Commingling of marital assets in Florida Divorce Cases

If a Husband or Wife mixes “non-marital” property with “marital” property, something called commingling can occur. If this happens, it’s possible that the “non-marital” nature of the assets can be transformed into “marital”, and then be split up by the Sarasota Divorce Courts during the divorce. Before we go further, let’s define “marital” vs. “non-marital” assets.

A marital asset is something that was acquired during the marriage through the efforts of either the Husband or Wife, the most common example is money earned from working during the marriage. A non-marital asset is something that was owned prior to the marriage, or was a gift from a third person (such as a relative) during the marriage, as long as the gift was never combined, or “commingled” with marital assets, it remains non marital regardless of the fact that it was received during the marriage. If the gift (or premarital property) is combined with marital property, it is possible that it will non longer be considered non marital, and will be divided.

The distinction is important, because in a Sarasota Divorce, when the Court has to decide which assets are getting divided, and which assets are to be kept separate, commingling can take a large non-marital asset, such as an inheritance, and make it marital. If the inheritance is large enough, this can cause a significant reduction in the wealth of the person who received the inheritance in the first place.

Not all mixing is co-mingling, a few examples will help explain the general differences. As with all Florida Divorce issues, it’s important to have a detailed conversation with your attorney prior to filing, so you understand the possible outcomes of any commingling.

Example 1:

A Husband enters into a marriage with a non-retirement savings account worth $250,000.00. The parties remain married for ten years, and the Husband keeps this account completely separate, never mixing the funds with any income that he earned during the marriage. The parties then file for Divorce in Florida, and the Husband’s non marital account remains his alone.

Example 2:

A Husband enters into a marriage with the same savings account as above, but during the marriage he earns money from working, and deposits that money into the savings account. When the parties filed for Divorce in Sarasota, his divorce attorney should advise him that the savings account has now been transformed into a marital account due to the commingling (mixing) of money earned during the marriage, and money prior to the marriage. The bad news for the Husband (or good news for the Wife) is that the entire savings account, including the $250,000.00 brought into the marriage may be divided equally between the Husband and Wife. That commingling may have cost the Husband $125,000.00, or half of the original, otherwise non-marital amount.

Example 3:

The Wife owns a home prior to the marriage, titled in her sole name. If nothing else happens, the house remains marital property, and during a Sarasota Divorce, the house would stay with the Wife. It is important to understand that improvements to the house by both parties during the marriage may cause a portion of the value of the home to be marital, and we’ll discuss that in detail later. To keep this example simple, we’ll say that during the marriage, the Wife changes the title to the property so that it is in both parties names. The house is now marital property, and as above, the best Sarasota divorce attorneys will tell her that the house is likely to be divided between the parties upon divorce.

Example 4:

The Wife owns as house just as in example 3, but never transfers the title to the home. During the marriage, and using marital funds (money earned by labor during the marriage) the Husband and Wife add improvements to the home, such as a pool. The increase in value of the house is now subject to division. So if the house was worth $500,000.00 at the date of the marriage, and the pool increases the value of the house by $50,000.00, the parties will split the $50,000.00 at the time of the divorce.

It is important to understand that this does NOT apply to structured retirement accounts. If a Wife keeps her retirement account separate, but mixes marital funds as described in example 2 above, the only portion of the retirement account that is marital is the increase in value that resulted from marital funds deposited into the retirement account, and any increase in value on those funds alone due to market forces. Again, an example will help.

Example 5:

The Wife’s retirement account at the date of the marriage is worth $100,000.00. During the marriage, she deposits $25,000.00 into the retirement account, and because of market forces, the retirement account increase in value to $150,000.00. At this point, the Sarasota Divorce Attorney’s job is to determine how much of that market increase is associated with the additional $25,000.00, and how much is associated with the original $100,000.00. The marital portion is the additional funds plus any market increase associated with those funds. As you can imagine, this can become extremely complicated, and the use of a qualified expert such as a forensic accountant is important to get as exact of an accounting as possible.

Commingling of accounts is rarely a simple concept, and it is important to understand that in a Florida Divorce, your Sarasota Divorce attorney will advise you that Divorce courts are “courts of equity” meaning that if a minor amount of commingling occurs, it is unlikely that the entire account will be divided. In other words, commingling, and the martial amounts resulting from commingling are decided on a case by case basis.

Our attorneys have strong relationships with local professionals that can assist you in your Sarasota Divorce to determine what, if any portion of your commingled accounts are in jeopardy, or alternatively available for distribution. Call us at (941) 404-8908 to schedule a consultation.

