Beyond 50/50: Understanding Equitable Distribution • Your Divorce Case
Splitting Assets in Divorce: More Than Just Breaking a Toaster in Half
In this episode of How to Split a Toaster, divorce attorney Seth Nelson and Pete Wright tackle the thorny issue of dividing assets in divorce. As part of their P.E.A.C.E. Process mini-series, Seth and Pete break down what "equitable distribution" really means - and why it's about way more than just splitting everything 50/50.
Seth and Pete walk through the four key steps of dividing assets: Identification (what stuff do we actually have?), Classification (whose stuff is it really?), Valuation (what's it worth?), and Distribution (who gets what?). They cover everything from basic bank accounts to complex business valuations, and even dive into some surprising assets you might not think about - like vacation days and airline miles. Along the way, they share real-world examples that show why "fair" in divorce court might not match your definition of fairness.
Questions we answer in this episode:
• How do you figure out what's "yours," "mine," and "ours" in a divorce?
• What happens when one person tries to hide assets?
• Can my ex get half my frequent flyer miles?
Key Takeaways:
• Just because something's in your name doesn't mean it's all yours
• Personal goodwill (like your winning personality) isn't a marital asset
• Sometimes arguing for "fairness" means you've already lost
Plus, we tackle another listener question! A California resident asks about inherited money that got mixed into shared accounts and home purchases during marriage. Seth explains why following the money matters and how different states handle these situations differently (spoiler alert: location matters!).
Whether you're facing divorce or just curious about how courts slice and dice assets, this episode breaks down complex legal concepts into bite-sized pieces. Seth and Pete take a practical approach to help make this topic both digestible and surprisingly engaging.
Links & Notes
Got a question you want to ask on the show? Click here!
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Pete Wright:
Welcome to How to Split a Toaster, a divorce podcast about saving your relationships from TruStory FM. Today, how do you split a toaster? Get a hammer.
Seth Nelson:
Welcome to the show, everybody. I'm Seth Nelson. As always, I'm here with my good friend, Pete Wright. Today we are talking about equitable distribution, and that's just fancy legal terms, Pete. It's really just about dividing up your stuff. So let's just jump right in. We don't have to say anything clever.
Pete Wright:
Although clever is our stock-in-trade, I understand we shall move right into it. Tell me about Florida Statute 61.075.
Seth Nelson:
Here's the thing, Pete, and this is why I said we don't need to do anything clever is because this is all about spreadsheets, and spreadsheets are my love language.
Pete Wright:
Yes. I noticed you were so excited there, you nearly knocked your microphone over.
Seth Nelson:
I know. I had to adjust it. Things are getting crazy over here.
First off, let's be clear, it is equitable distribution, not equal. It doesn't have to be down to the penny. So what are we talking about? We're talking about dividing assets and debts of the marriage. So when we say we're going to create a schedule of equitable distribution, that is silly, fancy legal speak for an Excel spreadsheet. That's what we're doing. Now, it starts off fairly simple. You start with identification. What are we identifying? We are identifying every single asset that the husband owns in his own name and the wife owns in her own name, every asset that they own jointly together and every asset that the husband owns with a third party or entity, not his wife, and that the wife owns with a third party or entity, not her husband.
So by way of example, I own an office building with my spouse, but technically it's owned by an LLC, a limited liability company. So the limited liability company would be identified as an asset that I own. Then the question becomes, what does that company own or do?
Pete Wright:
Right.
Seth Nelson:
I own a law firm, 100% owner of NLG. That's going to change because we got some amazing partners and associates that are like Seth. We want a piece of the pie, okay? But right now I own Seth R. Nelson PA, 100% me. And that is also a professional association and that runs a law firm. It owns the stuff and the computers and all that.
Pete Wright:
Everything in the law firm.
Seth Nelson:
That's right. Okay. So when I talk about third party or entity, that's what I'm talking about. Maybe I'm on a bank account with my aunt, and technically I'm an owner of it, but really maybe I'm just helping my aunt out and paying her bills. So yes, I'm an owner, but that's not really what it is. That's where equitable comes in a minute. So we identify these types of assets first.
Then we do the same thing on debts. Do I own debts personally? Do I own them with my... If I have a mortgage with my spouse. That's a debt. On the card, did we both sign on the note for the card? Credit cards are usually in a primary person's name, but someone might have another card to use it. So do I have debts by myself with a third party with my wife? Same thing, the other way. We've covered everything because you either own it by yourself, you own it with your spouse or you own it with a third party or entity. There's no other way to own anything.
