High-Net Worth Divorces: Why Title May Not Mean Everything Where Division of Assets is Concerned
Several years ago, our firm had a client in the midst of a high-net-worth divorce. He came to our office concerned that his wife would be awarded the couple’s home, as well as several other high-value assets, because ownership of the assets was in her name alone.
But after some discussion, it was discovered that a few years prior to the divorce the couple had transferred assets into the wife’s name for estate planning purposes. The husband had a higher net worth than his wife and, in an attempt to maximize the amount of assets he could transfer estate-tax free at his death, he transferred assets to his wife to balance their estates. The transfer included assets that up until that point the couple had held in both their names.
While it is understandable that the client was concerned – most people, regardless of their knowledge of divorce law, understand the concepts of separate and marital property – this situation highlights the need for obtaining experienced legal representation during a divorce, especially those involving high-net worth assets. Had this client attempted to settle the divorce on his own, he may have unnecessarily parted with millions of dollars in assets, on the mistaken belief that title trumped all.
Florida is an equitable distribution state, which means that the court will award marital assets in a manner that is most fair given the circumstances of each case. Equitable distribution does not always result in an even 50-50 division. Separate property is not subject to equitable distribution.
But what that particular client, as well as many other people, do not understand is that how an asset is titled is just the starting point in the court’s determination of whether an asset is marital or separate. There are many ways separate assets can become marital, including commingling, which occurs when separate assets are placed into a joint account, thus becoming marital, or if marital funds are used to enhance or increase the value of non-marital assets.
Florida law also considers certain assets to be marital, including interspousal gifts made during the marriage. When the husband transferred title to the house and other assets to his wife, he made a gift. So even though she held title to these assets in her sole name, Florida law considers the assets to be marital property. The marital nature of the asset is further supported by the fact that prior to the transfer, the assets were marital. And, the house was used as the marital home.
Another factor that goes into determining whether an asset is marital or non-marital is whether it was purchased with marital or separate funds. Couples may keep separate checking accounts so that they can spend money without being held accountable by the other spouse. But, unless the money in that separate account was separate prior to the marriage, or was obtained following the marriage due to an inheritance, gift or bequest, the money contained in the account – and anything purchased with it – is considered marital, regardless of whether the other spouse ever uses it.
Boca Raton High-Net Worth Divorce Attorneys
High-net worth divorces include a variety of complex issues, including issues where title to marital assets are held in one spouse’s names for reasons having nothing to do with how the couple actually used or acquired the asset. That’s why you should contact the Boca Raton high-net worth divorce attorneys at Schwartz | White. Our attorneys have years of experience handling the complex issues facing high-net worth clients and do so with the utmost discretion and attention to getting the best possible result. Contact our office today at 561.391.9943, or complete our convenient web form, to schedule an appointment to speak with one of our attorneys.