Saturday, January 14, 2006

KEEPING NONMARITAL ACCOUNTS SEPARATE (FLORIDA)

Under Florida law, "marital assets" are subject to equitable division and distribution upon divorce. Nonmarital assets are not.

Generally, if one spouse inherits property and properly keeps it segregated, under Florida law the inherited property does not become a marital asset. A recent case illustrates how a segregated account was held to remain a nonmarital asset, even though some facts were present that indicated perhaps it had become a marital asset. These issues are relevant for spouses that desire to protect an inheritance from future claims of a divorcing spouse, especially if there is no prenuptial or postnuptial agreement addressing these issues.
Some of the key facts:
  • Husband inherited funds, and put them in a separate bank account. This was a good fact for the husband and his quest for nonmarital asset treatment.
  • Husband opened the account as a joint account with his wife. This was not a good fact. Nonetheless, the appellate court held that if the other spouse is put on the account for convenience purposes only, the account will remain a nonmarital asset.
  • There was no commingling of assets - no marital assets or separate assets of the wife were added to the account. This was a good fact for the husband.
  • The wife was authorized to, and did, transfer assets from the account to the couple's joint account for payment of marital expenses. This was not a good fact for the husband. The court noted that "control" over the nonmarital assets by the other spouse can result in the creation of a marital asset, but under these facts, there was not enough control by the wife to convert the account to a marital asset.
It is important to note that the trial court found that the account was a marital asset, and it took an appellate court to overturn the trial court to result in nonmarital asset treatment. Thus, the case is instructive for certain situations to avoid if one wants to be clear that a nonmarital asset remains nonmarital since different courts will reach different results in close cases. These facts include keeping the other spouse off the title to the account, no commingling of assets, not using the assets for marital expenses, and not giving the other spouse control over the account. As the case illustrates, violating any one of these in a minor fashion may not be a problem, but such violations should be avoided if possible.

Greico v. Greico
, 31 Fla. L. Weekly D191a (2nd DCA 2006)
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