Pete Wright:
Right. So now you offer the opportunity for us to talk about why people fight about it because it seems like it's really clear.
Seth Nelson:
Yes, it's not because then you have to get to classification. Is the asset or debt a marital asset? If it is, it will be divided. Or a non-marital asset? If it's not, it just means that it's whoever owns it. So let's take a debt for example.
Assume that when I got married I had a law school debt, I had student loans, I obtained those loans prior to getting married, I became a lawyer. I'm paying off those loans, I get married and we go to get divorced. That debt was accumulated prior to marriage. It's non-marital debt. It's not part of the pie. She's not responsible for half of it.
Pete Wright:
Okay, question. I know a lot of couples get married, bring debt into the family.
Seth Nelson:
Yeah, into the marriage.
Pete Wright:
Into the marriage, and they then commingle finances to the point where some of the debt payment will have been provided by one spouse and some by the owner of the debt. And is that taken into account when the divorce happens and the debt, let's say a school loan, still exists?
Seth Nelson:
No, it will not be taken into account at all. What you're describing is let's say that my wife and I commingle our money. My salary goes into a bank account, her income goes in the same bank account. From that bank account, we pay down my student loan
Pete Wright:
In addition to all the other things, mortgage-
Seth Nelson:
All the other bills.
Pete Wright:
... cell phone, all the bills?
Seth Nelson:
The paying bills. The court does not try to undo or reclassify every transaction that happens during a marriage. So the money's commingled. It's marital money. That marital money was earned during the marriage and it went to pay down a non-marital debt. It is what it is. Whatever debts left when, we get divorced is still non-marital. It didn't change the classification.
Pete Wright:
Right. It might be less, but it's still your debt.
Seth Nelson:
That's right. Now, let's just use these numbers. It was 100 grand. We paid down 25. 75 is still left on my side. Okay? Now we get married. It's a non-marital debt. I got a hundred grand left on it and we buy a house and we pay down the house for a few years. The value of the house goes up. We want to do an addition and we're going to refinance the house to do the addition and we say, "You know what? Interest rates are low. Let's refinance the house and let's pay off the student loan because it's at a higher interest rate and we'll fold that into this second mortgage."
Pete Wright:
Sure. Perfectly logical thing to do.
Seth Nelson:
Right. Except what my wife has just done in this hypothetical is she's now taken my $100,000 student loan and made it a marital debt.
Pete Wright:
Right. Because she's on the house.
Seth Nelson:
She's on the house and that debt is no longer in existence, which, in a divorce, costs her 50G's because she's responsible for half and I'm responsible for half.
Pete Wright:
And at no point is there a recourse for her to come back and say, "Look, we did this, but technically that's not mine?" You don't make that. I mean, if it's truly equitable.
Seth Nelson:
Well, that's what she's going to say in the lawyer's office, right?
Pete Wright:
Yeah.
Seth Nelson:
But the court's going to be like, "Well, no, because you've converted it's in your name now. You signed." Then there's this whole gift presumption that is hard to get over in family court to say that that was really not, "I put my wife's name on this, but I did it for estate planning purposes only when I die, not when we got divorced." And then I'm like, well, you better get a postnup when you're going to do that, right? You can get a postnup. Just like a prenup, it's just after you're married if you're going to do stuff like that. So that's where people get really upset.
Or their parents, let's say that my wife's parents gave us a gift of 20 grand to help us on the down payment of a house and we're getting divorced and the parents are like, "I want my money back." And I'm like, "No, it was a gift. It's gone." Right? These are now, let's just assume we had children and now these are the grandparents of my children and now we're arguing over 20 grand or what... And I'm like, "You're not getting it back. You're just going to give it to my ex-wife who I'm very mad at right now. So no, I'm not giving you 20 grand back."
Pete Wright:
Yeah, but I can see how there's a instinctual entitlement vibe that comes with the process of splitting things up like this
Seth Nelson:
Yeah. In your using entitlement, I don't think in a negative way. A lot of people will say like, "Oh, they're so entitled," but this just seems like common sense fairness, but the problem with the common sense fairness is there's no way for a judge to really determine what happened and undo all these transactions, and does it matter if this happened five years ago and we were married for three, then we did the house or we've been married for 20 and then we did it? There's all these other factors that come in. So you would think equitable distribution would be fairly simple, but it can also get even more complex when you go to classification because I made it pretty simple for you, Pete. You're a smart guy. I said marital or non-marital. Some assets are both.
