Florida Divorce Assets: What You Don’t Know Can Hurt You

“It was supposed to be simple. We both agreed to the divorce,” said Anna as she stared at the list of assets her lawyer handed over. “I didn’t realize we had so much.” This is the moment when most people realize that divorce is not just an emotional battle but a financial one as well. When you’re knee-deep in the Florida divorce process, things can get complicated quickly, especially when it comes to splitting assets. Florida is an “equitable distribution” state, which means that marital assets are divided fairly—but not necessarily equally.

What Counts as a Marital Asset?

Before you can figure out how assets are divided, you need to know what counts as a marital asset. In Florida, marital assets include any property, income, and debt accumulated during the marriage. That means your home, vehicles, and even retirement accounts could be up for grabs. But here’s where it gets interesting—assets that one partner brought into the marriage but appreciated during the marriage can also be considered marital property.

For example, say you bought a house before getting married. If that house increased in value during the marriage, the appreciation is likely considered a marital asset.

What About Non-Marital Assets?

Non-marital assets, such as inheritances or property owned before the marriage, are usually not included in the asset split. However, things can get tricky. If a non-marital asset is commingled with marital assets, it can lose its protected status. This is especially common with bank accounts, where funds are mixed.

For instance, if you had $50,000 in a savings account before marriage but added your spouse as a joint owner, or deposited income earned during the marriage, that money might now be classified as a marital asset.

Key Mistakes People Make During Divorce

One of the biggest mistakes people make is underestimating the complexity of asset division. You might assume that splitting everything down the middle is the way to go, but Florida law doesn’t see it that way. Equitable distribution considers factors like the length of the marriage, each spouse’s contribution to the marriage (both financial and non-financial), and even whether one spouse will have custody of the children.

Another common mistake? Failing to properly value assets. You might think you know the value of your home or retirement account, but accurate appraisals are essential. This is particularly true for assets that have fluctuating values, like investments or business interests.

Retirement Accounts and Pensions: The Hidden Danger

Here’s where things get even more complicated. Retirement accounts and pensions are often overlooked, but they are significant marital assets. In Florida, these accounts are subject to division, even if only one spouse contributed to them. This includes 401(k)s, IRAs, and pensions.

The division of retirement accounts typically requires a Qualified Domestic Relations Order (QDRO), a legal order that instructs the plan administrator on how to divide the account. Without a QDRO, you could face hefty taxes and penalties, not to mention an unfair division of your retirement savings.

Businesses: Not as Simple as They Seem

If one or both spouses own a business, things get even more convoluted. The value of the business must be determined, and often this means bringing in experts to conduct a business valuation. Depending on how intertwined the business is with the marriage, it could be classified as a marital asset subject to division.

However, not all business assets are considered marital property. If the business was started before the marriage, only the increase in value during the marriage might be considered for division. Even then, proving that increase can become a major legal battle.

How Can You Protect Yourself?

The best way to protect yourself during a Florida divorce is to be prepared. Gather all financial documents, from bank statements to property deeds, and make sure you have a clear understanding of both your marital and non-marital assets. Hire a skilled attorney who is experienced in Florida divorce law, especially if there are significant assets at stake.

Another crucial step is getting accurate appraisals. Whether it’s the value of your home, a business, or retirement accounts, having the right numbers can make all the difference when negotiating a fair settlement.

Florida’s “Equitable Distribution” Law Explained

In Florida, equitable distribution doesn’t mean a 50/50 split. The court considers various factors to decide what is “fair.” These factors include:

• The duration of the marriage
• The economic circumstances of each spouse
• Contributions to the marriage, including homemaking and child-rearing
• The desirability of retaining certain assets, like the family home, particularly if one spouse has custody of the children

For example, if one spouse earns significantly more than the other, the court may award a larger share of assets to the lower-earning spouse.

The Role of Debt in Asset Division

It’s not just assets that get divided in a Florida divorce—debts do too. Marital debt includes anything accumulated during the marriage, whether it’s a mortgage, credit card debt, or loans. Like assets, debts are divided based on equitable distribution.

This means that if one spouse was the primary breadwinner but the other took on substantial debt in their name, the debt may still be divided equitably between the two. But watch out—hidden debts are a common issue. Some spouses try to hide debts during divorce proceedings, which is why a thorough financial investigation is crucial.

Don’t Forget About Taxes

Taxes are another often-overlooked factor in divorce settlements. Certain assets, like retirement accounts, may have significant tax consequences when they are liquidated or divided. Failing to account for these tax implications can leave one spouse with a hefty tax bill down the road.

Mediation vs. Litigation: Which Is Right for You?

In Florida, divorcing couples have the option of going through mediation rather than litigation. Mediation allows couples to work together with a neutral third party to come to an agreement on asset division. It can be faster, less stressful, and much cheaper than going to court.

However, mediation isn’t always the best choice, particularly if there is a power imbalance between the spouses or if one spouse is hiding assets. In these cases, litigation may be the only way to ensure a fair settlement.

Final Thoughts: Navigating the Florida Divorce Process

The division of assets in a Florida divorce is rarely straightforward. With so many factors to consider, from the valuation of assets to the intricacies of Florida law, it’s easy to feel overwhelmed. But with the right preparation and legal support, you can navigate the process and emerge with a fair settlement.

Remember, what you don’t know can hurt you. Take the time to understand your financial situation, get proper valuations, and hire an experienced attorney who can guide you through this complex and often emotional process.