Asset Protection and Florida Divorce
If you are facing divorce in Florida and have accumulated substantial assets, you may be wondering what asset protection strategies are available. Fortunately, there are some steps to consider, both before and during divorce. Florida is an equitable distribution state, meaning the law divides marital assets fairly, though not necessarily equally. Below are some methods to explore (please note that this is just an overview, and you should speak with a lawyer to determine if these apply to your situation and how to employ them):
Asset Protection Before Divorce
Prenuptial or Postnuptial Agreements.
A prenuptial agreement is signed before a marriage, and a postnuptial agreement is signed during a marriage. Both can be legally binding agreements that essentially allow you to make your own law and specify how assets will be divided and spousal support will be handled in case of divorce. These agreements must be entered into voluntarily, with full disclosure of assets, and include other elements that can help ensure that it holds up if challenged.
You can learn more about prenuptial and postnuptial agreements here.
Keep Non-Marital Property Separate.
Another method for asset protection is to maintain clear boundaries between marital and non-marital assets and avoid co-mingling assets. For example, if you inherit funds from a relative, you can help maintain its non-marital categorization by keeping the funds in an account only in your name and not placing it in a joint account or account in your spouse’s name.
Keep in mind that there are a lot of ways to unintentionally convert a portion or all of a non-marital asset to marital asset in the Florida Statutes and case law. For example, if you have a house purchased before a marriage, even if the house is titled in your sole name, a portion of your house will convert to marital if you use funds earned during the marriage to help pay off the mortgage. A prenuptial or postnuptial agreement can help prevent many of these unintentional conversions. Even if you do not wish to enter into a prenuptial or postnuptial agreement or your spouse does not agree to one, it is worthwhile to consult with a family law attorney to learn additional ways to avoid converting non-marital asset into marital assets.
Asset Protection During Divorce
Accurate Financial Disclosures.
Florida law requires transparency. Attempting to hide assets can lead to severe legal penalties, including loss of the hidden asset. Therefore, you should be very careful to ensure that you are disclosing all of your assets, regardless of whether you consider them to be marital or non-marital.
Classification of Assets.
You should clearly distinguish between marital and non-marital property when disclosing your assets. Keeping clear records, such as receipts, bank statements, and personal finance software can help you do this. You should also strongly consider working with a Neutral Financial Professional within a Collaborative Process to help trace assets and show their non-marital status.
Valuation and Appraisal.
You should properly value all assets, including real estate, businesses, pensions, and other valuable property to ensure an equitable distribution. There are aspects of valuations that apply discounts in divorce law that you might not see with other uses of valuations. For example, under Florida divorce law, your spouse generally would not be entitled to the portion of the value of your business that is based on your personal goodwill, even if that might be taken into account when selling your business to a third party. Your divorce lawyer can suggest appraisers who are familiar with family law matters and will apply the appropriate discounts.
Reaching an Agreement Rather Than Going to Court.
In most cases, going to court to resolve your divorce is the longest, least efficient, and most expensive path. A big way to protect your assets is to avoid a divorce court battle. Instead, you should try to reach an agreement with your spouse. We oftentimes recommend the Collaborative Process, where both spouses have separate attorneys. The Collaborative Process restrains the attorneys and other members of the team and prohibit them from fighting in court. The Collaborative Process oftentimes also includes a Neutral Financial Professional to efficiently address financial matters and a Neutral Facilitator (a licensed mental health professional) to help keep discussions focused on resolution rather than the fights of the past.
Conclusion on Asset Protection
It’s essential to work with an experienced family law attorney, as Florida law on equitable distribution and asset protection can be complex. We invite you to reach out to us to discuss asset protection strategies for you.
Adam B. Cordover is co-author of an American Bar Association book on Collaborative Family Law and an international thought leader on the topic. He serves clients throughout the State of Florida, and he has offices in Tampa, St. Petersburg, and Sarasota.
