Video answers from Jacksonville family law attorney A. James Mullaney about equitable distribution issues in Florida family law.
What happens to an IRA or 401k in a divorce in Florida?
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An IRA or 401(k) are retirement accounts that offer the benefit of deferring income tax to the future. Typically, these accounts are marital assets to the extent they were created or contributed to during the marriage. Generally, three situations arise involving these types of retirement accounts. The first situation is when the account is created and contributed to during the marriage. In this situation, the entire account is marital property and can be divided between the parties by the judge. The second situation is when a spouse has the retirement account prior to the marriage and does not add to it during the marriage. In this situation, the account is not marital property and it will not be divided between the parties by the judge. The third situation is when a spouse has the retirement account prior to the marriage and contributes to the account during the marriage. In this situation, only the portion of the account that was created during the marriage is considered marital property subject to division by the court. For example, suppose that just prior to your marriage, you have an IRA with $50,000 in it. While married, you continue contributing to the account. When you get divorced, there is now $75,000 in the account, In this situation, only $25,000 is marital property since it was added to the account during the marriage. Often each account is not divided, even if they are all marital accounts. The spouses may still be left with roughly equivalent values in their retirement accounts, but this can sometimes be accomplished by making a single transfer instead of multiple transfers.
What happens to joint debts when we divorce in Florida?
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A joint debt is a debt that you and your spouse are both responsible for. Joint debts commonly, but not always, include mortgages, car loans, and credit card debts. A divorce will not effect your obligation to a bank, creditor or other lender. Typically a Final Judgment does one of two things to a joint debt. First, the Final Judgment could require that one spouse be fully responsible for the entire joint debt. Problems occur when the spouse that is required to pay a joint debt by the Final Judgment fails to so so. The creditor will seek payment from either or both parties. The other alternative is where the Final Judgment requires the spouses to each pay a share of the joint debt. In this situation, problems arise when one of the spouses fail to pay their share of the debt. It is likely that your credit will be impacted when a joint debt goes unpaid. So far as the credit bureaus are concerned, it does not matter that the judge has ordered your ex to pay all or a portion of a joint debt. To minimize the impact of this potential problem it is helpful to have an indemnification or hold harmless clause in your Final Judgment. This would allow you to recover an over payment from your ex by suing them.
In Florida, can we decide ourselves how to divide our property?
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Absolutely. In fact, the court system encourages divorcing couples to decide themselves how property gets divided. Since both parties in a marriage are adults, they are free to agree to any type of division of their assets and debts. You are free to agree to what the judge might think is a great deal or a terrible deal. The judge will not second guess your agreement so long as the agreement was made in the absence of fraud, duress or coercion.
What is the difference between marital and non-marital property in Florida?
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If you are married, everything both spouses own is either marital property or non-marital property. In general, property you acquire before you get married is considered non-marital property. Property you acquire while married is marital property. The importance of the difference is that non-marital property is not included in the roughly 50/50 split of assets that you can usually expect in a divorce case. You get to take out of the marriage the property that you brought into the marriage. Of course, there are exceptions to this general rule. There are ways that once non-marital property can become marital property and vice versa. You should absolutely consult with a lawyer if you and your spouse disagree about what is marital property and what is not.