Pete Wright:
How can they be both? That's not a thing. You're making it up.
Seth Nelson:
It's a thing. Here we go. And this is where the law doesn't make sense in Florida to me. When you have a retirement account, an IRA, it is titled in one person's name. It's impossible to be commingled. You can't put your wife's name on your IRA. You can make her a beneficiary, but the account holder is one person. And if I start that IRA on the date that we get married and I put money into it, titled a property in and of itself does not matter. I funded it during the marriage. It grew up in the stock market during the marriage, all of that is marital-
Pete Wright:
It's marital
Seth Nelson:
... to be divided.
Pete Wright:
Yeah, okay.
Seth Nelson:
Okay. So now I get married and I have $100,000 in my IRA and I keep putting money into that IRA during the marriage and it now has $150,000 and we are getting divorced. The question becomes, what part is marital and what part is not?
Pete Wright:
Is it the 50? The 50 is marital?
Seth Nelson:
Nope. $100,000 that I had at the time of marriage, we all agree non-marital.
Pete Wright:
Okay.
Seth Nelson:
Any growth? Here we go, Pete. Any growth on the 100 grand, the passive income, non-marital.
Pete Wright:
Contributions...
Seth Nelson:
Marital. Growth on contributions, marital.
Pete Wright:
Marital. Oh my god.
Seth Nelson:
Yeah, you got a headache now already?
Pete Wright:
That's terrible. I mean, I can see how this gets incredibly complicated very quickly because now we're talking about not just classifications but classifications and dates.
Seth Nelson:
And bank statements.
Pete Wright:
And on a 20 year, 30 year marriage that can be significant.
Seth Nelson:
That's right. Now I'm going to add another layer of complexity. The date you file for equitable distribution purposes is a big line in the sand. Okay?
Pete Wright:
How so?
Seth Nelson:
Any contributions I make after the date of filing from money earned after the date of filing, non-marital. So I have non-marital before we get married. I have non-marital after the data filing, plus passive growth or down hopefully growth, but up or down, on that as well.
Pete Wright:
On the non-marital, but also on half of the value of the marital.
Seth Nelson:
Yeah. Well, the marital, once you define the marital, you just go with the growth, let's say, but now you're defining two sets of non-marital, before marriage and after date filing, and then everything else is marital in between, and then you got to get all the statements. And then let's say this is the proof problem now. In court, I have to have evidence to show, and it's not beyond a reasonable doubt. Let's say it's preponderance of the evidence, but on appeal, do I have competent substantial evidence to hold up on appeal? Well, what happens if I only have, it's a four-year marriage, but I only have bank statements that are every other month, so I'm missing every other month? Can I fill in the gaps? Is that competent substantial evidence? What happens if I'm missing half the statements? What happens if I'm missing only one statement? What does my expert do with that? Can they make a reasonable assumption?
Pete Wright:
Okay, so you're giving me hypotheticals, but now I want to know. Let's say you just have January and December of a given year. Can you not just draw a line that best fits and say, "Look at all the appreciation"?
Seth Nelson:
Well, we can look at the appreciation, but then that December statement's always the lifesaver because it says the amount of contributions for the year. Year-end statements are-
Pete Wright:
Yeah, year-end statements.
Seth Nelson:
... glorious. Right? Okay, so now we have identification, then we have classification. And we've touched on a couple things here. I'm going to touch on one or two more before we go on to valuation. Guy gets down on one knee before marriage, "Will you marry me?" Gives a diamond ring. It's called an engagement ring. She says, "Yes." They get married. Under the law, right when she gets married, that ring is her. By the way, if they would've broken up before the engagement ring was a contract. She would have to give it back, side note. But yeah, I saw this. I did that quick. I want to see what you're going to say.
Pete Wright:
Okay. No, that's good. You're just proving I'm listening. I get it. But I was and that's good to know. Movies sometimes are wrong.
Seth Nelson:
That's right. Now, if you just give a birthday gift or a Christmas gift, never get engaged on Christmas day, was a Christmas gift or was an engagement ring? Something to think about.
Pete Wright:
Something to fight about.
Seth Nelson:
But now here we go. So you get the engagement ring. That was a gift before marriage. So you go get divorced, not marital. She gets to keep it. You traded it in. You upgraded it. The 10-year mark. It's now marital.
Pete Wright:
Marital.
