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Are Insurance Payouts a Marital or Nonmarital Asset?


One of the most difficult hurdles to clear early in the divorce process is that almost all the assets you acquired during your marriage are marital property.  In your marital settlement agreement, you can decide that you keep certain assets and your spouse keeps others, but if that would leave one spouse financially dependent on the other, then you may need to pay your spouse some money to compensate for part of the value of the assets you are keeping.  You might think, “That’s my beach house!  I furnished it and cleaned it and spent weeks there every summer with our children while my husband stayed in Weston.  My parents used to stay there when they visited us in the winter, and my husband’s parents never even saw the house.”  You might also think, “That’s my auto body shop!  My wife never set foot in it or committed an hour of work to it.  She doesn’t even have a driver’s license!”  Unfortunately, unless you have a prenuptial agreement, your prized possessions that your spouse never cared for are marital property if they came into your possession during your marriage.  A Boca Raton divorce lawyer can help you if you and your spouse disagree about whether certain valuable assets are marital or nonmarital.

How Do Divorce Courts Deal With Insurance Payouts You Received During Your Marriage?

According to Florida law, all income either spouse earns and all property either spouse buys are marital assets, subject to division in divorce.  It does not matter which spouse’s name is on the pay stub or the title to the asset.  There are several exceptions, though.  The following assets are separate property even if they enter your possession during your marriage:

  • Inherited property
  • Insurance payouts related to personal injury claims, including but not limited to workers’ compensation claims
  • Life insurance payouts, if you are a beneficiary of a deceased family member’s life insurance policy
  • Assets designated as separate pursuant to a prenuptial agreement

The Case of the Replacement Boat

A divorce court in Palm Beach County recently faced a difficult decision related to an insurance payout for a boat.  The husband bought a boat before he married his wife.  During the marriage, the boat suffered irreparable damage in a hurricane.  The husband filed an insurance claim, and the insurance company declared the boat a total loss and paid him a settlement.  He used the settlement money to buy a new boat to replace the one that had been destroyed.

When the parties got divorced, they disagreed about whether the second boat was a marital asset.  The wife claimed that it was marital because the husband bought it during the marriage.  The husband claimed that it was nonmarital because it was an extension of the insurance payout.  The appeals court wasn’t sure and remanded the case to the trial court.

Contact Schwartz | White About Divorce

A South Florida family law attorney can help you if you never cared for your husband’s boat but justice dictates that you get a payout for a portion of its value.  Contact Schwartz | White in Boca Raton, Florida about your case.



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