A seven-step analysis of equitable distribution in Florida.

Part 2: Distributing Marital Property

In part one of this article which was published in last month's (May) issue, we discussed the first four steps in the equitable distribution process under F.S. [sections] 61.075: 1) setting the date relevant to classification of assets and liabilities; 2) classifying assets and liabilities as marital or nonmarital; 3) setting dates relevant to valuing the assets and liabilities; and 4) assigning value to the marital assets and liabilities. Once the court performs these steps, it then has the pool of property which can be distributed. It is important to remember that only marital property can be distributed; the statute makes it clear that "the court shall set apart to each spouse that spouse's nonmarital assets and liabilities...."[1] Nonmarital property is outside the scope of the statute and is not subject to equitable distribution. This is why the semantics of classification are so important.

In part two of this article, we analyze the remaining three steps in the equitable distribution process: 5) distributing the marital assets and liabilities; 6) structuring the distribution award; and 7) considering the interplay between distribution and alimony. We will pay special attention to recent cases in which the courts have considered whether unequal distribution schemes were warranted under the statute.

Step 5: Structuring the Distribution

As the Florida Supreme Court stated in Robertson v. Robertson, 593 So. 2d 491, 493 (Fla. 1991), "equitable distribution is premised on the theory of an equal partnership in marriage."[2] The court is directed to start with the premise that a distribution of marital property will be equal, but the statute does recognize that there may be situations which justify awarding a greater percentage of one or all assets to one party over the other. Section 61.075(1) lists several factors that may call for an unequal division:

(a) The contribution to the marriage by each spouse, including contributions to the care and education of the children and services as homemaker.

(b) The economic circumstances of the parties.

(c) The duration of the marriage.

(d) Any interruption of personal careers or educational opportunities of either party.

(e) The contribution of one spouse to the personal career or educational opportunity of the other spouse.

(f) The desirability of retaining any asset, including an interest in a business, corporation, or professional practice, intact and free from any claim or interference by the other party.

(g) The contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

(h) The desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so, it is in the best interest of the child or that party, and it is financially feasible for the parties to maintain the residence until the child is emancipated or until exclusive possession is otherwise terminated by a court of competent jurisdiction. In making this determination, the court shall first determine if it would be in the best interest of the dependent child to remain in the marital home; and, if not, whether other equities would be served by giving any other party exclusive use and possession of the marital home.

(i) The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within two years prior to the filing of the petition.

(j) Any other factors necessary to do equity and justice between the parties.

These factors are not to be taken lightly. The presumption toward equal distribution is a heavy one, and unequal distributions are the exception to the rule. In Segall v. Segall, 708 So. 2d 983 (Fla. 4th DCA 1998), the court held that there was insufficient justification for an unequal distribution where the wife had alleged the husband substantially mismanaged their money. The court quoted its earlier decision in Geddes v. Geddes, 580 So. 2d 1011, 1018 (Fla. 4th DCA 1988), where it wrote: "Those entering into a marriage partnership must share not only the benefits and successes of the relationship, but also the risk of failure and the economic consequences to the parties of such failure."

Not all of these factors will lead a court to make an uneven distribution. Some simply guide the court in terms of how to allocate specific assets. For instance, the allocation of the marital home or business to one party or the other may make sense, but this is not a justification for an unequal distribution of all of the marital property.

There are, of course, cases in which appellate courts have held that unequal distributions were justified. But those cases are consistent in that each recognizes that one--or, more often, several[3]--of the statutory factors are so significant as to overcome the general presumption, and each relies on evidence supporting the factors which is both obvious and substantial. Cases upholding unequal distributions rely on evidence which concretely establishes an extraordinary need to deviate from the 50/50 norm. A survey of recent cases provides some illustration of the courts' treatment of some of the statutory factors:

* Contribution to the marriage by each spouse (factor "a")

Simply earning a much greater income during the marriage than the other party does not rise to the level necessary to trigger the "contribution of each spouse" factor. In Williams v. Williams, 686 So. 2d 805 (Fla. 4th DCA 1997), the court rejected this argument when the husband had earned a significant income and the wife largely had been an unemployed homemaker. To trigger the factor, the husband would have to make "the requisite showing of some extraordinary services on the part of the spouse receiving the lion's share of the distribution."[4]

* Economic circumstances of the parties (factor "b")

In Pierre-Louis v. Pierre-Louis, 713 So. 2d 1073 (Fla. 3d DCA 1998), the trial court had ordered that the parties were equally responsible for an income tax liability incurred during the marriage. The district court reversed, and reasoned that the "economic circumstances of the parties" factor justified making the husband solely responsible. The court found that the husband clearly had the superior financial ability to pay the debt, looking to a business which was the parties' "greatest income generating asset" and had been awarded to him. The court also found that the former husband had primarily benefitted from the income over which the taxes were owing: The wife and children had only received approximately $20,000 in support during the period in question, while approximately $290,000 went out of the husband's various accounts during the same period. Also, the husband had--in that period--paid off his car, paid off his sister's car, repaid a loan from his brother, moved savings from joint accounts to his sole accounts, and spent funds after the dissolution proceedings had begun.[5]

