The question frequently arises in a divorce case as to whether or not an inheritance is a marital asset or non-marital asset.  The Florida equitable distribution statute which deals with the distribution of assets, both marital and nonmarital, clearly sets forth that assets acquired separately by either party by non interspousal gift, bequest, devise, or descent, and any asset acquired in exchange for such assets, are non-marital.  See Florida Statute 61.075(6)(b)2.

The initial determination as to whether an asset received as an inheritance is marital or nonmarital is rather straightforward.  The issue can become more complex as the years go on in a marriage, and the separate nature of the inheritance becomes clouded.

In order for an asset to maintain its separate, non-marital status, it is very important not to commingle marital assets with non-marital assets.  Therefore, in order to preserve the integrity of the inheritance being a non-marital asset, the inherited funds should be maintained in a separate bank account, in your own name, and you should never, ever deposit or commingle marital funds into your separate account.

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Equitable distribution of marital assets comes in many forms.  One such form is the enhanced equity that one party obtains when his non-marital mortgage is paid down during the course of the marriage with marital funds.  Support for this proposition is found under Florida Statute 61.075(6)(a)(1)(b).

In the case of Somasca v Somasca, 171 So3rd 780 (Florida 2nd DCA 2015), the former husband owned commercial real property encumbered by a mortgage.  A substantial portion of the mortgage was paid down during the marriage by utilizing marital funds obtained when the wife refinanced the marital residence.  The wife was claiming 50% of the amount of the mortgage reduction as a marital asset and as a portion of her equitable distribution.

The husband responded by claiming that his separate property depreciated substantially in value during the marriage, which essentially “washed out” or canceled any claims that the wife was making in reference to a pay down of his non marital mortgage.

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In a dissolution of marriage action, the court is required to identify all the marital assets and to establish the value for those marital assets.

Stock is just one example of what might be considered a marital asset in a divorce case.  Stocks which are traded routinely on an exchange have a value that is easily determined.  What do you do however when you are dealing with stock in a privately held company, or stocks commonly referred to as penny stocks?  How do you go to go about valuing these types of stocks?

Bring your valuation experts to court, and present their full testimony.  For certain, a trial judge should not make a finding of value until all the evidence has been presented to the court regarding valuation.  Additionally, if both parties to the proceeding offer evidence of differing valuations, it is not appropriate for a court to take an average of the two conflicting valuations in order to assign a value to the stock.

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There is a general rule in Florida that essentially says that a trial court should award the primary residential parent exclusive use and possession of the marital residence after divorce, until the child or children reach majority or are emancipated.

As we often discover in life, there are exceptions to every rule, and this holds true in situations dealing with the marital residence.

When “special circumstances” exist, it may be appropriate for the court to order the sale of the marital residence, rather than awarding exclusive use and possession to one of the parties.  Special circumstances may exist “when the parties incomes are inadequate to meet their debts, obligations, and normal living expenses, as well as the expense of maintaining the marital residence.”  This concept was set forth in the case of Coristine v Coristine, 53 So3rd 1204, (Florida 5th DCA 2011).

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A trial court in a divorce proceeding lacks the legal authority to order the sale of jointly owned real property, unless there was a specific pleading asking for partition of the real property.

Partition is a request that is made by one of the parties to sell jointly owned real property.  The court in the case of Martinez v. Martinez, 573 So.2d 37 (Fla. 1st DCA 1990) specifically held that a court has no authority to partition or order the sale of  jointly held real property in the absence of an agreement between the parties or a specific pleading filed in the case requesting partition.

The court does, however, have the right to award a 100% interest in a parcel of real property to one party or the other in a dissolution of marriage case, as part of the equitable distribution ordered by the court, as provided under Florida Statute 61.075.