Can the Equity in My Home Be Considered a “Marital Asset” Even if I Bought the Property Before Marriage?

One of the key tasks in a divorce case is the division of any marital assets. A “marital asset” refers to any property acquired during the marriage by either spouse. Conversely, this definition generally excludes any property acquired by either spouse before marriage.

So let’s say you bought a car several years before getting married. That car is a non-marital asset and will remain so during your marriage, unless you make an explicit agreement with your spouse to treat the vehicle as marital property. If there is no such agreement and you later divorce, the car is not subject to equitable distribution as it is still non-marital property.

Court: Use of Marital Funds to Pay Down Husband’s Mortgage Gave Wife Equity in “Enhanced” Value

But there are situations where an asset itself may be non-marital property, but an increase in its value may be considered a marital asset. To illustrate what this means, here is a recent decision from the Florida Second District Court of Appeals, Nathey v. Nathey. In this case, the former husband had built a home prior to his marriage. The home remained in his sole name all throughout the marriage. However, the husband and wife used marital funds to pay down the mortgage on the house, as well as a subsequent line of home equity credit.

At the couple’s divorce trial, the judge ruled the house itself should be considered a marital asset. Based on the equity in the house at the time–about $235,000–the judge awarded the former wife $100,000 to represent her share of the property. The former husband appealed that decision, arguing the home was never a marital asset.

The Second District agreed with the husband on that point. But it went on to note that even though the house was properly classified as a non-marital asset, the “enhancement in value and appreciation” of the property through the use of the couple’s funds was itself a marital asset. Or put another way, the “increase in equity due to the use of marital funds to pay down a mortgage balance is a marital asset subject to equitable distribution.”

The Second District therefore returned the case to the trial court with instructions to recalculate the “amount by which marital funds reduced the indebtedness on the home.” The former wife would then be entitled to her share of this amount.

Speak with a Boca Raton Divorce Attorney Today

The basic takeaway from this case is that if you and your spouse use common “marital” funds to pay down the debt on any non-marital property, a court must take that into account when making an equitable distribution of property during a divorce. This is just one of many issues you will need to consider with respect to property. A qualified Boca Raton divorce lawyer can provide you with more specific advice tailored to your situation. Contact WiseLieberman, PLLC, at 561-488-7788 today, if you need to speak with someone right away.

Sources:

flsenate.gov/Laws/Statutes/2018/61.075

scholar.google.com/scholar_case?case=11163436897308809253

https://www.wiselieberman.com/who-claims-your-children-as-tax-dependents-after-a-divorce/