Florida Passes Bill Regarding Marital Assets and Liabilities
The State of Florida has recently passed House Bill 639, relating to the equitable distribution of marital assets and liabilities in the event of a dissolution of marriage. This bill will become effective on July 1, 2018.
In the event of a dissolution of a marriage, the court must determine an equitable distribution of assets and liabilities between the parties. One marital asset that is particularly difficult to value is the passive appreciation of a nonmarital asset encumbered with a mortgage which has been paid down with marital funds.
The new bill modifies the current method for determining this valuation. Under current law, a method for determining the marital portion of passive appreciation that is subject to equitable distribution has been established by case law as dividing the amount of the mortgage at the time of marriage by the fair market value of the asset at the same time and multiplying that fraction by the amount of passive appreciation during the marriage.
House Bill 639 establishes a more definitive statutory formula to calculate the marital portion of passive appreciation of a nonmarital asset that is subject to equitable distribution. The bill uses methodology similar to the case law, but uses the amount of mortgage principal paid down during the marriage instead of the amount of the mortgage at the time of marriage.
The bill also allows a party to argue that use of the formula would be inequitable under the facts of a specific case.
Zachary Pearlstein, JD, is a Regulatory Compliance Director with CLA's Mortgage Advisory Division. He joined CLA on January 1, 2014, as part of its acquisition of Bankers Advisory, Inc. Zachary oversees Mortgage Advisory's regulatory compliance team, which focuses on federal and state compliance, fair lending, and the Home Mortgage Disclosure Act (HMDA). He is a graduate of Brandeis University and earned his juris doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar.
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