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Commingling: How Mixing Assets Can Change Everything in a Florida Divorce

Collaborative Divorce, Property Distribution / Michael P Sampson

May 23, 2025 By Michael P. Sampson Sampson Collaborative Law You saved money before getting married. You fell in love and tied the knot without a prenup. Now, your marriage is falling apart. You’re thinking about divorce and discover that your savings might be split. Why? You mixed your pre-marriage money with money earned during the marriage. In Florida, this mixing—called commingling—can turn your separate property into shared property. It can change how your assets are divided in a divorce. Pour cream (the money earned during marriage) into a cup of steaming black coffee (your premarital savings). The now creamy coffee has changed. Irreversibly. Once mixed, the coffee changes forever. In a divorce, commingled assets work the same way. This guide explains commingling, how it affects your assets, and ways to keep your separate property safe. What Are Marital and Nonmarital Assets in Florida? In a Florida divorce, assets are split into two types: Timing Matters Unless you have a written agreement that says otherwise, asset status is determined on the date of filing for divorce, not on the date of separation (Yon v. Yon, 286 So. 3d 322, (Fla. 1st DCA 2019)); section 61.075(7), Florida Statutes. So, if you separate but don’t file for years, changes in asset status during that gap count. Valuing assets is a different matter from identifying them as nonmarital or marital. Courts may choose valuation dates for an asset other than the date of filing, however, when equity and evidence warrant. Section 61.075(7), Florida Statutes. Where the increase in value of a property or continued ownership of property is solely due to the work or efforts of the owner spouse, use of the separation date is mandated. Norwood v. Anapol-Norwood, 931 So. 2d 951 (Fla. 3d DCA 2006); Silva v. Claffey, Case No. 4D2024-0269 (Fla. 4th DCA Feb 05, 2025). Cf. Frazier v. Dodd, Case No. 5D2022-2478 (Fla. 5th DCA Mar 21, 2025) Knowing what counts as separate property is the first step to protect your money, especially inheritances or pre-marriage savings. Commingling: When Nonmarital Assets Become Marital Commingling happens when you mix separate assets with marital ones. This makes the separate part lose its identity. You can’t unmix cream from coffee. In Florida, this mixing makes the asset shared, and the court can divide it as a marital asset. Dravis v. Dravis, 170 So. 3d 849 (Fla. 2d DCA 2015). Real-Life Examples: Depositing your paycheck into a pre-marriage account (Distefano v. Distefano, 253 So. 3d 1178 (Fla. 2d DCA 2018)) or moving separate funds into a joint account for shared expenses (Knecht v. Palmer, 252 So. 3d 842 (Fla. 5th DCA 2018)) causes commingling. In Sturms v. Sturms, 226 So. 3d 1004 (Fla. 1st DCA 2017)), money from selling drilling rights owned by the husband’s premarital business became marital when mixed with business funds earned during the marriage. Blending marital funds with separate funds can jeopardize their nonmarital character. Did You Unintentionally Give Your Spouse Half Your Separate Assets? Commingling assets doesn’t just make them marital – it can also create a legal presumption you meant to give half to your spouse. Presumption of Gift: Mixing separate funds with funds in a joint account shows you intended a give half to your spouse. Link v. Link, 897 So. 2d 533 (Fla. 5th DCA 2005); Spielberger v. Spielberger, 712 So. 2d 835, 1998). In Link v. Link, a wife’s funds from life insurance proceeds deposited into a joint account were presumed a gift, and she couldn’t prove otherwise. Proving It Wasn’t a Gift: You must prove you intended no gift, which is hard once money gets mixed. Woodard v. Woodard, 634 So. 2d 782 (Fla. 5th DCA 1994). No Mixing, No Gift: If you keep funds separate, the court won’t presume a gift. Your spouse must prove you meant to share the funds. Grieco v. Grieco, 917 So. 2d 1052 (Fla. 2d DCA 2006). In Rogers v. Rogers, 351 So. 3d 1230 (Fla. 2d DCA 2022), the court saw no proof a joint account was just for convenience, so the trust money was considered a gift, making a boat purchased with such money marital. Joint accounts are risky. Keep separate funds in your own account to avoid sharing them by mistake. Nonmarital Assets That Stay Separate Some assets can stay separate if you’re careful. Not all assets are vulnerable to commingling. Accounts Kept Separate: Accounts funded only with separate funds, even if opened during marriage, stay separate. Street v. Street, 303 So. 2d 1253 (Fla. 2d DCA 2020). Stocks and Investments: Stocks or investments you had before marriage stay separate unless commingled or they grow with marital contributions or effort. Farrior v. Farrior, 736 So. 2d 1177 (Fla. 1999); Abdnour v. Abdnour, 19 So. 3d 357 (Fla. 2d DCA 2009). Inherited Assets and Proceeds: Assets you inherit, including money from selling those assets, stay separate if you don’t commingle them. Rivera v. Rivera, Case No. 3D22-1914 (Fla. 3d DCA 2023). In Rivera, money from selling an inherited house, used to buy a home for the husband’s mother and a car, stayed separate because he hadn’t commingled the proceeds with marital funds. Passive Appreciation: Appreciation of nonmarital assets remains nonmarital unless marital efforts or funds enhance the value. Doerr v. Doerr, 751 So. 2d 154 (Fla. 2d DCA 2000). However, Knecht v. Palmer, 252 So. 3d 842 (Fla. 5th DCA 2018) found that appreciation of a nonmarital home became marital due to commingled funds used for remodeling, though the court made an unequal distribution to adjust to achieve equity. Houses, inheritances, and some investments can stay separate, but don’t mix them with shared funds. For a calculator of marital component of appreciation in nonmarital property useful as a tool in collaborative divorce, try out the Sampson Collaborative Law Calculator for Marital Appreciation in Nonmarital Real Property. For a calculator of the marital component of appreciation in nonmarital accounts, try the Sampson Collaborative Law Premarital Account Calculator. Proving Your Nonmarital Asset Is Separate Claiming an asset is your separate, nonmarital asset isn’t enough—you need proof. Commingling makes this harder. Your Job: Prove the Asset Stayed Separate! You

