Equitable Distribution in Divorce Cases: Top Practice Tips

Broward County Bar Association 2023 Raising the Bar Seminar Equitable Distribution: Top 10 Practice Tips and Mistakes to Avoid HONORABLE LAUREN M. ALPERSTEIN SEVENTEENTH JUDICIAL CIRCUIT CIRCUIT COURT JUDGE DIVISION 35 DAVID L. HIRSCHBERG, ESQ. LAW OFFICES OF DAVID L. HIRSCHBERG, P.A. BOCA RATON, FLORIDA

#1: What is dissipation/depletion during the pendency of the case? A hot topic for mediation, and the courtroom, is when an account has been spent down during the pendency of the case. For example: On the date of filing, H s marital bank account had a balance of $27,000.00. On the date of trial, the balance was $9,000.00. What amount should the Court use for equitable distribution? Whose burden?

Dissipation (cont.) Where assets are used Post- Filing for Marital Expenses, the Court should not include them in the Distribution scheme. Platt v. Platt, 164 So.3d 138 (Fla. 4th DCA 2015). Equitable

Dissipation (cont.) To include a dissipated asset in the equitable distribution scheme, there must be evidence of the spending spouse s intentional dissipation or destruction of the asset, and the trial court must make a specific finding that the dissipation resulted from intentional misconduct. Miller v. Miller, 186 So. 3d 1128 (Fla. 4th DCA 2016).

#2: Stock options, Restricted Stock Units, and Unvested Benefits Equitable distribution of these types of assets can be challenging. The assets may be vested or unvested. They may be speculative as to value and even if they will be exercisable. With an asset that vested prior to the date of filing of the divorce, the analysis should be straight forward. What if the benefit was unvested at the time of filing of the dissolution of marriage?

Unvested Benefits The status of unvested options turns on the factual issue of whether the unvested stock options and restricted shares were primarily awarded as deferred compensation past service or as an incentive for future services. Ruberg v. Ruberg, 858 So.2d 1147 (Fla 2d DCA 2003) for

Unvested Benefits Practice Tip #1: When dealing with unvested benefits, controlling document(s) classify and define their award, conditions, etc. get the which Practice Tip #2: Understand the law behind coverture fractions. Practice Tip #3: Constructive trust language for Agreements.

#3: Date of Valuation Unlike the cut-off date for the classification of what is a marital asset/liability, Florida Statute 61.075(7) provides that the date for determining value of assets and the amount of liabilities identified or classified as marital is the date or dates the judge determines is just and equitable under the circumstances. Different assets may be valued as of different dates, as, in the judge s discretion, the circumstances require.

Date of Valuation (cont.) Examples: Real estate/marital residence? Automobile? Investment account? Retirement account? Corporation?

#4: Tax Consequences Practice Tip: Understand and consider tax consequences for each asset distributed. A trial court is required to consider tax consequences in establishing an equitable distribution scheme, and failure to do so, may be reversible error.

#5: Interim Partial Equitable Distribution Requirements that must be met: Sworn motion setting forth the factual basis for an interim distribution. If the motion is not signed by the moving party, it cannot be granted. Goodcause must be shown. Statute literally defines good cause as extraordinary circumstances.

#6: Partition and Real Property Issues QUESTION: Does Partition need to be plead?

Partition (cont.) There appears to be a split in jurisdictions as to whether a request for partition specifically plead. 2013: 5th DCA said yes 2016: 4th DCA said yes 2020: 3d DCA said no 2021: 2nd DCA said no must be Practice Tip: Plead it!!!

Real Property Pitfalls to Avoid: Real Property (cont.) If someone is retaining the house, did you address the removal of the other party s name from the mortgage? Is there some sort of penalty for failure to do so/some security? The sold...now what? How to avoid post- judgment issues between the parties Confidential side agreement Selection of realtor Determination of sale price Mechanism for lowering the listing price Threshold requirement for accepting an offer Address access issues, including open houses marital residence is being

#7: Corporate Interests QUESTION: When should you add the Corporation as a Party?

Corporate Interests (cont.) A corporation should be added as a party to the dissolution of marriage proceedings if transfer of the corporate assets is requested by a party. If a corporation is not joined, then the trial court has no power to order a transfer of corporate assets. Keller v. Keller, 521 So.2d 273 (Fla. 5th DCA 1988) This applies to all assets of the corporation, including stock, proceeds from the sale of real estate, vehicles, etc.

Corporate Interests (cont.) Practice Tip: Just as a court cannot distribute assets of the corporation unless it is named as a party, a Court cannot direct the corporation to continue to make payments to a party if not a party to the proceedings.

#8: Division of Brokerage/Investment Accounts Practice Tip: Simply #9999 shall be equally divided....or saying divided 50/50....IS NOT ENOUGH. saying Charles Schwab

Dividing Invest. Accounts (cont.) Sample Language: Within ten (10) days of the Effective Date of this Agreement, the Parties shall provide instructions to their Charles Schwab agent/broker to equally divide this investment account. In equally dividing the holdings of the account, instructions shall be given to the broker to divide the investments and the cash equally in the account so that each Party is left with the same cost basis. To the extent that any security or investment held in the account cannot be equally split, then said security/investment shall be sold and the net proceeds shall be equally divided (50/50) between the parties. The parties shall be equally responsible for any tax due as a result of any sale of any fractional share or of any investments/securities that cannot be equally split. Neither party shall be permitted to make any withdrawals from this investment account, until the division has been effectuated. Each party s 50% share of the same shall be considered that party s separate property.

#9: Distributing Retirement/Qualified Plans Practice Tips to Consider and Pitfalls to Avoid: Is the retirement plan/vehicle one that requires a QDRO/separate retirement order? If so, who and how will it be prepared, and how will its preparation be paid for? What is the date of valuation and did you include that in your settlement agreement? Did you address post-filing contributions? Did you specifically address passive appreciation/depreciation of the retirement account from date of filing to date of distribution?

#10: Hot Tip Whether it is a single issue (i.e., doing the coverture fraction), or multiple financial issues in the case, utilize the services of a good, qualified forensic accountant. Don t forget...there are evidentiary issues in Court that can be overcome by having a forensic accountant.

Thank you!