* Duration of the marriage (factor "c")

While there is no bright line test for this factor, courts have given some indications. In Williams v. Williams, 686 So. 2d 805 (Fla. 4th DCA 1997), the district court held that it was erroneous to rely on the duration of marriage factor to justify an unequal distribution when the parties had been married for nine years. That factor, it explained, was to be reserved for rare cases such as Ibanez-Vogelsang v. Ibanez-Vogelsang, 601 So. 2d 1303 (Fla. 3d DCA 1992), in which the husband was awarded the jointly titled, $900,000 home--his premarital property--after a six-week marriage.[6] Although it did not articulate any specific number which was "long enough," the Williams court reasoned that in the instant case the parties had been married long enough so that their assets had lost their separate identity, "becoming inextricably commingled with assets acquired during the marriage as a result of the reciprocal efforts of both parties to the marital partnership."[7]

In McMonagle v. McMonagle, 617 So. 2d 373 (Fla. 5th DCA 1993), the district court reversed an equal distribution when the trial court had not properly structured its final order. Before remanding, the district court noted that the parties had only been married for two years, that they were in their fifties when they married and had both been married before, and that all of their assets had been acquired prior to the marriage. The district court agreed with the trial court's determination that because the husband had intended to make a gift to the wife of one-half of his premarital assets, his assets were properly classified as marital property. However, the court noted that the factors were probably sufficient to justify an unequal award of the marital property on remand.[8]

In Vaughn v. Vaughn, 714 So. 2d 632 (Fla. 1st DCA 1998), the court also found that the two-year duration of the marriage, combined with other factors, justified an unequal distribution. In that case, the parties were married two years before they separated. They had accumulated no assets over the course of the marriage but had accumulated substantial debts, mainly in the form of consolidation loans to pay off debts incurred by the husband either before or immediately after the parties were married. The husband's annual income was between $26,000 and $30,000; the wife's annual income was in the neighborhood of $5,000. The trial court made the husband responsible for a $31,000 debt, and the wife responsible for a $1,438 debt. On appeal, the district court affirmed the distribution, recognizing that "it would be inequitable for the former wife, having little or no income, to leave this short-term marriage with responsibility for one-half of an approximately $30,000 debt, the benefit of which inured almost exclusively to the former husband or his family."[9]

The district court concluded that the duration of the marriage, when combined with the economic circumstances of the parties and the contribution of each spouse to incurring the liabilities, justified awarding the husband almost all of the parties' liabilities.

* Contribution of each spouse to the acquisition of assets or liabilities (factor "g")

In Barner v. Barner, 716 So. 2d 795 (Fla. 4th DCA 1998), the court recognized that when one spouse has contributed significantly to the property of another spouse (even when those contributions do not necessarily enhance the value of the property), the trial court can use that as evidence of the "contribution of each spouse" factor in considering how to structure distribution. In that case, the contributions were in the nature of seedlings planted and property tax paid on the wife's timber property. Under the court's analysis, the contributions did not convert that property to marital, but could provide support for an unequal distribution of the other properly classified marital property.[10]

Contribution also can be a factor when liabilities are concerned. Remember Vaughn, discussed above, in which among the factors the court considered in assigning to the husband the majority of the parties' liabilities was the fact that the debts were acquired by him, and the benefits inured almost exclusively to him.[11]

* Dissipation of assets (factor "I")

In Horne v. Horne, 711 So. 2d 1310 (Fla. 1st DCA 1998), the court held that financial misconduct must rise to the level of actual dissipation to support an unequal distribution--finding that one party was simply significantly less "thrifty" than the other is not sufficient.[12] Misconduct that does not rise to the level of dissipation of assets is not sufficient to justify an unequal distribution. This is consistent with Segall, when the court described dissipation of assets "as a situation in which one spouse used marital funds for his or her own benefit, and for a purpose unrelated to the marriage at a time when the marriage was undergoing an irreconcilable breakdown."[13]

While agreeing that dissipation must be substantial to justify an unequal award under the statute, Beers v. Beers, 23 Fla. L. Weekly D2370 (Fla. 5th DCA 1998), held that the court is not limited to the two-year time period written into the statute. Because subpart (j) specifically allows the court to consider "any other factors necessary to do equity and justice to the parties," the trial court could, in its discretion, look further back if there was evidence that was relevant to the distribution.[14]