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Imminent Sale Doctrine Pink and white roseate spoonbill

Imminent Sale Doctrine – Closing Costs in Florida Divorce

Collaborative Divorce, Property Distribution / Michael P Sampson

By Michael P. Sampson Sampson Collaborative Law, March 16, 2025 Divorce can feel overwhelming, especially when it’s time to divide the marital home. In Florida, whether realtor fees and closing costs come off its value depends on the Imminent Sale Doctrine and solid evidence. Courts stick to strict guidelines, but the collaborative process offers couples flexibility. Let’s explore the imminent sale doctrine, considering fees, closing costs, and tax consequences on the sale of marital residence. What’s at stake? How might you move forward? What if there is no imminent sale? Closing Costs and Realtor Fees: The Imminent Sale Doctrine: Evidence In Florida, splitting property in divorce follows section 61.075, Florida Statutes. The Imminent Sale Doctrine acts like a checkpoint at an airport —only those with a boarding pass (proof of an impending sale) can get through the gate to deduct realtor fees or closing costs. Without it, the distribution value of the marital residence stands firm, with no such deductions. Florida courts have shaped this standard. They say, for the judge to deduct these fees and closing costs from the value of the marital residence, there must be proof of an “imminent sale” – one about to happen – and reliable cost estimates. For example, in Goodwin v. Goodwin, 640 So. 2d 173 (Fla. 1st DCA 1994), the First District Court of Appeal held: “The estimated cost of selling may be deducted from the value of the property where there is evidence as to the estimated sale costs.” The court cited a foreclosure case, Savers Federal Savings and Loan Ass’n v. Sandcastle Beach Joint Venture, 498 So. 2d 519 (Fla. 1st DCA 1986), and a divorce case, Taber v. Taber, 626 So. 2d 1089 (Fla. 1st DCA 1993). Savers Federal Savings and Loan Ass’n v. Sandcastle Beach Joint Venture: Failure to Consider Sales Costs In the foreclosure case, Savers Federal Savings and Loan Ass’n, the First DCA received a real estate appraiser’s expert opinion about the fair market value of condo project. The S&L foreclosed on the project, then sought a deficiency judgment for the difference between the foreclosure sale price and the FMV of the project. The trial judge denied the lender’s deficiency claim based on a finding the value of the property on the date of the foreclosure sale exceeded the debt owed. But the judge accepted an overstated value for the property, by not considering sales costs. The appraiser used two different appraisal methodologies – the cost approach and the market analysis approach. Both approaches assumed imminent sale of the units. Under the cost approach, he arrived at a replacement cost for the condo units as new, less depreciation, and adjusted that for profit, overhead, and the owner’s paying selling costs to individual purchasers over 18 months. Under the market approach, the expert compared the subject townhouses to sales of similar units. He arrived at a gross price, then presumed the seller would sell each unit individually over 18 months based on then-current sales rates. Under both approaches, the expert testified items that hadn’t yet occurred, including sales expenses, should come off the value. The judge acknowledged the condo project would be sold – an implicit imminent sale – yet failed to deduct associated sales costs. That was wrong. Taber v. Taber – No Imminent Sale In contrast, in Taber, the divorce case First DCA cited in Goodwin, the court considered if the trial court abused its discretion by awarding the former husband an unequal distribution of marital assets. There, a real estate agent testified about the fair market value of the marital home. Then the judge deducted closing costs at .083 percent to which a real estate sales expert testified. Yet there was no evidence of an imminent sale of the home. The Taber court reasoned: In determining the value of real estate, it is entirely appropriate to deduct the estimated cost of selling the property where the value of the property is based on the prospective sale of the property, and the witness as to value indicates such a deduction is appropriate. Savers Fed. Savings and Loan Ass’n v. Sandcastle Beach Joint Dev., 498 So. 2d 519 (Fla. 1st DCA 1986). Absent such evidence, however, a further deduction of value for selling costs is inappropriate. Shaw v. Charter Bank, 576 So. 2d 907 (Fla. 1st DCA 1991). In the instant case, there appears to be no evidence that sale of the property was imminent or that the value was based solely on the ability to sell the property. It is, therefore, unclear from the record on what basis the judge allowed a deduction for closing costs. Reed v. Reed – 2025 – No Imminent Sale – Deducting Closing Costs Disallowed Following Taber, the court in Reed v. Reed, Case No. 4D2023-2584 (Fla. 4th DCA Feb. 19, 2025) likewise tossed out an 8% closing cost deduction. No sale was planned, unless the former wife’s payment default triggered a sale. Speculative Evidence Won’t Cut It Under the imminent sale doctrine, guessing at realtor fees and closing costs when no sale is imminent is like planning a grocery budget without a shopping list. It’s so much guessing and wandering up and down the aisles. Courts don’t allow that without competent substantial evidence to support deducting these fees and costs. Instead, judges follow a clear line: no deduction without solid evidence of an imminent sale or court order, as seen in Reed and Goodwin. In Reed, the wife wanted to keep the home and property on which she ran a bed and breakfast for years, so no sale was imminent. The court disallowed an 8% cost cut, unless she missed a deadline for paying an equalizing payment. Daubert – Expert Opinions Must Be Based on Data Not Hunches Solid evidence to support claimed deductions isn’t just a suggestion—it’s key. Regarding expert opinion, Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), raises the bar. This US Supreme Court case, the evidentiary standard from which Florida adopted, demands expert testimony be based on tested, reliable methods, not on guesses. See Section 90.702, Florida Statutes; In re Amendments to the Florida Evidence

