2024 Changes to Florida’s Equitable Distribution Law

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Effective July 1, 2024, Florida made changes to the law that applies to the equitable distribution of marital assets and liabilities during divorce proceedings. These amendments aim to refine the process and provide clearer guidance for identifying, valuing and distributing marital assets and liabilities. Here are the some of the notable changes and their implications:

Determining “Good Cause” for Interim Order

The court may enter an interim partial distribution of assets during the divorce proceedings if it determines that there is good cause and extraordinary circumstances that justify the interim distribution. Marital assets are identified and given a value, and then could be distributed in the middle of the divorce proceedings, as opposed to typical equitable distribution that usually takes place at the conclusion of the case, if there is a need for funds to:

  • Avoid the loss of an asset like a home or housing, a default by either party of a marital debt, or the levy of a tax lien
  • Pay an expense for a dependent child, if nonpayment would be detrimental to the child
  • Pay attorneys’ fees, court costs, or other suit money for maintaining or defending the parties’ position in the divorce
  • Or any other circumstance that would justify the entry of an order granting an interim partial equitable distribution.

Prior to the amendment, there was no guidance in the applicable statute that explained what might constitute extraordinary circumstances justifying an interim distribution. The new law helps provide guidance as to when it might be appropriate to seek such relief in a divorce.

Interspousal Gifts During Marriage

Per the amendment, a gift of real property from one spouse to another must be agreed upon in writing, in compliance with the same Florida law that applies to the transfer of property to any third party. Prior to this amendment, it was not explicitly stated that real property needed to be exchanged from one spouse to another in a written agreement with two subscribing witnesses as is typically required for the conveyance of real property in Florida. In fact, gifts of real property had been found in the marriage context in one instance where the owning spouse sent the other spouse an anniversary card with a picture of the real property in it even though the property was acquired with the owning spouse’s nonmarital funds and was kept in his name alone. The new statute should provide guidance on what is required to effectuate a conversion of nonmarital real property to a marital asset going forward.

Marital Interests in a Closely Held Business

Legislation recognized the need for additional clarity of valuing marital assets in a closely held business. The court may determine the value of the marital interests in a closely held business with consideration of the following statutory factors:

  • The standard value for the closely held business is the fair market value, which is the amount a willing and able buyer would pay to a willing and able seller for the property being valued. This provides guidance for the value to be placed on closely held businesses.
  • Enterprise goodwill is the value of the closely held business separate and distinct from the value placed on the continued involvement with the business of the owner spouse. While personal goodwill is not a marital asset, enterprise goodwill is a marital asset that the court can value and distribute.
  • The court must consider if a non-compete or similar agreement would be required in the sale of the owner spouse of the business, but this does not preclude the court from determining that there is enterprise goodwill over and above the owner spouse’s personal goodwill.

It is clear that the legislature aimed to provide some guidance in dissolution cases for the identifying of marital and nonmarital assets, as well as placing values on marital assets for the purposes of achieving an equitable distribution in the divorce proceedings. Understanding the value of the marital estate is critical in achieving a fair result in the dissolution process. At Johnson Ritchey Family Law, we engage in thorough discovery and extensive analysis of the marital estate and the parties’ financial circumstances to help our clients reach a fair and reasonable resolution of their divorce matter as efficiently as possible. Call our office to learn more if you have a family law matter we can assist you with.