Divorce: What is Equitable Distribution?

Navigating the waters of divorce can be tricky, especially when it comes to splitting assets. Many people assume that it is as simple as a 50/50 division. However, under Florida law, that’s not always the case. At NLG Divorce & Family Law based in Tampa, we help you navigate the complexities of equitable distribution. As we discussed in our latest podcast episode, How To Split A Toaster: Beyond 50/50: Understanding Equitable Distribution • Your Divorce Case, understanding equitable distribution is essential. Let’s explore what you need to know about dividing assets and liabilities in a Florida divorce and how these principles might apply to your case.

The Importance of Identification and Classification

When it comes to equitable distribution in  Florida, the first step is identifying and classifying assets and debts. It is not just about what you own but also how you own it. Every asset—whether it is in your name, your spouse’s name, or jointly owned—needs to be accounted for. The same goes for debts. Once you’ve identified all assets and debts, the next step is classification. Assets and debts are categorized as either marital or non-marital. For example, a debt incurred before marriage typically remains with the person who brought it into the relationship. However, commingling finances can complicate things, as joint use of a previously individual asset might convert it into marital asset.

Why Your IRA Might Not Be Just Yours

Retirement accounts, such as IRAs, often become sticking points in equitable distribution during a Florida divorce case. While an IRA may be in one spouse’s name, contributions made during the marriage are generally considered marital property. This means the amount in the account before the marriage would be yours, but growth based on contributions made during the marriage may be subject to division.

Valuation: More Than Just Numbers

Valuing assets is another important step in equitable distribution, and it’s not always as straightforward as it might seem. While bank accounts and brokerage statements have clear-cut balances, valuing real estate or businesses can be much more complex. This is especially true in Florida, where the real estate market can fluctuate significantly due to market conditions or natural events like hurricanes. Businesses present another challenge, as their worth often extends beyond the numbers on a balance sheet. Elements like personal goodwill (income tied to an individual’s skills or reputation) are not considered marital assets, which can significantly influence a business’s valuation during divorce proceedings.

Strategic Distribution: Who Gets What?

Once assets and debts are identified, classified, and valued, the next step is determining how to distribute them. This phase often involves negotiation and strategy rather than simply dividing everything in half. For example, one spouse might assign greater value to a particular asset, such as a family heirloom or pet, which could create an opportunity for negotiation. By understanding what your spouse values most, you can craft a distribution plan that may not be equal in the strictest sense but is equitable and fair. Understanding the legal framework of equitable distribution in Florida can give you a strategic advantage during negotiations.

Navigating Equitable Distribution

If you’re facing a divorce, preparation is key. Start by gathering all relevant financial documents, from bank statements to property deeds, and creating a detailed inventory of what you and your spouse owe or own. Consulting professionals, such as a forensic accountant and divorce attorney, can help ensure a fair and thorough division of assets.

Take the Next Step

If you found these insights helpful, don’t miss the full episode of How To Split A Toaster for an in-depth exploration of equitable distribution.

And if you have questions or topics you’d like us to cover, we’d love to hear from you. Remember, every situation is unique, and having the right guidance can make all the difference as you navigate this challenging time.