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Jurisdiction Over Property at Issue in Florida Divorce

Collaborative Divorce, Jurisdiction and Procedure, Property Distribution / Michael P Sampson

By Michael P. Sampson (part 7 of 8) In Rem Jurisdiction Over Property Located in County Where Florida Divorce Is Pending If property at issue in a divorce case is within the court’s jurisdictional boundaries, it doesn’t matter if the owners or those claiming an interest in the property reside outside Florida. The court has in rem jurisdiction over the property at issue. Jurisdiction in rem, founded on property within the court’s territorial bounds, can substitute for personal jurisdiction. See Stephens, Scott, Florida’s Third Species of Jurisdiction, Vol. 82, No. 3, Florida Bar Journal 10 (March 2008). A court may not exercise in rem jurisdiction to resolve disputes over real property outside the court’s territorial boundary. Publix Super Markets, Inc. v. Cheesbro Roofing, Inc., 502 So. 2d 484 (Fla. 5th DCA 1987) (an action asking the court to act directly on property or title to the property is an in rem action, which must be brought in the county where the land lies). This rule is known as the “local action rule.: See also State, Dep’t of Nat. Res. v. Antioch Univ., 533 So. 2d 869 (Fla. 1st DCA 1988); Seven Hills, Inc. v. Bentley, 848 So. 2d 345 (Fla. 1st DCA 2003). In Rem Jurisdiction Over Property in Florida Divorce An example of in rem jurisdiction over property in a divorce is an action to partition real property or personal property a spouse and another owner, such as a foreign trust or corporation, co-own. Under these circumstances, in rem jurisdiction over the property lies in the circuit court of the county in which the property is physically located. “A partition judgment is unquestionably in rem.” Sammons v. Sammons, 479 So. 2d 223 (Fla. 3d DCA 1985). In divorce, both the dissolution of marriage and division of property rights may be conducted through in rem jurisdiction. Davis v. Dieujuste, 496 So. 2d 806 (Fla. 1986); Montano v. Montano, 520 So. 2d 52 (Fla. 3d DCA 1988). Under section 64.031, Florida Statutes, a spouse owning an interest in real property or personal property may file a partition action against the cotenants, coparceners, or others interested in the lands to be divided. For example, in Martinez v. Martinez, 219 So. 3d 259 (Fla. 5th DCA 2017), a wife’s petition for dissolution of marriage included a partition count against her stepson and corporations her husband created during the marriage. She alleged her husband had been commingling the parties’ marital assets with assets owned by the stepson and corporate respondents. She sought partition of the marital assets, recognition and equitable distribution of her interest in the corporations. Further, she asked the court to claw back and equitably distribute assets transferred to the corporations and stepson. The Fifth DCA held the trial court erred by granting the stepson’s motion for summary judgment on his stepmom’s claims against him. No In Rem Jurisdiction if the Property is Outside the County of the Divorce Action For the divorce court to acquire in rem jurisdiction over property, it isn’t enough for a spouse seeking divorce simply to describe property in the divorce petition. To have power to include provisions in a divorce judgment that affect property rights in such property, the property must lie within the county where the divorce action was filed. Contreras v. Contreras, 336 So. 3d 772 (Fla. 3d DCA 2021). Joinder of Nonparty Co-Owners of Property in Florida Divorce Is Necessary to Adjudicate Their Interests A divorce judge can’t adjudicate property interests of co-owners unless joined as parties. In Bailey v. Bailey, 310 So. 3d 103 (Fla. 4th DCA 2021) a mother-in-Law claimed interest in real property, to be distributed in a divorce. The wife sought partition of the property. After joining mother-in-law as an indispensable party, the wife dropped her partition claim. But the mother-in-law claimed she owned the property with the divorcing couple as joint tenants with rights of survivorship. She moved to intervene, but the trial court denied her motion. The divorce judge could adjudicate only the husband’s and wife’s respective one-third interest in the property, but that adjudication would likely impact the right of survivorship in the property held as joint tenants. Therefore, the 4th DCA held, the mother-in-law’s joinder was required. See also Salituri v. Salituri, 184 So. 3d 1250 (Fla. 4th DCA 2016), in which the same court reversed a judgment purporting to distribute property in a divorce absent joinder of the husband’s dad, who co-owned the property. In a dissolution of marriage action, in Matajek v. Skowronska, 927 So. 2d 981 (Fla. 5th DCA 2006), the trial judge erred in adjudicating the full value of and assigning to the wife real property titled to a partnership co-owned between Husband’s limited liability company and a partner not a party. Corporate Property: No Power to Transfer Property Without Joining Entity A Florida trial court has no power or authority to transfer property of a corporation without joining the entity. See Ehman v. Ehman, 156 So. 3d 7 (Fla. 2d DCA 2014); Mathes v. Mathes, 91 So. 3d 207 (Fla. 2d DCA 2012). See also Sandstrom v. Sandstrom, 617 So. 2d 327 (Fla 4th DCA 1993) (the court lacked jurisdiction to order a transfer of a corporation’s assets because it was not made a party) and Ashourian v. Ashourian, 483 So. 2d 486 (Fla. 1st DCA 1986). In Nichols v. Nichols, 578 So. 2d 851 (Fla 2d DCA 1991), an order distributing corporate property in a dissolution of marriage proceeding was reversed because the corporation was not made a party. Likewise, in Keller v. Keller, 521 So. 2d 273 (Fla. 5th DCA 1988), the court had no authority to award wife a Mercedes owned by husband’s corporation because the corporation was not joined). See also Buchanan v. Buchanan, 225 So. 3d 1002 (Fla. 1st DCA 2017) (court had no power to order a company not joined as a party to continue paying spouse’s salary). Property Business Entities and Trusts Own Isn’t the Same as Spouses’ Ownership in the Entities Assets nonparty LLCs, corporations, partnerships, or trusts own ordinarily aren’t divisible