In Jonsson v. Jonsson, 715 So. 2d 1064 (Fla. 5th DCA 1998), the court upheld a finding of dissipation of assets that did rise to the level necessary to support an uneven distribution. After setting out the assets and performing the distribution, the trial court explained that "the wife was responsible for a diminution of the marital assets by her surreptitious misuse of credit. The Court feels it appropriate to reduce her portion of the equitable distribution of the assets and debts due to this fact."[15]

Even when there has been intentional dissipation of assets, there still is a presumption that the equality of the distribution should be modified only to the extent necessary. In Siravo v. Siravo, 693 So. 2d 676 (Fla. 4th DCA 1997), the trial court had awarded the wife all of the parties' assets and a more-than-half interest in a business she and her husband had owned together, based on concerns that the husband had "dissipated the business and its inventory, concealed assets, misled the court, and obfuscated the facts concerning the business."[16] After the court found that the record did support the trial court's finding of "intentional dissipation, waste, depletion or destruction of assets," it held that the distribution was still too polarized in favor of the wife.[17]

Similarly, Bell v. Bell, 642 So. 2d 1173 (Fla. 1st DCA 1994), reversed an unequal distribution scheme when the trial court had relied on numerous instances of misconduct on the part of the husband including that he was serving a 50-year sentence as a habitual violent felony offender for child molestation and that he burned one of the parties' properties in an attempt to collect insurance, resulting in a judgment against him for insurance fraud. The Bell court held that it was proper to adjust the distribution only to reflect the actual sums the husband had dissipated; to further skew the distribution scheme "would be directly contrary to the rule prohibiting unequal distribution of marital assets, or an award or increase in alimony, based upon misconduct, except to the extent that the misconduct results in the dissipation of marital assets."[18]

Step 6: Structuring the Distribution Award

Once the assets and liabilities have been divided, it is necessary to structure the judgment. Section 61.075(9) allows the court, in its discretion, to order monetary payment of either a lump sum or periodic installments to effectuate the distribution. But no matter how the court structures the distribution, [sections] 61.075(3) mandates that if the action is one in which no stipulation and agreement have been entered by the parties, the court must set out findings in the judgment or order based on "competent substantial evidence" with reference to any factors supporting an unequal distribution. Absence of those findings is reversible error.

Whether the distribution of marital assets and liabilities is equal or unequal, [sections] 61.075(3) requires specific written findings of fact as to clear identification of nonmarital assets and ownership interests, identification and valuation of marital assets and the designation of which spouse is entitled to each, identification of the marital liabilities and designation of which spouse is responsible for each, and any other findings which may be necessary to explain the court's rationale behind the distribution scheme to the parties or a reviewing court. Otherwise, a reviewing court is unable to determine whether the distribution was fair.[19]

The statute's remaining two subsections--[sections] 61.075(2) and (4)--concern the legal effects of any award or distribution under this statute. Section 61.075(2) states that if there has been an award of cash as part of the equitable distribution--whether in lump sum or in installments--that award vests immediately in the party to whom it is awarded. Remarriage of either party does not alter the obligation. Neither does the death of either party alter the obligation: The estate of the deceased party "inherits" the obligation or the award. Section 61.075(4) provides that the judgment has all the effect of an instrument of conveyance when it is recorded in the official records of the county where property included in the judgment is located.

Step 7: Considering Alimony in Relation to Distribution

It is worth noting here that [sections] 61.075(8) makes the distribution process separate from any determination of whether alimony is to be awarded: "The court may provide for equitable distribution of the marital assets and liabilities without regard to alimony for either party. After the determination of an equitable distribution of the marital assets and liabilities, the court shall consider whether a judgment for alimony shall be made." Distribution is to be accomplished first, then a court may determine whether alimony is appropriate. It is here that a court can look to nonmarital property: in determining and fashioning an award of alimony.

Jurisprudentially, this is a sound approach. When there is some evidence supporting the factors in [sections] 61.075(1), but not enough to justify an unequal award, a court should utilize that evidence in fashioning an alimony award which remedies any unfairness instead of compromising the principles of equitable distribution. The court followed this approach in Spielberger v. Spielberger, 712 So. 2d 835 (Fla. 4th DCA 1998), in which it rejected an unequal distribution premised on the wife's lesser capacity for self-support. The court noted that the wife was in good health and was able to work. Accordingly, the court held that there was insufficient justification for an unequal distribution. But the court added that any unfair imbalance in the parties' financial positions was properly rectified by the alimony award.[20]

Similarly, the court in Siravo, discussed above under "Dissipation of Assets," held that to the extent there was any inequity not rectified by subtracting from the husband's share of the distribution the value of those assets dissipated or depleted by him, that inequity was properly rectified in the wife's alimony award rather than by a more skewed distribution scheme.[21]

For a more extensive review of the alimony process in Florida, see Victoria Ho and James Caudill, "Appellate Court Trends in Rehabilitative Alimony," 72 Fla. B.J. 65 (March 1998), and Victoria Ho and Janeice Martin, "Appellate Court Trends in Permanent Alimony for `Gray-Area' Divorces," 71 Fla. B.J. 60 (Oct. 1997).

