Anytime you are analyzing a case for divorce, there are numerous issues that can arise in any Divorce case. The pieces of PEACE include; Parenting Plan, Equitable Distribution, Alimony, Child support and Everything else. Today, I am going to analyze just one piece of peace and discuss equitable distribution and in particular commingling of non marital and marital funds. A recent article in the Florida Bar Journal explored this area of commingling in depth.
The first thing that needs to be determined is what type of asset we are dealing with whether it is marital or non marital in nature. Any asset determined by the court to be marital is generally divided equally between the parties and any asset non marital is a separate and distinct asset not used in the calculation. The most difficult part about equitable distribution are those assets that have been commingled from one account to another or were a non marital asset brought into the marriage and the nature of the asset changed post marriage. To determine the status of the asset the court uses three distinct theories; Strict Transmutation approach which states when marital funds are commingled, all non marital contributions automatically transform into a marital asset without consideration of any other facts. For example under this approach in Abdnour v Abdnour, 19 so. 3d 357 (Fla.2d DCA 2009), a husband came into the marriage with stock holdings in brokerage account in his own name. During the marriage, marital funds were used to chase additional stocks under same umbrella and after; all equity was liquidated and placed into a cash account. A jointly owned mutual fund was also liquidated and placed into the same cash account. The court held that when husband liquidated all the equity and mutual fund shares into a cash account, the funds became irretrievable commingled. The courts held this reasoning by stating even though the husband had non marital assets once it became commingled into the cash account with marital assets, it lost its status as a non marital asset. The second approach used is the tracing approach. The courts consider whether the non owning spouse was the one who deposited the funds into the joint account or whether they were placed there for convenience. The final approach used by the courts is determining the intent of the parties. The courts will look at the conduct of the parties and whether the recipient intended that the asset be non marital or whether the conduct gave rise that a gift was given to the other party. Under this approach, the mere payment of marital expenses from an otherwise non marital account does not transform the non marital account into a marital asset. Under Florida Statute 61.075 when commingling is absent, the party claiming that the property has been transformed from non marital to marital has the burden to establish that a gift was intended. The basic idea is that if you are considering a divorce or need advice in regards to your assets during marriage, consult a lawyer.