Seth Nelson:
Yeah.
Pete Wright:
Okay. All right.
Seth Nelson:
So now valuation. Pete, some things are easy to value, right? A bank statement, it has the value of your bank account.
Pete Wright:
Yeah, it's literally written on the paper.
Seth Nelson:
Your brokerage account, your IRA, anything with its statement. Now, some things are a little harder to value, a car.
Pete Wright:
Kelly Blue Book.
Seth Nelson:
There you go.
Pete Wright:
I mean, is there an accepted standard for valuation?
Seth Nelson:
Okay, Kelly Blue Book is perfectly acceptable. Judge, they put in that it was in poor condition. That thing's in mint condition. So Kelly Blue Book-
Pete Wright:
There's a range.
Seth Nelson:
... has Inputs. Has input. So do we argue over the inputs, right? What happens when you change the zip code? Does that change the value?
Pete Wright:
Presumably, yes.
Seth Nelson:
Right. You got to watch. You've got to watch those inputs. What I'd love to do is go to CarMax. They'll buy it from you. They'll give you a quote right then and there and it's good for seven days. So I've used that before. We had to have our evidence in five days before trial, seven days before trial, my client went to CarMax. Here it is..
Pete Wright:
Yeah, here's the title. Tell me what it is. You now have money on paper.
Seth Nelson:
That's right. So now what do we have next? A house. Little harder to value. Listen, hurricanes just came through Florida. Houses are really hard to value right now. No one knows what's going on in the market because a lot of houses are going to just be demolished. And now lots are now abundant, where before they were hard to come by. Supply, demand. So what are we doing on values of houses? Real estate appraisals. You can get a real estate agent to come in and say, "Here's my comparative market analysis and this is what I would list it for. This is what I think it's worth." The owner to property is allowed to testify to value. So if you own the house, you can say, "I think it's worth X. And here's why, Judge." Judge doesn't have to believe you.
I had a case years ago, and this is the stuff you really need to talk to your lawyer about, how do we value things? Am I allowed to testify? Do we have to get an appraisal? What about this? Do you get an appraisal now for mediation? But in six months when you're at trial, do you have to redo it because who knows if the market has changed?
Pete Wright:
Well, I mean, you're residential. If you're heavily invested in real estate, it sure does imply that maybe you want to hold your divorce until February if you're in Florida.
Seth Nelson:
You might. There's a lot of ways. When '08, market crashed, or '06. Bam, all of a sudden. But I went to trial and at mediation, they wanted to do a joint appraisal and I said, "No, I don't want to do an appraisal." And the mediator was like, "Well, why wouldn't you do that?" And I said, "Well, we're in mediation. It's all confidential. You can't this in the other room." I said, "The other side's not on the title and I don't think they're going to get an appraisal and I think they're going to try to testify to value and they're not allowed to because she's not an owner," or he was not an owner. I don't remember what side I represented. I said, "But my client's the owner. So my client is going to be the only one to testify to value.
Pete Wright:
Tell me you're using shorthand there, testify to value. Is that something that just means your client is the only one who gets to say how much this thing is worth?
Seth Nelson:
You got it. Exactly. Now there's only one number that the judge is allowed to hear. And as long as we can back that number up with facts and it's going to be beyond a reasonable doubt, not beyond a reasonable doubt. Proponents of the evidence like, the judge believes my client, he had a good reason for doing it or she had a good reason, or she bought and traded real estate all the time. They were in the... You got to back it up. You can't just pick a number. You have to support it. So you got to be careful on who's allowed to go to court and say what they believe the value is.
Pete Wright:
Just a clarifying question. You've got CarMax as an example. There are now services that do essentially what CarMax does, but for houses, right? There are these online real estate agencies that you can just give them your house today, they'll give you today's value and then they'll take it off your hands and do what they need to do. Is there any consideration for, making no judgment by this statement, but is there a consideration for quality of sources because the judge is going to say, "That's not a service that we trust in this courtroom"?
Seth Nelson:
That's right. The judge does not have to take that as evidence or take it in as evidence, but give it the weight it deserves is what they'll tell you. I'm not going to believe that. Great question.
