Posted by Nydia Streets of Streets Law in Florida Divorce

There may be certain tax liability associated with assets distributed to each spouse in a Florida divorce. This tax liability affects the value of assets being awarded in equitable distribution. That is why Florida law requires that such liability be taken into consideration when distributing assets and debts to each spouse. This issue arose in the case Sumlin v. Sumlin, 5D18-2701 (Fla. 5th DCA January 10, 2020).

The parties were in a moderate term marriage and had no children. Significant marital assets were accumulated during the length of the marriage including retirement accounts for both spouses. After a trial, the court adopted the former wife’s proposed equitable distribution plan which resulted in the award of an equalizing payment to her. The former husband appealed this plan, arguing (1) the court erred when it considered the tax consequences to the former wife’s pension, but failed to consider the same for his retirement account and (2) the court erred when it under calculated the equitable distribution credit due to the former wife for marital money she withdrew from her retirement account to pay for a non-marital property.

On both points, the appellate court agreed with the former husband, holding (1) “he trial court should consider the effect of the burden so that neither party gains an unfair advantage or suffers an unfair burden because he or she receives a particular asset in distribution,” and (2) “Because the former wife testified that she utilized the full marital portion [withdrawn from her retirement account to pay for her non-marital property], the entire $57,459 marital value of the 401(k) withdrawal should have been allocated to the former wife.” The case was therefore remanded for the trial court to reconsider the equitable distribution scheme.

Equitable distribution is an issue in most Florida divorce cases. To maximize your fair share of the value of the marital estate, it is important that you understand your rights and entitlements under Florida divorce law. Schedule a consultation with a Miami divorce lawyer to understand the nuances of your case.