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Domestic Partnership Agreements: FAQs

Property Distribution, Relationship Agreements / Michael P Sampson

This final installment of a 7-part series about domestic partnership agreements answers frequently asked questions (FAQs) about them. Using the Collaborative Process for Negotiating a Domestic Partnership Agreement The Collaborative Process can assist a couple with negotiating a domestic partnership agreement. A full collaborative team includes a lawyer for each party, a neutral financial professional, and a neutral mental health professional may work with the parties in negotiating a domestic partnership agreement or, if the parties intend to marry, a premarital agreement. The couple and their collaborative team meet together. First, they identify each person’s goals and interests. Next, they work on gathering and exchanging financial information. Together, they explore best options and their lawyers work on an agreement expressing the couple’s decisions. In collaborative settlement agreements, the parties may agree to submit any future disputes to an agreed-upon collaborative process, even using the same team as the one used during negotiations. Related Blog Posts Read more about Florida Domestic Partnership Agreements:

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Domestic Partnership Agreements: Financial Disclosures

Property Distribution, Relationship Agreements / Michael P Sampson

This sixth installment of a 7-part series about Domestic Partnership Agreements discusses financial disclosures and privacy. To avoid later attack on the domestic partnership agreement, the partners should make fair and reasonable financial disclosures to each other. Disclosures to Consider For Florida “family law matters” (which Florida Family Law Rule of Procedure 12.010 defines broadly) such as divorce, Florida Family Law Rule of Procedure 12.285 mandates extensive financial disclosures. “Family law matters” includes matters arising from support unconnected with dissolution of marriage and declaratory actions related to premarital agreements. The list below includes items modified from the list that the Florida Supreme Court approved on November 12, 2020. Before domestic partners sign their agreement, each should consider disclosing: Trusts and all trust amendments for any trust of which either party is a beneficiary or may be in the class of beneficiaries or for which either party is a trustee. Documents sufficient to show each party’s ownership interest in any corporation, limited liability company, professional association, partnership, family limited partnership, joint venture, franchise, or other entity. Buy-sell or other agreements between or among either party and other owners of any business or family entity. Documents sufficient to reflect each party’s ownership of any tangible and intangible personal property, including vehicles, intellectual property (patents, trademarks), deferred compensation (such as stock options, restricted stock units), furniture and furnishings, collections, equipment, or contracts. Complete federal and state personal income tax returns, gift tax returns, and foreign tax returns for the past 3 years. Include all attachments, Forms W-2, 1099, K-1, and all schedules and worksheets comprising the entire tax return. IRS forms W-2, 1099, and K-1 for the past year, if the income tax return for that year hasn’t been prepared and for the prior 2 years beyond the past year, if the return hasn’t been filed for those years. Pay stubs or other evidence of earned income for the past 6 months. For the past 24 months, all loan applications, financial statements, and credit reports. Deeds evidencing ownership in property held during the last 3 years. Promissory notes or other documents evidencing money owed in the last 24 months. Leases for property on which the party is receiving or has received payments in the last 3 years or in which the party owns or owned an interest. Statements for the last 12 months for all checking and other bank accounts. Accounts include held in the party’s name individually, jointly with any other person or entity, as trustee or guardian for a party or a minor or adult dependent child, or in someone else’s name on the party’s behalf. Brokerage account statements held within the last 12 months. The most recent statement and statements for the past 12 months for any profit sharing, retirement, deferred compensation, or pension plan. Examples are IRAs, 401(k)s, 403(b)s, SEPs, KEOGHs, or other similar accounts. The most recent statement and statements for the past 12 months for any virtual currency transactions in which the party participated or holds an interest. The declarations page, the last periodic statement, statements for the past 12 months. Include the certificate for all life insurance policies insuring the party’s life. Current health and dental insurance cards covering the parties or their dependent children. If the party has an ownership or interest in a corporation, partnership, or trust, corporate, partnership, and trust tax returns for the last 3 tax years. Promissory notes evidencing debt for the last 24 months, whether since paid or not, and all credit card and charge account statements. Present lease agreements. Written premarital or marital agreements (or domestic partnership agreements) entered into at any time between the parties. Any court orders directing a party to pay or receive spousal or child support. Confidentiality and Nondisclosure Protections Domestic partnership agreements may provide for protecting the privacy and confidentiality of private financial information. Such information may include private family business information or trade secrets. Parties may agree to limit who may access confidential information. They may agree not to file confidential information in any future court action. They may agree to invoke court rules for sealing confidential documents being filed in court. Agreed Dispute Resolution: Collaborative Process They may agree to resolve future disputes through the collaborative process. The collaborative process enables out-of-court resolution of disputes with a team. The collaborative team includes a lawyer for each party, a neutral financial person, and a neutral mental health professional. Read more about Florida Domestic Partnership Agreements: Domestic Partnership Agreements: Overview Domestic Partnership Agreements: The Home and Joint Expenses Domestic Partnership Agreements: Separate and Joint Property Support When the Relationship Ends Survivor’s Rights on Domestic Partner’s Death Domestic Partnership Agreements: FAQs