Now we have value. So there's all these ways to value things, but then how do you value a business? Is it business just owned land? Well, that's pretty easy then. We can go back to an appraisal. But what happens if I own 49% of a business. That's worth less than owning 51, and it's not just worth less than by 2%. It's because I don't have control. So in non-controlling interest is worth less and then it's called non-marketable interest. Who's going to buy in? If I own 49%, who's going to buy in? It makes it not... Now, you'll buy in at a lower price, but you're not going to buy in at a higher price when you can't have any control and you just got to trust the guy that I happen to be business partners with. So that gets into complexities. So you got to look at these issues early on in your case because they might take experts. This is not something you're rushing to do at the end of a case.
Pete Wright:
Right. There was one of my early jobs. I worked for a firm that was... We had 15 people, small firm, training and development. It was a firm without property. It was all intellectual property. We're all consultants, right? We're trainers, consultants. And the owner, sole owner was evaluating, looking for a divorce and had to value the firm and was deeply disappointed at the valuation of the firm because there was, if I remember right, there's no property for the firm. If everybody could walk at any given moment, there is no value in the business, in the divorce process, when you're looking at businesses, is there some sort of accounting for that?
Seth Nelson:
Yes. Great question. Let's take a hairdresser. Okay? Hairdresser owns her own shop. She has one chair and she does a great job, top-notch clientele, making six figures doing hair, phenomenal at it. She can't sell that business because those people want her. They don't want me standing behind the chair. That would be a nightmare.
Pete Wright:
That would be obvious.
Seth Nelson:
Yeah. Short Jewish, bald guy. Let's make this happen. Let me tell you, I give everyone the same haircut. It's phenomenal.
Pete Wright:
It's great. Precise is what they call it.
Seth Nelson:
Now, that business is generating income, so that's a revenue source, so it might be worth something to her, but what she really has, 100% of that business other than the chair, the towels and all the supplies is what's called personal goodwill. And that attaches to the person, and personal goodwill is not a marital asset.
Pete Wright:
Okay. That's like your charm score.
Seth Nelson:
That's right. So let's take NLG. I'm getting divorced. We need to value NLG. Now, these lawyers can get up and leave any day. Some people call for Seth Nelson, but then they don't use me as their lawyer because I tell them, "Look, I've got good news for you. This is not a complex legal case and I have other lawyers at the firm that can handle your case at a lower hourly rate." And then I tell them, I can't believe I'm saying this on their podcast, I tell them, "The other lawyers can handle it just as well as I can." And then I tell them, "I will deny that I ever said that," but now I can't deny it.
Pete Wright:
Now you put it in. Yeah, it's been recorded.
Seth Nelson:
So by way of example, a case comes in and I give it to Sterling and I tell the client, "Sterling can handle this just as well as I can. He can be with Kristin Scully, a second chair, and they're going to do a phenomenal job as well as I can at a hourly rate because this is not a complex legal case. It'll be emotional, it'll be difficult, it will still take a long time, but from a legal perspective, it won't be that complex." So that has value. That person might've called me for my personal goodwill, but now they're always going to refer to Sterling and Kristin because they did such a good job. So you just got to carve that out. And there's some case law that can define it very broad or very narrow, depending on the case you're looking at, but that is not marital. So let's say the business is worth $100,000 and the accountants say, "Under all the formulas we run, 40% is personal goodwill. The value is $60,000. Seth, you're going to keep your business, you're going to owe your spouse 30 grand."
Pete Wright:
Again, our target is equitable. That gets us there. Okay.
Seth Nelson:
Now you go to distribution. So identification, classification, valuation, distribution, who gets what? It's kind of amazing because the way I did this, I started with valuation, but a lot of people move value... That was third. A lot of people put distribution before valuation and the reason they do that, they know that their wife wants to keep the house, so they're going to value it higher than if they were keeping the house, they value it lower, and I call that the valuation game. So in a settlement, one spouse may overpay to keep something for other reasons than just money. Some value want to keep the kids in the school district, whatever the case may be. But on the fair market value, a hypothetical buyer, a hypothetical seller at an arm's length transaction, the number's the number. It doesn't matter who's getting the house, the number should still be the number, but there's a lot of swing there.
Pete Wright:
Okay, because the way you just described it, it made me think, here's a factor that might mean we are swinging away from equitable distribution if you have one party who says, "I'm just going to pay you more than would normally be agreed as long as I can get this asset.
Seth Nelson:
In a settlement, they can do that. In court, what happens is they go to court and they put on, "The house is worth $100,000 and I want to keep the house, Judge," and the other side goes, "Judge, I'm not arguing. She can keep the house, but I think it's worth $130,000." And you think, well, it's equitable. We'll just split the difference, 115. A judge is not allowed to do that. Pick a number, Judge. Which one you believe is true. You pick it. You can't say-
Pete Wright:
A judge can't make up a new number because that wasn't evidence, right?