Comingling of marital assets in Florida Divorce Cases

If a Husband or Wife mixes “non-marital” property with “marital” property, something called commingling can occur. If this happens, it’s possible that the “non-marital” nature of the assets can be transformed into “marital”, and then be split up by the Sarasota Divorce Courts during the divorce. Before we go further, let’s define “marital” vs. “non-marital” assets.

A marital asset is something that was acquired during the marriage through the efforts of either the Husband or Wife, the most common example is money earned from working during the marriage. A non-marital asset is something that was owned prior to the marriage, or was a gift from a third person (such as a relative) during the marriage, as long as the gift was never combined, or “commingled” with marital assets, it remains non marital regardless of the fact that it was received during the marriage. If the gift (or premarital property) is combined with marital property, it is possible that it will non longer be considered non marital, and will be divided.

The distinction is important, because in a Sarasota Divorce, when the Court has to decide which assets are getting divided, and which assets are to be kept separate, commingling can take a large non-marital asset, such as an inheritance, and make it marital. If the inheritance is large enough, this can cause a significant reduction in the wealth of the person who received the inheritance in the first place.

Not all mixing is co-mingling, a few examples will help explain the general differences. As with all Florida Divorce issues, it’s important to have a detailed conversation with your attorney prior to filing, so you understand the possible outcomes of any commingling.

Example 1:

A Husband enters into a marriage with a non-retirement savings account worth $250,000.00. The parties remain married for ten years, and the Husband keeps this account completely separate, never mixing the funds with any income that he earned during the marriage. The parties then file for Divorce in Florida, and the Husband’s non marital account remains his alone.

Example 2:

A Husband enters into a marriage with the same savings account as above, but during the marriage he earns money from working, and deposits that money into the savings account. When the parties filed for Divorce in Sarasota, his divorce attorney should advise him that the savings account has now been transformed into a marital account due to the commingling (mixing) of money earned during the marriage, and money prior to the marriage. The bad news for the Husband (or good news for the Wife) is that the entire savings account, including the $250,000.00 brought into the marriage may be divided equally between the Husband and Wife. That commingling may have cost the Husband $125,000.00, or half of the original, otherwise non-marital amount.

Example 3:

The Wife owns a home prior to the marriage, titled in her sole name. If nothing else happens, the house remains marital property, and during a Sarasota Divorce, the house would stay with the Wife. It is important to understand that improvements to the house by both parties during the marriage may cause a portion of the value of the home to be marital, and we’ll discuss that in detail later. To keep this example simple, we’ll say that during the marriage, the Wife changes the title to the property so that it is in both parties names. The house is now marital property, and as above, the best Sarasota divorce attorneys will tell her that the house is likely to be divided between the parties upon divorce.

Example 4:

The Wife owns as house just as in example 3, but never transfers the title to the home. During the marriage, and using marital funds (money earned by labor during the marriage) the Husband and Wife add improvements to the home, such as a pool. The increase in value of the house is now subject to division. So if the house was worth $500,000.00 at the date of the marriage, and the pool increases the value of the house by $50,000.00, the parties will split the $50,000.00 at the time of the divorce.

It is important to understand that this does NOT apply to structured retirement accounts. If a Wife keeps her retirement account separate, but mixes marital funds as described in example 2 above, the only portion of the retirement account that is marital is the increase in value that resulted from marital funds deposited into the retirement account, and any increase in value on those funds alone due to market forces. Again, an example will help.

Example 5:

The Wife’s retirement account at the date of the marriage is worth $100,000.00. During the marriage, she deposits $25,000.00 into the retirement account, and because of market forces, the retirement account increase in value to $150,000.00. At this point, the Sarasota Divorce Attorney’s job is to determine how much of that market increase is associated with the additional $25,000.00, and how much is associated with the original $100,000.00. The marital portion is the additional funds plus any market increase associated with those funds. As you can imagine, this can become extremely complicated, and the use of a qualified expert such as a forensic accountant is important to get as exact of an accounting as possible.

Commingling of accounts is rarely a simple concept, and it is important to understand that in a Florida Divorce, your Sarasota Divorce attorney will advise you that Divorce courts are “courts of equity” meaning that if a minor amount of commingling occurs, it is unlikely that the entire account will be divided. In other words, commingling, and the martial amounts resulting from commingling are decided on a case by case basis.

Our attorneys have strong relationships with local professionals that can assist you in your Sarasota Divorce to determine what, if any portion of your commingled accounts are in jeopardy, or alternatively available for distribution. Call us at (941) 404-8908 to schedule a consultation.