3 Commingling Theories Recognized by Florida Law During Equitable Distribution
If you are familiar with Florida’s property division laws, you probably know that the classification of assets plays a crucial role in a divorce. Under Florida’s equitable distribution law, courts recognize two categories of property: marital and separate.
While marital property – the assets acquired during the marriage – is subject to equitable distribution in Florida, separate property is not divided between the parties. In Florida, various types of non-marital property include:
- Assets owned by one spouse before the marriage
- Items acquired as a gift during the marriage
- Assets and property inherited by one spouse during the marriage
However, separate property may lose its status when it is commingled with marital property. Florida law recognizes three types of commingling:
- Strict Transmutation
- The Tracing Approach
- Intent of Parties
Commingling Theory #1: Strict Transmutation
When you mix your separate and marital property, your non-marital assets can go from being separate to being marital. The underlying reasoning is that money is fungible.
Per the theory of “strict transmutation,” fungible property is commercially interchangeable with other types of property of the same kind. An example of strict transmutation would be a spouse selling their separate property and placing the proceeds from the sale into a joint account.
Commingling Theory #2: The Tracing Approach
If your separate property was commingled with marital property, you might still be able to trace the assets back to before your marital and non-marital assets were commingled. For example, if you purchased a home before getting married, you may still be able to get more equity in the home. However, this would require you to demonstrate evidence to prove that the home was purchased prior to the marriage.
Also, if you had a significant amount of money in your sole bank account before the marriage, but then used it as a joint bank account after the marriage, you may still be able to keep the funds that were rightfully yours before you tied the knot.
Commingling Theory #3: Intent of Parties
Typically, Florida courts employ the “intent of parties” theory when determining whether assets inherited by either spouse are separate or marital property. In order to classify inherited assets, the court will consider the intent of the spouse who received the inheritance. Let’s review two examples:
- After receiving the inheritance, the recipient spouse puts the funds into a separate bank account; or
- The recipient spouse uses the funds to pay off the mortgage.
In the first example, the funds will most likely be classified as separate property. In the second example, however, the inheritance is likely to be classified as marital property subject to equitable distribution.
As a rule of thumb, if you want your inheritance or gifts to remain separate property, you should avoid commingling or mixing them with joint funds. In order to ensure that your separate property does not lose its status and does not go to your soon-to-be-former spouse, speak with an Orlando property distribution attorney. Here at the Law Offices of Steve W. Marsee, P.A., our knowledgeable attorney will explain your legal rights and ensure that your separate property is not commingled with marital assets. Call at 407-521-7171 to receive a case review.