Conclusion

Equitable distribution is not an easy process in a society in which one's "home" is one's "castle." Identification, classification, and valuation of the parties' assets may prove a daunting task, especially when the circumstances necessarily mean that the parties are less apt to agree than they might be otherwise. As one song lyric says, "I'll show you all the things I own / My treasures you might say / Couldn't be more'n ten dollars worth / But they brighten up my day."[22] Parties may justifiably feel passionately about property they own, and dollar values often have little correlation to sentimental ones. Still, these initial identification, classification, and valuation steps are fundamental, since a court can only hope to fashion a fair distribution scheme if it has first accurately established what constitutes the parties' marital property.

When it comes to the actual award, the general rule is that "equitable distribution" really means "equal distribution." An unequal distribution must be supported by extraordinary factors, and those extraordinary factors must be clearly established by competent substantial evidence. In all other cases, distribution should be equal. After the distribution has been performed, the court can utilize the alimony process to balance any inequity which might result from the distribution scheme. And while nonmarital property is not subject to equitable distribution, the court can utilize nonmarital property in fashioning an alimony award. Recent case law makes it clear that appellate judges attempt to tread cautiously when dealing with the equitable distribution statute, and the trial court practitioner would be well served by following the same course.

[1] FLA. STAT. [sections] 61.075(1) (emphasis added).

[2] Robertson, 593 So. 2d at 493.

[3] See, e.g., Goosby v. Lawrence, 711 So. 2d 577 (Fla. 3d D.C.A. 1998).

[4] Williams, 686 So. 2d 805, quoting Romano v. Romano, 632 So. 2d 207, 211 (Fla. 4th D.C.A. 1994).

[5] In support of its decision, the Pierre-Louis court cited Stevens v. Stevens, 666 So. 2d 227, 229 (Fla. 2d D.C.A. 1995); Lorman v. Lorman, 633 So. 2d 106, 108 (Fla. 2d D.C.A. 1994); and Hair v. Hair, 402 So. 2d 1201, 1203 (Fla. 5th D.C.A. 1981).

[6] Williams, 686 So. 2d at 809.

[7] Id.

[8] McMonagle, 617 So. 2d at 374.

[9] Vaughn, 714 So. 2d at 634. Although the court below did not explicitly list the factors on which it based its unequal distribution scheme, the appellate court found that they were "readily apparent from the record." Id. at 632.

[10] Barner, 716 So. 2d 795.

[11] Vaughn, 714 So. 2d 632.

[12] Horne, 711 So. 2d at 1312-13. The court also held that refusing to seek counseling before filing a petition for dissolution--while perhaps relevant to whether the marriage was irretrievably broken--was not relevant for distribution purposes.

[13] Segall, 708 So. 2d at 985.

[14] Beers, 1998 Fla. App. LEXIS 13553, *14 (Fla. 5th D.C.A. 1998).

[15] Jonsson, 715 So. 2d at 1064. Here, the husband was not specifically contesting the unequal distribution, but instead argued that it was wrong for the court to award the wife alimony based on her dissipation. In affirming the trial court's decision, however, the district court approved the trial court's reasoning as to the unequal distribution.

[16] Siravo, 693 So. 2d at 677.

[17] Id. at 677.

[18] Bell, 642 So. 2d at 1175.

[19] See, e.g., Staton v. Staton, 710 So. 2d 744 (Fla. 2d D.C.A. 1998); Lawrence v. Lawrence, 709 So. 2d 192 (Fla. 3d D.C.A. 1998); Romano v. Romano, 690 So. 2d 751 (Fla. 5th D.C.A. 1997).

[20] Spielberger, 712 So. 2d at 837.

[21] Siravo, 693 So. 2d at 677.

[22] GUY CLARK AND LYLE LOVETT, Step Inside This House.

Victoria M. Ho is a partner in the law firm of Asbell, Coleman & Ho. She is a fellow in the American Academy of Matrimonial Lawyers, and is board certified in matrimonial and family law.

James Rhett Brigman recently joined the Seattle, WA, firm of Graham & James, LLP/Riddell Williams, P.S. He received his B.A. from the University of North Carolina at Chapel Hill in 1991 and his J.D., with honors, from the University of Florida College of Law in 1995.

This column is submitted on behalf of the Family Law Section, Jane L. Estreicher, chair, and Sharon O. Taylor, editor.