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Survivor’s Rights on Domestic Partner’s Death

Beneficiary Designations, Property Distribution, Relationship Agreements / Michael P Sampson

This fifth installment of a 7-part series about Domestic Partnership Agreements discusses survivor’s rights on death. Florida law provides for survivor’s rights if a married person dies before the other spouse and they have no premarital or postnuptial agreement. But for unmarried domestic partners, Florida law provides no survivor benefits upon the decedent’s death. Through careful planning and drafting of a domestic partnership agreement, however, partners can achieve similar financial rights on death. Elective Share – Create Equivalent Survivor’s Rights for Domestic Partners? A survivor’s right available to a surviving spouse, but not to unmarried couples, is the “elective share.” See section 732.201-732.2155, Florida Statutes. The elective share is a surviving spouse’s right to a share of the decedent’s estate no matter what the will provides. A marrying or married party may waive that right. Florida law specifies the property included in the “elective estate.” The amount of the elective share is generally 30 percent of the “elective estate.” For example, for married couples, if a spouse’s will provided the other spouse would get $100,000 upon death, and the rest of the wealth, money, and property would go into a trust for someone other than the surviving spouse, but the decedent’s “elective estate” calculated under Florida law were worth $1 million, the surviving spouse could elect to take $300,000. Options for Survivor Death Benefits of Domestic Partner To provide for survivor’s rights, domestic partners may use definitions similar to those for the spousal elective share. Their agreement could provide for irrevocable commitments that the survivor partner would share in the decedent’s estate. These irrevocable commitments for survivor death benefits would stand, regardless of what a later will were to provide. The draft agreement could lay out alternative provisions for either party to consider: There will be a partial waiver and release of property and estate rights and a specific waiver of any right to include the value of the interests in trusts in a partner’s share upon the other’s death. Both parties will waive and release property and other estate rights upon the other’s death. Absent later different written arrangements, there will be specific irrevocable rights in the other party’s estate upon the party’s death. Related Blog Posts Read more about Florida Domestic Partnership Agreements: Domestic Partnership Agreements: Overview Domestic Partnership Agreements: The Home and Joint Expenses Domestic Partnership Agreements: Separate and Joint Property Support When the Relationship Ends Domestic Partnership Agreements: Financial Disclosures and Privacy Domestic Partnership Agreements: FAQs

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Domestic Partnership Agreements: The Home and Joint Expenses

Collaborative Divorce, Property Distribution, Relationship Agreements / Michael P Sampson

