Increase in Value of Premarital Assets During Marriage: Subject to Equitable Distribution?
or
If there’s a divorce, do you split it down the middle?

Well, it depends.

Assets such as a partner's interest in 401(k) or other retirement plans or investments brought into a marriage are considered to be non-marital and thus are not subject to equitable distribution in the event of a divorce. Income or appreciation routinely derived from non-marital assets during the marriage are also considered to be non-marital, unless the parties treat such income as a marital asset.

But, if either party actively manages the premarital assets, for instance by trading stocks and bonds, enhancements in value and appreciation of the assets are considered to be marital in nature and the investment could be treated as a marital asset because of extensive marital time spent on the investment. Chapman vs. Chapman, (FL 4th DCA 2004)

The Courts do not consider “active management” to include moving funds around. If funds in an employer-sponsored retirement plan or investment can be moved by the employee among a variety of investment vehicles without withdrawing any funds, such transfers are not considered to be Aactively managing the assets, and appreciation or income is considered to be non-marital.

Requirements for Permanent Change of a Child’s Primary Residence

Final orders entered by courts are presumed to be correct, and as a result the court=s authority to later modify final orders is restricted. A final order setting a child=s primary residence can be modified, but only when there is extraordinary evidence that the reasons for such a change are accurate. This is so because the initial determination is presumed to have been the correct decision at the time it was made, and only new information is relevant for the court to consider.

Two-Pronged Test

The Supreme Court of Florida adopted a two-pronged test for determining whether primary residency can be changed. The parent seeking modification must first show that circumstances have substantially and materially changed since the original custody determination, and second, that the child=s best interests justify a change in custody. The substantial change must be one that was not reasonably contemplated at the time of the original judgment.

Unanticipated Substantial Change

The Florida Supreme Court held that the two-part substantial change test applies to modification of all custody agreements and made it clear that all modification of custody cases will have the same standard.

The law as established by the Supreme Court suggests that parents should expect certain changes within a child’s lifetime, but only unanticipated changes should form the basis for a modification. If, for example, the parents divorced when the child was only two years old, his life will certainly have changed by the time he is twelve years old. However, the passage of time and the change that it can bring is like to have been anticipated in the original custody arrangements. There must be something more that was not anticipated. Examples may include a change to a parent’s mental health that was not present at the time of the original decision, a new substance addiction that affects a parent’s ability to effectively raise a child, or abuse or neglect from a previously gentle and conscientious parent.

Child’s Best Interests Control, Not Detriment to the Child

Some courts have said that there must be a finding that maintaining the status quo is a detriment to the child. The Florida Supreme Court, however, has rejected that argument, finding that there is no legl support for that requirement. The child’s best interest is what ultimately determines the appropriateness of a request for modification.

Both wanted to be named the primary residential custodian of the child. The trial court determined that the existing arrangement had failed because the Mother refused to abide by the plan, that it was no longer in the child's best interest to continue the rotating custody arrangement, and that there had been a substantial and material change in circumstances since the entry of the final judgment. The trial court named the Father as primary residential parent.

The Mother appealed the decision, and the appeals court created a rule that applied to split rotating custody cases only, allowing a trial court, in such cases where the rotating custody scheme has failed, to redetermine custody as if it were making an initial custody determination. The rationale was that since there was no primary residential custodian to begin with, the court should be able to make a brand new decision without giving the previous decision the presumption of correctness. The appeals court agreed with the trial court that the Father was the more appropriate primary residential parent under that standard, and so the Mother appealed to the Florida Supreme Court.

The Florida Supreme Court held that the two-part substantial change test applies to modification of all custody agreements. Thus, the Court disapproved the new rule applied to only split rotating custody cases, and made it clear that all modification of custody cases will have the same standard. The original trial court ruling that designated the Father as the primary residential parent was approved by the Florida Supreme Court because the Father had met the difficult burden of the two-prong test.

New Law Regarding Electronic Communications Between a Parent and a Child

On October 1, 2007, new law was added to the Florida Statutes (Section 61.13003), entitled “Court-ordered electronic communication between a parent and a child.” There has been very little case law on this subject previously.

The new law directly affects child custody/visitation cases that are pending as of October 1, 2007, in which a court order on the subject of electronic communications between parent and child has not previously been entered. In other words, if there is an order that predates October 1, 2007, dealing with the subject of electronic communications between parent and child, the new statute will not directly affect that order.