Seth Nelson:
That's exactly right. But what a judge can do is say, "I'm going to go with the $100,000 on this one." So he knows he is got a $30,000 gap, "but on four other assets, I'm going with the other number in favor of the husband, making up the 30 grand." He can do that. She can do that.
Pete Wright:
Are there other factors? Just while I've got it on the brain, are there any other factors that lead the judge to say that we are not going to end up equitable in this case?
Seth Nelson:
Yeah. Well, the judge is going to say it's equitable because that's what the judge is willing has to be, unless there's a petition for unequal distribution of inequitable and you have a lot of things to prove there, but setting that aside, the judge is going to say it's equitable because that's what they're required to do. But let's take who gets the dog. One of our best downloads ever, who gets the dog?
In Florida family law, you can go to court and argue about the dog. You can argue about things in state. "Judge, it's sentimental to me and here's why I want the dog," or, "Here's why I want this piece of artwork," or whatever. "We bought it on our honeymoon. I get it judge, it's marital, but I would like it. And it has almost no value, judge. A hundred bucks, let's call it. Okay? But it's sentimental to me and here's why." And the judge can say, "Sentimental? I'm going to give it to you." you're allowed to use that for that personal property stuff. I'd like to make the argument that the bank account with a million dollars in it is very sentimental to me.
Pete Wright:
Very sentimental. It's my love language.
Seth Nelson:
It really is. A million times over.
Pete Wright:
A million times over.
Seth Nelson:
I have not been successful, not in court. So I want to advise it.
Pete Wright:
I have another question. Do you have more in your education, your sermon today or may I begin the questions?
Seth Nelson:
No, fire away.
Pete Wright:
All right. We've talked in the past about potentially a spouse hiding assets, right? Can you talk a little bit about strategies for figuring out what happens when one party is hiding assets from the other and consequences in court for that behavior?
Seth Nelson:
Follow the money. A forensic accountant is great at this. You have to get all the pieces to the puzzle. So when someone's hiding money, and even figuring out equitable distribution in our income, there isn't one document that tells you everything. So people will say, "Well, if I can get their tax return, I'll know what their income is." If they're reporting it correctly, we'll take that as true, but then it's going to show interesting come, which means, wait a minute, where did that interest come from? A bank account. I don't see that bank account that they've produced, so let's go get that bank. Oh, there's money over here. And now you have that bank account that you found from the tax return and that bank account has deposits or withdrawals to a crypto account that wasn't disclosed. So you got to follow the money. On equitable, ready for this? You want to get your spouse's end of the year pay stuff because it might show that they have vacation days that they're allowed to buy out. Equitable. It is a marital asset.
Pete Wright:
Vacation days.
Seth Nelson:
Vacation days, airline miles.
Pete Wright:
Oh, would not have thought about that.
Seth Nelson:
Yes.
Pete Wright:
Yeah. That can be significant.
Seth Nelson:
Here's another one a lot of people missed. If you're a member of a club and you have an initiation, let's call it five grand. You want to join this club, five grand, 20 grand, whatever it is, you pay an initiation and usually what happens is someone's the main member and the other is the spouse. And so now you get divorced, you're not under the same membership. And if my spouse was the main member and when she bought into this fancy club, it was five grand, but now the entrance fee is 20 grand, I'm missing out. So maybe the judge says, "That's not equitable. I'm going to give Mr. Nelson 10 grand extra on this side." Right? Go apply [inaudible 00:30:52]. A lot of people miss that and then they get divorced, it's over, they go to the club and all of the sudden-
Pete Wright:
They're not a member anymore.
Seth Nelson:
... you're not a member anymore. "Well, can I join?" "Sure. Give me 20 Gs." "What about my five?"
Pete Wright:
Okay, I want to point back to consequences for hiding assets in court.
Seth Nelson:
They're not the way they should be. My view is if you are hiding it and we find it, it should just be ours. That's my view on it.
Pete Wright:
It's the Florida Statute finders keepers? Is that what we're doing?
Seth Nelson:
Yes, that's the one I'm looking for. But what happens is you found it so you're going to get half of it, but there's not a lot of penalty for that. Now, if it's extreme, if they're not producing documents, it gets crazy, but they'll just say, "Oh, no, Judge, I didn't realize I had that." They make excuses and that's why you just got to follow the money on these documents. And you got to dig into them. You can't just breeze through them, and that's why it takes some time.