This second installment of a 7-part series about domestic partnership agreements discusses the home and joint expenses. Partners Acquiring a Home Together Two people may acquire a home together. They may contribute different amounts to the purchase price. During their relationship, they may contribute different amounts towards improvements, the mortgage, insurance, and property taxes. Further, they will undoubtedly have home and joint expenses. Recognizing these contributions, domestic partnership agreements may establish a fair formula for splitting net proceeds if (i) the home is later sold or, (ii) if one person dies before the other and they are still together, a buyout from the decedent’s estate. The couple may say how they’ll handle their joint household expenses. Calculators: Growth in Real Property and Accounts Owned Before the Domestic Partnership Each partner may bring separate real property or personal property into their domestic partnership. Many couples agree any growth – no matter why – in value of such property during their relationship remains the owner’s separate property. That may be their written agreement no matter how long their relationship lasts. Still other couples, however, may consider alternative ways to handle growth in value. That way, if during their relationship, the value grows from passive market growth or from either person’s contributions, they can allocate the growth fairly. Calculators useful in the marital context may help the couple think about what might be “fair” allocation of asset growth during their domestic partnership. One real property calculator helps calculate increased value of real property. The other personal property calculator helps calculate growth in value of other assets, like investment accounts. Questions to think about: (a) If the couple has children, are still together, and one parent dies, what would they like to happen with the home? (b) Is the answer different if they’ve been together for 2 years or 15 years? Would they want the surviving parent and children to stay in the home until there are no longer dependent children? (c) If the couple has children and one wants to end the relationship, what would they like to happen with the home? Is the answer different if they’ve been together for 2 years or 15 years? (d) If the couple has no children together, how would they like the home handled if one dies before the other or if one gives wants to end the relationship? Handling Home and Joint Household Expenses A committed couple may provide for a joint household account or other joint accounts to pay home and joint expenses. Their agreement may allow deposits into joint accounts of funds either party may earn. One may agree some distributions from a trust will go into the joint account. The couple may decide a percentage of their separate money will go into a joint account for household bills or improvements. Joint funds may be deemed joint property. But ownership in trusts or each party’s separate accounts, and any growth in the value of such ownership or interests during the parties’ relationship, ordinarily would remain separate. Read more about Florida Domestic Partnership Agreements:

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Domestic Partnership Agreements: Overview

Property Distribution, Relationship Agreements / Michael P Sampson

This first installment of a 7-part series gives an overview of domestic partnership agreements. Married and Unmarried Committed Couples Many couples who could not legally marry now can. In Obergefell v. Hodges, The United States Supreme Court described the fundamental right to marry, commit to, and intimately associate with the person you love through marriage as one of identity and liberty. But thousands of people in committed intimate relationships choose not to marry. Instead, they choose to stay happily unmarried. Their identity and liberty interests allow them that choice. Property and support issues are no less important to people in unmarried committed relationships than they are to married people. Domestic partnership agreements can protect committed, unmarried couples, as premarital agreements do for marrying couples. Domestic Partnership Agreements In this series, we provide an overview of domestic partnership agreements and issues couples typically address. Issues include where they’ll live during their relationship, paying home and joint bills, handling separate property, property they may acquire together, support if their relationship ends, death, and financial disclosures. The series concludes with FAQs about domestic partnership agreements. Overview: Domestic Partnership Agreements Premarital agreements, also known as “prenuptial” or “antenuptial” agreements, express the wishes of a marrying couple regarding their property and support rights upon (i) death of one party or (ii) divorce or separation. For estate planning, each party’s family may have transferred assets into trusts or business entities. One goal might be to retain control of family companies and other assets. Provisions in the agreements should be consistent with this goal. Issues addressed Domestic partnership agreements may include provisions for a joint household account; support; what happens on death; and keeping the agreement private. The agreement typically will define and cause, if the relationship ends, each party’s interests in separate assets and family trusts and in other property to be deemed each party’s separate property. Next, the agreement will define each party’s separate property, and, unless either party directs otherwise, typically provide for the income, distributions, dividends, appreciation, and benefits from each party’s separate property will also be that party’s property. The agreement should describe each party’s ownership interests and trust interests in which either party may acquire rights and benefits during the parties’ relationship. It will provide for waiving interests if the relationship ends or one party dies. Related Blog Posts The following blog posts discuss other issues that often arise in negotiating domestic partnership agreements. Read more about Florida Domestic Partnership Agreements:

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Domestic Partners: Support When the Relationship Ends

Property Distribution, Relationship Agreements / Michael P Sampson

This fourth installment of a 7-part series about Domestic Partnership Agreements discusses support when the couple’s relationship ends. Florida law generally provides, when there is no premarital agreement, a spouse’s right to alimony on divorce depends on the spouse’s need for alimony and the other spouse’s ability to pay. But, when a couple is not married, how are support rights determined? No Palimony…But Creating Support Rights by Contract Although Florida courts will honor common law marriages validly established in other states, Florida itself no longer has common law marriage. Florida law provides no support (or “palimony”) for unmarried couples. But domestic partnership agreements may establish contract rights and obligations for support. Creative Options for Domestic Partners Support There are many, creative ways to structure support. Most provide for a fair amount based on how long the couple stay together and their respective financial positions if their relationship were to end. Among many alternative support options, couples may consider providing for: A. Nonmodifiable payments. The amount could vary based on how long the couple stays together. Agreements may provide different amounts of support to the partner if there are children of the relationship. B. A fixed amount of support, e.g., (a) for 2 years if the relationship is under 7 years; (b) for 4 years if the relationship is more than 7 and but less than 12 years; (c) for 10 years if the relationship is more than 12 and but less than 18 years; (d) for the provision to be void if the parties are together more than 18 years. C. A percentage of support based on each party’s prior year’s gross taxable income. The payment schedule could be as in Option B. But the amount, rather than being a fixed sum, could be a percentage of each party’s prior year’s gross taxable income less a percentage of the other party’s prior year’s gross taxable income, then dividing by 12 months. For example, if the greater money earner’s gross income for the prior year was $100,000 and the partner’s gross income were $30,000, annual support could be (30% X $100,000) – (20% X $30,000), or $24,000, and monthly support would be $2,000. Taxes IRS Publication 504 states, unmarried domestic partners (who are not considered “common law married”) can’t file joint U.S. tax returns, but may file only individual 1040 tax returns. Individuals who have entered into registered domestic partnerships, civil unions, or other similar relationships that are a legal marriage under state (or foreign) law are not married for federal tax purposes. Nevertheless, unmarried domestic partners, with the assistance of a tax professional, could calculate and make creative (legal!) financial agreements to lessen the tax burden them and retain more of their wealth. Related Blog Posts Read more about Florida Domestic Partnership Agreements: Domestic Partnership Agreements: Overview Domestic Partnership Agreements: The Home and Joint Expenses Domestic Partnership Agreements: Separate and Joint Property Survivor’s Rights on Domestic Partner’s Death Domestic Partnership Agreements: Financial Disclosures and Privacy Domestic Partnership Agreements: FAQs

