Equitable Distribution is the allocation of property, other assets and debt between a couple who is seeking a divorce. Equitable does NOT mean equal. Equitable means a “fair” distribution. In Florida, judges have broad discretion in determining what fair means and how to divide the marital property during a divorce proceeding.
Depending upon the length of the marriage and the number of assets and liabilities, this can be quite easy process or very complex. Our goal is to make division of assets and liabilities easy for our clients to understand. We create an equitable distribution worksheet for each client that provides them with a snapshot of the assets and debts of the marriage. This worksheet will help to determine what plan for distribution of assets and debts is best for them.
Tips for Determining Assets and Liabilities
- Financial Affidavit. Each party in a divorce must complete a financial affidavit (links to court approved forms are on the right side of this page). Part of this document contains a detailed list of each party’s assets and liabilities which is sworn to under oath. The list will include all potential assets such as cars, bank accounts, retirement accounts, jewelry, collectibles, household items, etc. and liabilities such as credit cards, mortgages and loans.
- Determining Value. Many things are easy to value such as the amount of money in a checking or savings account. Other things can be more complex such as an art/coin collection, house, business or car. Values for many things are subjective and if there is significant dispute over the value of an item, experts are often needed substantiate a value.
- Identification Of Premarital Or Non-Marital Assets And Liabilities. Once a list of all assets and liabilities has been made, the next step is to determine if any of them are premarital or non-marital (meaning they belong to only one party and do not belong to the marital estate). These are things that were obtained prior to marriage or given solely to one party during the marriage (usually by gift from a third party to one spouse or by inheritance). There are times when a party has voluntarily made a premarital or non-marital asset marital by changing title or using commingled funds during the marriage.
- Double Check The List! It is easy to forget about debts or assets that only occasionally have to be dealt with. Consider reviewing bills and checkbooks over the last year to verify everything is listed.
Divorce and Complex Assets
For some, equitable distribution can be more challenging especially when it comes to identifying value. For example, if either spouse owns a business, has rental property, a complex retirement plan or significant un-vested stock options it may be difficult to identify the marital value. Some people also have special tax liabilities, are involved in a personal injury matter or one or both spouses are in the process of bankruptcy or foreclosure.
All of the above can create uncertainty and may require the involvement of a financial professional or tax attorney. As we mention often, each divorce is a unique situation and it is important to create a unique solution for them.
Consider Your Distribution Strategies
Once everything is identified and assigned a value an analysis has to be done to identify a complete and equitable distribution. It is often important to look at each item from several perspectives so that things can be divided in the most favorable way for each spouse’s situation and future goals. For some, dividing assets and liabilities in a simple 50/50 fashion works well. For others a 50/50 split is not appropriate or fair. In addition, as the value of assets and liabilities gets larger it can be important to consider more creative methods to split assets and liabilities to achieve the clients’ goals, limit tax liability, make a career change or to relocate.
Get Experienced Advice About Divorce and Equitable Distribution
Although equitable distribution can seem simple for some, it can be quite complex for others. In addition, it is just one step of the divorce process. If you would like advice in favorably dividing assets and liabilities for your situation as well as discussing your overall divorce strategy, please contact us to set a consultation. In order to provide you with an accurate calculation, you will need to discuss your matter in detail with one of our attorneys who can then provide you with proposed alternatives.
Next Step: Return to our divorce factors page to learn more about some other considerations such as alimony, child support and parenting plans.
You can also return to our divorce home page to view other topics.