Pete Wright:
Prenuptial agreements. What impact does prenup have on equitable distribution?
Seth Nelson:
If the agreement is valid and enforceable and it says what's going to happen, then that's what happens. And usually what it says, whoever's the owner of the property in name and title, keeps it. And so then you don't have all these valuation issues. You still have identification. You want to make sure you get everything, but most of it is going to be non-marital according to the prenup. Now, if in the prenup says, but if it's an joint account, then we'll divide that.
Pete Wright:
And anything acquired through the marriage is something you now have to distribute equitably?
Seth Nelson:
No. Whoever paid for it keeps it.
Pete Wright:
Okay. We got a car together.
Seth Nelson:
Well, did you make joint name? If it's joint name-
Pete Wright:
Sell it, take the value?
Seth Nelson:
Yes, or if it's joint name, it's equitable distribution to be divided, but if I go buy a car in my own name, it's mine. If I go buy a car with my wife and we're filling out the paperwork and I said, "Honey, I'll handle the paperwork. This car is for you. You're going to be driving it. They're going to take you through and teach you how all the buttons work," and when we're filling it out, I put my name on it, in the divorce, it's mine. It's titled in my name.
Pete Wright:
That is a lesson that's hard learned I think. And there are a number of... We talked about it before because in dealing with death of a parent, when the car owner died, that ends up being complicated. And so that is a really interesting one because that happens all the time
Seth Nelson:
Yeah, yeah. And sometimes I did it very deceivously. I'm trying to pull [inaudible 00:33:39].
Pete Wright:
Yeah, you agree.
Seth Nelson:
Thank you.
Pete Wright:
I noticed you started to whisper as if she was listening.
Seth Nelson:
Which was really silly because she never listens to this show.
Pete Wright:
She doesn't listen.
Seth Nelson:
I can scream it from the rooftops.
Pete Wright:
Yeah, right.
Seth Nelson:
At the end of the day, it might just be, "Oh, I'll handle the paperwork, go look at your fun new car, and oh yeah, it's in my name." You don't even think about it. Right? But the other thing is who really keeps receipts on who bought what during the marriage? There's all sorts of things that I put in prenuptial to try to make... And really, what I work really, really hard in prenups is to not have litigation. That's the whole goal of the prenup. So I have a lot of language on how we divide things. Who gets first choice? Who gets second choice? How do we value things? Do we pick a data value so we're not arguing over a data value because it can go from the data filing all the way to trial date? There's a lot of things to argue about and that's why I try to do a prenup is really not argue, not have litigation.
Pete Wright:
Okay. Anything changing in Florida law or has recently changed that changes the way people think about equitable distribution? We need a legal update.
Seth Nelson:
No, not like an alimony, the way there's the big change, not like in the parenting plan with the presumption of 50/50, but it really is basically the same, but there's just a lot of nuance to it and a lot of lawyers will say, "It's all math. I went to law school because I couldn't do math. That's why I'm not a doctor," and I'm like four out of the five issues we deal with in family law are money and it is nuanced and complicated and you can really save your clients a lot of money and you can lose them a lot of money if you don't know what you're doing and you're not really keeping your eye on the ball.
Pete Wright:
Well, we actually have a question that I believe deals with commingled funds. Shall we turn to a listener question?
Seth Nelson:
Let's do it.
Pete Wright:
This comes from Commingled in Cali. Commingled funds in divorce. And bear with me, this one's a little bit of a story.
"I inherited two large sums of money from my family, both before I ever got married. The money was in another European country and I moved the money to the US during my marriage. I am in California. The first sum was..." I think this is a word problem, and there might be trains leaving from opposite coasts shortly. So here we go. "The first sum was invested in a brokerage account in the US under my name, but I moved it into a shared brokerage account that already had a small balance. Since then, no contributions have been made. My portion is about 75% of the money. The other 25% are marital funds. The account has increased significantly in value. One, I've been told if I can trace the money, I can recover my share plus half of the marital funds. Is this correct? Two, if yes, what do I need as proof to show my portion of the money is mine?
The second sum was used as down payment for our home. I've been told I can only recover the actual amount originally used as down payment, which hurts because the value of the house has more than doubled. I get that we have been contributing to it and made improvements with marital funds, but the original down payment was almost 50% of the purchase price. What's your opinion about recovering more than the actual original down payment plus half of the remaining value? Is it reasonable to fight for more? Is it possible to get at least a portion of the value increase since we could have never purchased the house without my money?"