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Why Jeff Bezos should have gotten a prenup & why you should too

Property Distribution, Relationship Agreements / Michael P Sampson

By: Hanna Horvath, Policygenius The richest couple in the world is a couple no more. What is a prenup? Jeff Bezos, the CEO of Amazon and the richest man in the world, announced he and his wife, MacKenzie, are getting divorced. The couple hadn’t signed a prenuptial agreement, meaning his soon-to-be ex-wife could be walking away with half of his approximately $136 billion fortune. Michael Sampson, a divorce attorney from Florida, describes it as a “contract between two marrying people and their agreement on how finances will be handled in divorce or in death.” Prenups became prominent after the establishment of no-fault divorces in the 1970s and are becoming more common as couples get married older and sometimes more than once. Sampson said couples typically sign prenups so their kids aren’t disrupted financially by a second marriage or because they have a family inheritance to protect. A prenup is different than a will. Your spouse is entitled to an “elective share” of your entire estate after you die, typically around 30%. If you leave them out of your will, they can make a claim against your estate for that share. Only a prenup would waive your spouse’s elective share, if they agree to it. Sounds romantic. But Sampson argues a prenup forces a couple to discuss something important before their marriage: money. “I think it strengthens the marriage because it forces them to consider certain realities,” he said. “It has couples look at their money in an adult way.” According to a Policygenius survey, one in five couples don’t share money. An even greater percentage don’t discuss finances. This can negatively impact a marriage and lead to divorce, said Sampson. Even if you manage money separately or have it hidden under your mattress, it will almost always come out in a divorce proceeding and be divided evenly. So what’s going to happen to Bezos? Though Bezos’ wealth may make him an exceptional case, Sampson predicts the divorce will proceed like any other: Both parties will disclose their assets to each other, figure out how much they need to pay in child support and disclose any liabilities. A judge will value everything and divide things as equally as possible. Sampson said this high-profile divorce points to the importance of planning ahead. You never know where you’ll be financially (and romantically) in the future. “You get this storybook picture of couples who are in love and think they will never break up,” he said. “They don’t think they need a prenup because they will be together forever. And that’s not always the case.” This article originally appeared on Policygenius.

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Aerial view of houses. Separate Property and Jointly Acquired Property by Domestic Partners

Domestic Partnership Agreements: Separate and Joint Property

Property Distribution, Relationship Agreements / Michael P Sampson

This third installment of a 7-part series about Domestic Partnership Agreements discusses separate and joint property. Separately-Acquired and Jointly-Acquired Property Domestic partnership agreements should list or include an attached schedule of each party’s separate property. If the parties agree, the agreement should protect ownership of property and interests in trusts as separate property. Such agreements typically say how income from separate property will be treated while the couple remains together – will the income also be separate property…or joint? Enhancement in Value of Real and Personal Property Brought into the Relationship Couples may agree, as many do, to allocate any growth in value during their relationship, regardless of the reason for the growth, to the partner who brings the asset into the relationship. Others, however, may take guidance from Florida family law about enhancement in value of premarital real property or premarital accounts. This free real property calculator may help domestic partners provide for allocating growth in real property, like a home, during their relationship if it ends. For assets other than real property, such as accounts a partner has going into the relationship, this calculator may help generate ideas on fairly allocating growth. Generosity With Separate Property Agreements between domestic partners define separately-acquired property. But that doesn’t mean, if either party chooses to share separate assets, trusts, or work during the relationship, the other party can’t benefit. The party may choose how to save or spend such funds. The agreement may allow each party to be generous. Either party may make gifts to the other, to each party’s children, or to others. Jointly Acquired Property Sometimes a party purchases property and titles it in joint names with a partner. When that happens, Florida law ordinarily presumes the party intends to give the other half the value of the property. If either party gives the other funds or property, the agreement typically would provide such gifts would become the recipient’s separate property. Estate Planning Each domestic partner retains freedom to do estate planning. Each person may choose to have a will and trusts. The person may provide upon death for the partner, children, or anyone else. Occasionally, to reassure and provide security for a partner with less means, one partner may commit to making irrevocable estate planning designations or bequests for the other partner. Related Blog Posts Read more about Florida Domestic Partnership Agreements:

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Collaborative Divorce: Dividing Retirement Accounts

Beneficiary Designations, Collaborative Divorce, Property Distribution / Michael P Sampson