However, the new law does provide for relatively simple modification of existing orders which do not prohibit such communication. For instance, parents who are not currently able to have electronic communication (i.e. telephone calls, e-mail, web cams, etc.) with their children due to the reluctance of the other parent to allow it, may be able to get the court to modify the existing order to allow for electronic communication. Ordinarily, modification of a custody order requires that one must prove a significant change in circumstances, but the new statute specifically excludes that requirement for this purpose.

In cases which have not yet had court orders entered on the subject of visitation, the new statute provides some powerful tools to either obtain such rights or to defend against them in appropriate circumstances.

Bottom line: One of the major features of the new law is that a presumption is created that in this day of commonplace use and availability of electronic communications, it is in our children’s best interests to be able to have electronic communications with both parents. Of course, such electronic contact is only a supplement to face-to-face contact and is not intended to replace or serve as a substitute for face-to-face visitation. Each parent should encourage and, if necessary, assist each child in receiving e-mail, text messages, or other forms of electronic communication from the other parent.

Each parent should provide the other with access information necessary to facilitate electronic communication. Each parent should be instructed to notify the other parent of any change in the access information within 7 days of the change.

Finally, cost and availability of electronic communications should be considered by the court, and the cost can be allocated between the parents in appropriate circumstances. The court must also take into account a history of substance abuse or domestic violence, as well as other factors that the court deems important. The fact that such electronic communication is available is not a factor in determining the right to relocate a child, and it is not a factor when considering child support.

If you believe the new statute may affect you, then you should contact your attorney for more information.

The New Putative Father Registry

Beginning May 30, 2003, Florida statutes were amended to legislate the creation of a Putative Father Registry. The registry, which is maintained through the Florida Department of Health’s Office of Vital Statistics, enables men who believe they have fathered a child out of wedlock to register their names and addresses, and other information. They will then be contacted if the child is put up for adoption by the birth mother. By submitting his name, which must be registered any time prior to the birth of the child, the father is consenting to DNA testing to determine paternity and is stating his intent and willingness to support the child.

The registration form requires the putative father to list his name, date of birth, physical description and contact information, and information about the mother, including her name, address, date of birth, physical description, the date and location of conception if known, as well as other information. This information is confidential. The putative father must keep his contact information current to ensure that he is contacted when a proceeding regarding the minor child is filed.

The Putative Father Registry replaces an unpopular adoption law that required unmarried mothers who want to put their babies up for adoption to take out newspaper advertisements identifying themselves and their sexual histories.

The intention of this process is to make the adoption proceedings more certain and avoid potential custody battles that disrupt the lives of the children, the birth mother, and the adoptive families. Under the putative father registry process, the prospective adoptive parents must apply to the Department of Health for a certificate which must be filed with the court handling the adoption. This certificate sets forth whether any putative fathers are listed for the child and if so, the name and contact information for the father. If a name is listed with the registry, the court can determine the putative father’s rights based upon Florida statute if he chooses to exercise them. If not, the adoption can take place in a smooth and prompt manner without potential disruption.

New Laws Relating to Marital Assets

Military Reenlistment Bonuses

The husband reenlisted in the Air Force for another five years and became eligible to receive a bonus under the Aviator Continuation Pay Program. He chose to receive half his bonus in a lump sum and the other half spread out over five years.

Soon thereafter he filed for dissolution of his marriage, expecting that the second half of the reenlistment bonus would not be included in the divorce settlement. However, the trial court awarded half of the entire bonus to the wife as part of equitable distribution. The First District Court found that this was correct since the entire bonus was vested upon reenlistment, which was before the divorce was filed. The court required payment to the wife if and when the husband received each bonus payment, rather than reducing the bonus to present value and requiring immediate payment.

Marcell v. Marcell, 28 FLWD772 (Fla 1st DCS 2003)

Disability Benefits are Non-Marital

A series of opinions in Florida courts from 1989 to 2003 hold that the future value of a disability pension on which a spouse is currently receiving benefits is not a marital asset subject to equitable distribution. However, the income derived from such a pension by its very nature replaces future lost income, and therefore, may be viewed as a source for the award of permanent alimony.

Swedlow v. Swedlow, 28 FLW D750 (Fla 4th DCA 2003)
Bloch v. Bloch, 688 So 2d 945, 947 (Fla 3 DCA 1997)
Hoffner v. Hoffner, 577 So 2d 703, 704 (Fla 4th DCA 1991)
Hanks v. Hanks, 553 So 2d 340 (Fla 4th DCA 1989)

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