So two parts to that question. Take them in whatever order you would like.
Seth Nelson:
Let's start with the house because we mentioned that before. Just to my examples, you put down to down payment, you made non-marital money, marital. I don't know California law. It was a California question. So yeah, check with your local attorney and check your local jurisdiction and the laws on the case law and the statutes. But in Florida-
Pete Wright:
If you were in Florida...
Seth Nelson:
That money is now marital. Now, here's the good news about that. In fact, this questioner, the questioner says, "I'm at least going to get my down payment back." In Florida, that might not happen. You don't get it back at all, except, always remember, you get half of it back.
Pete Wright:
Because that's now the value of the home.
Seth Nelson:
You got it. You got it, Pete. Okay, so that's the house one.
The brokerage account is interesting. Check your local jurisdiction. It's a little bit analogous to the IRA in the sense of you're putting money in, you can identify what stocks and what bonds were purchased. Those are items. If you think about it, you buy a stock, you can sell a stock. You can see exactly stock it was. It's not like cash that's fungible. If it's a cash account, like a bank account, a checking account, and you put the cash in, you can't tell $1 from the other and it's all commingled. So on brokerage accounts, check your local jurisdiction. Maybe you can say, "Look, I bought a specific item, and therefore, it's equitable. I can trace it back to that item." Cash accounts, you can't do that. Retirement accounts, you can.
Great questions.
Pete Wright:
That's an interesting question and timely that it feels like a bar question a little bit that you just talked about.
Seth Nelson:
And this is what people don't really understand about the law. No client comes in and says, "I have an equitable distribution question and I need to know the difference between marital and non-marital and valuation." They might Google some stuff now, but they come to us with these fact patterns and it's the lawyer's job to say, "Oh, we're talking about equitable distribution. Here's the law in Florida. Here's what we're dealing with." Then, as you can see, facts matter. Information matters. How much was put in? Can I make an equity argument here?
And here's the problem. When you're arguing equity, the facts aren't on your side, and the facts might be that the law's not on your side. When you take the facts that we all agree on and apply it to the law, it doesn't help you. It hurts you. And then you say, "But, Judge, it's not fair." When you're arguing equity, you are already losing, right? And the judge might say, "Yeah, I hear you, but I mean, the law says this, and this is a court of law and equity and judges don't want to get overturned." One, they don't want to be wrong. They don't want to be told they're wrong if they are, and to the judge's credit, they don't want to have more litigation in an appeal and then gets remanded and it hurts the parties. I mean, they're not just saying for their own ego. They want to get it right the first time.
Pete Wright:
Interesting stuff, man. There's always more to... They seemed like you were setting me up for a really easy one today, and you absolutely did not.
Seth Nelson:
Well, Pete, if they're easy, people aren't learning.
Pete Wright:
That's right.
Seth Nelson:
They know the easy stuff.
Pete Wright:
They know the easy stuff. I will say this as for easy stuff, I can say thank you to Commingled in Cali for writing in such a thorough question, giving Seth all the right facts and information to be able to give you at least something, just something to hang onto and maybe add new questions to ask in your local jurisdiction. Thank you for doing that.
And everybody, you can ask us all the questions you want. Just head over to howsplitatoaster.com, press that button that says, "Hey, submit a question," and that'll come right to us. We will ask Seth that question on a future show and see how he handles it. I think he's going to do okay.
Seth Nelson:
Thanks.
Pete Wright:
I feel good about it. Thank you, everybody, for downloading and listening to the show. We sure appreciate your time and your attention. On behalf of Seth Nelson, America's favorite divorce attorney, I'm Pete Wright and we'll be back here next week on How to Split a Toaster, a divorce podcast about saving your relationships.
Outro:
How to Split A Toaster is part of the TruStory FM podcast network, produced by Andy Nelson, music by T. Bless & the Professionals and DB Studios. Seth Nelson is an attorney with NLG Divorce and Family Law with offices in Tampa, Florida. While we may be discussing family law topics, How to Split a Toaster is not intended to, nor is it providing legal advice. Every situation is different. If you have specific questions regarding your situation, please seek your own legal counsel with an attorney licensed to practice law in your jurisdiction. Pete Wright is not an attorney or employee of NLG Divorce and Family Law. Seth Nelson is licensed to practice law in Florida.
