Florida Statute § 61.075 defines which assets and debts are marital and which need to be equitably divided between the parties, so for our Florida Supreme Court Certified Mediators at Mediation of Coral Springs, Inc. determining which assets and liabilities are marital is of the utmost importance at a mediation.
Historically, passive appreciation in nonmarital property owned by only one of the spouses had been one of the toughest issues for our Florida Supreme Court Certified Mediators to deal with at mediation because Florida Statutes gave very little, if any, guidance and Florida caselaw wasn’t much better. It had been the experience of Mediation of Coral Springs, Inc. that one spouse at a mediation would dig in their heels when the other spouse tried to claim some interest in non-marital real property due to a reduction of the mortgage principal during the course of the marriage. Even when the parties agreed that there may be some marital component to a reduction of marital principal, calculating that amount can be very difficult.
That all changed 2018, when the Florida Legislature passed legislation that became effective on July 1, 2018 whereby section 61.075 was amended to include as a marital asset passive appreciation in nonmarital property that only one spouse owns provided that marital funds were used to pay down the mortgage principal.
This 2018 amendment provides an equation for calculating the marital share of passive appreciation in the nonmarital property. All contributions towards the nonmarital property during the marriage and all income either spouse earns during the marriage increasing the value of the nonmarital property are treated as marital. To the contrary, Florida caselaw had previously required that the nonowner spouse had to actively contribute to any appreciation in value of the other spouses nonmarital property.
The 2018 amendment establishes three steps for determining the marital passive appreciation in nonmarital property. If the parties follow these three steps, the result will be an accurate valuation of the marital passive appreciation – but there are several factors that still require calculation.
The valuations that are necessary to calculate the marital passive appreciation in nonmarital property under section 61.075 include the value of the property on the valuation date in the dissolution action; the value of the property on the date of the marriage; any enhancement in value resulting from the efforts of either party during the marriage; and any additional encumbrances secured by the property during the marriage.
Using these values, the parties can then determine the percentage of passive appreciation that is marital, but in the experience of our Florida Supreme Court Certified Mediators at Mediation of Coral Springs, Inc. it will be very beneficial for both parties to have a Certified Public Accountant (CPA) to assist them at mediation when there is a significant amount of anticipated passive appreciation in nonmarital real property of one of the spouses.
Mediation is an opportunity for the parties to reach an equitable and fair distribution of their assets and Mediation of Coral Springs, Inc. has found it beneficial when parties have financial experts available to assist them at mediation.