Equity, meaning something that is equitable, is a familiar term for most of us. Home equity, shareholder equity, and even sweat equity are terms that come up a lot in conversations when talking about investments. But what does “equitable” really mean? It is defined as dealing with issues fairly and impartially, but when it comes to equitable distribution in divorce, it should be made clear that fair is not synonymous with equal.
Divorce in Florida, along with 41 other states, is governed by an Equitable Distribution law; this dictates that property acquired by spouses during their marriage (homes, cars, and investment properties) along with common debt should be divided fairly at the time of the divorce, no matter how long a couple has been married.
Like all the discussions couples have around getting a divorce, negotiating an equitable distribution of assets and debt can be contentious and confusing. Since assets and liability are not just split down the middle, many considerations need to be reviewed and analyzed, including assets acquired before the marriage, such as property, individual bank accounts, or student loans. Each spouse has different financial obligations that can come into play. One individual may be more employable than the other because it was decided that one spouse would stay home to raise the family. There may be a difference in earning potential due to career market value, education, and special skills. There may have been infidelity or abuse that caused the split and financial hardship – this is considered during the negotiation process.
If you are one of the approximate 10% of couples who have a legal prenuptial agreement prepared, you already have an asset distribution roadmap for your split, but for the larger percentage of people who do not, it is recommended that the negotiation of equitable distribution between the divorcing parties is supported by a family law attorney, mediator, or financial advisor who is knowledgeable about shared marital assets and their value. There are always cases when a spouse has mismanaged the marital property or will not agree to the equitable distribution of assets. A trusted legal professional can help significantly in scenarios like this.
If you and your soon-to-be ex-spouse cannot agree on a fair distribution of assets and burden, you can always take the matter to court to help determine an equitable distribution of assets for both parties. If you choose or are forced to pursue a litigated divorce, the process will undoubtedly take more time and will be more expensive.
In a court hearing, you are no longer in control of how assets and liabilities are distributed because the decision is up to the presiding judge. As with every court case, the judge is responsible for reviewing the supporting documentation that may include whether or not there are minor children, whether child support has been ordered, age and health of each spouse, the liquidity of marital property, and the value of non-marital property which was acquired or inherited before the marriage. All of these factor into the final judgment. The court’s interest is not in how you feel about the split or the ownership of assets, but that the case follows the legal process and fairness is determined by the evidence presented.
With all divorces, couples should negotiate an agreement that is right for their family. Working together to agree on a fair outcome will leave both parties satisfied with the outcome, and this, in the end, can mean an equitable split.
