Florida is an equitable distribution jurisdiction, which that means marital property is divided fairly though not necessarily equally, between spouses in the event of a divorce. However, separate property may not be divided between divorcing spouses as it is considered the individual possession of one spouse and is generally exempt from the equitable distribution process.
Yet, separate property may sometimes become marital property through transmutation. This is where assets initially classified as separate are combined or treated in such a way that they lose their separate status and become subject to division during divorce proceedings. Transmutation happens in several ways, including the following.
Formalized marital agreements
If spouses choose to enter into formalized marital agreements such as postnuptial agreements, they have the opportunity to transmute separate property into marital property. Through these agreements, they may explicitly agree to convert certain separate assets into marital property, subjecting them to equitable distribution in the event of divorce.
Commingling of assets
Separate assets may also be considered marital property through transmutation when they become commingled with marital assets. This occurs when separate property such as inheritance or pre-marital assets is mixed or combined with marital assets, blurring the distinction between the two. For example, if funds from an inheritance are deposited into a joint bank account shared by both spouses or if separate property is used to purchase marital assets like a family home or a vehicle titled jointly, it can lead to commingling.
Gifting
If one spouse gifts their separate property to the other spouse, it may lose its separate status and become marital property. The act of gifting demonstrates an intention to share ownership of the property, thereby potentially transmuting it into marital property subject to division in a divorce.
It is important to seek legal guidance to help understand how transmutation of separate property may affect the division of assets and property rights during divorce proceedings in Florida if you and your spouse are going your separate ways. Otherwise, you could unintentionally accept unfair settlement terms uninformed by the true status of assets belonging to you and your spouse.
