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New Bill on Calculating Appreciation of Non-Marital Assets in Divorce & Property Division Takes Effect in July

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In March, Florida Lawmakers passed HB 639, a measure that established a statutory formula for calculating the marital share of passive appreciation of non-marital assets subject to property division. Prior to this measure being approved, Florida courts relied on case law to aide them in determining the marital portion of an asset’s passive appreciation for distribution.

HB 639 is important to property division, which can be one of the most complex and contested aspects of a divorce. Under Florida law, property subject to equitable division during divorce is known as marital property, and it includes assets and debts acquired during marriage, or with marital funds or labor. Non-marital property, which is not subject to division, can include assets and debts acquired before marriage, or through gifts or inheritance. Although certain assets may be purchased using non-marital funds before a marriage – such as a home – appreciation of that asset can be divisible marital property if it was paid for during marriage with marital funds.

On July 1, when HB 639 takes effect, Florida courts will now use an established statutory formula (written into law) when calculating the marital shares of assets that appreciate in value, including a home one spouse purchased before marriage, but which was paid for with marital funds during the marriage. The bill uses a similar method as what was used in case law – dividing the amount of mortgage at the time of marriage by the asset’s fair market value (FMV) and multiplying that number by the value of passive appreciation during the marriage. However, the bill calls for using the amount of principal paid on the mortgage rather than the entire amount of the mortgage. It also creates a cap on the marital share’s appreciation value, and provides spouses with opportunity to argue if the use of the statutory formula would be inappropriate under given circumstances.

Because homes are often the largest asset owned or shared by spouses, characterizing them as marital or non-marital property, accurately appraising them, and calculating any appreciation is critical to ensuring spouses are entitled to their fair share. This is especially true when values of homes – even those purchased by one spouse before marriage – are increased through the combined efforts or contributions of both spouses, particularly when they contribute funds to pay the mortgage, and potentially when they perform or pay for updates and renovations.

Florida courts recognize that spouses who do financially contribute to paying a home’s mortgage have rights and interests to that property. Though it may be more disproportionate when compared to what spouses who purchase a home together may equally share when they divorce, it can still be a significant sum, especially when homes passively appreciate over a number of years.

Although there are laws like HB 639 in place to govern the rights of spouses in divorce, protecting those rights and your marital share of assets demands the support of proven and experienced family law attorneys like those at Owenby Law, P.A. Our award-winning Jacksonville divorce attorneys have helped thousands of clients throughout Florida navigate their divorce proceedings, as well as issues involving property division and marital and non-marital homes.

If you have questions about dividing your home in divorce, or how the new bill may impact your divorce case, contact us for an initial consultation.