The Challenge: In collaborative divorce, dividing retirement accounts can be tricky. Collaborative teams, usually with a neutral collaborative financial professional’s help, must often figure out premarital and marital components of retirement assets. How might the collaborative team approach the challenge? Premarital Accounts Calculator: One tool that may be useful as the collaborative team develops options for allocating the marital and nonmarital components of premarital individual retirement accounts (IRAs), investment accounts, and other plans: Florida Law on Marital and Nonmarital Retirement Assets: State law guides treatment of marital and nonmarital retirement assets. In Florida, marital assets include: The enhancement in value and appreciation of nonmarital assets resulting from either party’s efforts during the marriage, and The enhancement in value and appreciation of nonmarital assets resulting from the contribution to or expenditure on nonmarital assets of marital funds or other forms of marital assets, or both. See 61.075(6)(a)1.b., Florida Statutes. Marital assets also include all vested and nonvested benfits, rights, and funds accrued during the marriage in retirement, pension, profit-sharing, annuity, deferred compensation, and insurance plans and programs. See 61.075(6)(a)1.d., Florida Statutes. Nonmarital assets include assets acquired prior to the marriage and acquired in exchange for such assets. 61.075(6)(b), Florida Statutes. Valuation Dates: In divorce cases, judges may exercise discretion as circumstances require to determine the valuation date or dates for valuing assets as the judge determines is just and equitable under the circumstances. 61.075(7), Florida Statutes. Dividing retirement accounts is subject to the judge’s discretion. However, dates the judge selects may or may not achieve the divorcing couple’s individual or mutual interests. To take back control, collaborating couples may select dates for valuing and dividing retirement accounts they believe best reflect their agreement about fairness and best achieve their interests. Helpful Documents: To help the financial neutral and collaborative team, the retirement account owner should get statements showing (1) the balance of the retirement account closest to the date of marriage, (2) the balance on the date of separation, and (3) the balance currently. It would help to know the participant’s contributions to the account during the marriage. Dividing Retirement Accounts: Time Rule (Coverture) Fraction: Florida courts use a “coverture fraction” or formula to determine the marital portion of a retirement or pension fund. Parry v. Parry, 933 So. 2d 9 (Fla. 2d DCA 2006). This process identifies and allocates contributions a spouse made to an asset based on when the spouse made them. Example for Dividing Retirement Accounts in Collaborative Divorce. For example, suppose the asset being divided is a spouse’s interest in a 401(k) Plan. Consider if multiplying the coverture fraction, determined as of the date of separation, to the most current balance or the balance on a different date makes sense. To give the parties their fair share of ups and downs in the market since separation, determine the marital portion as of the agreed valuation date. This approach is consistent with case law. See Byers v. Byers, 910 So. 2d 336 (Fla. 4th DCA 2005) (Abuse of discretion to value husband’s 401(k) retirement account as of date of petition where asset passively appreciated nearly $70,000 between filing date and date of hearing). Dividing the Dough: Retirement Accounts Imagine a ball of unbaked dough. Split each party’s half of the marital dough ball as of the date of separation. Stick their portions in the fridge. Both portions will rise (or deflate). When it’s time to bake, each party gets his or her separated dough ball representing the marital piece. The participant gets an additional ball, plus the amount it has risen or deflated, reflecting premarital contributions. Calculate a “coverture” or “time rule” fraction. The numerator is the time the participant was married while participating in the Plan. The denominator is the total time the participant has in the Plan. To get a starting number of the marital value, multiply the fraction and the Plan’s current value (or, if the parties agree, value on a different date, such as their separation date). That will yield the total present value of the retirement fund accruing during the marriage. The rest is allocable to the participant as nonmarital. This piece would comprise the premarital balance contributed plus passive growth on that amount during the marriage. Collaborative Divorce: Couples May Consider Fair Options for Dividing Retirement Accounts. Now think about marital amounts net of joint expenses or debts paid with the marital portion of the retirement account. It would be fair for each to benefit from gains or losses through the account’s division. The parties may agree differently. In the usual case, the participant doesn’t actively manage the retirement plan of the employer, so there is no need to distinguish between enhancement from marital efforts and enhancement from passive forces, such as because of a bull market. In litigated cases when enhancement comprises both active and passive pieces, the spouse claiming entitlement to enhancement of premarital contributions is passive, therefore also nonmarital, bears the burden of showing market growth by proving a relevant index (e.g., an industry Standard & Poor’s 500 Index) for measuring growth. Unless there’s a basis for unequal distribution of marital assets, splitting 50-50 the marital pie would be fair, but, to achieve their goals, in the collaborative process, the parties may agree to split other than 50-50. Interesting Florida Case Law on Dividing Retirement Assets for Collaborative Practitioners: First District Schroll v. Schroll, 227 So. 3d 232 (Fla. 1st DCA 2017) – Sums diminished during dissolution proceedings for purposes reasonably related to the marriage – paying living expenses, attorneys, debts, moving expenses – should not be included in an equitable distribution scheme. Second District McNorton v. McNorton, 135 So. 3d 482 (Fla. 2d DCA 2014) – Without evidence of the composition of the retirement investments, the increase in a Standard and Poor’s index proved nothing. Horton v. Horton, 62 So. 3d 689 (Fla. 2d DCA 2011) – To determine the amount a retirement or pension fund accumulated during the marriage, the trial court “creat[es] a fraction where the numerator is the amount of time the employee was

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