The Division of Property and Assets statute in Florida classifies property as marital assets and nonmarital assets. A divorce court divides marital assets between the parties. However, nonmarital assets are retained by their owner. When a nonmarital asset is enhanced in value by marital labor or by marital money, the enhancement in value itself becomes a marital asset. In a recently decided case captioned Higgins v. Musso, the wife received a home as part of her divorce from her first husband. She borrowed money from her parents to buy out her first husband’s interest in the property. The wife’s mother filed a lien on the property which proved that the wife borrowed money to purchase and renovate the home. The wife also utilized marital funds to fix the property after it was damaged by two hurricanes. The wife painted the ceiling, installed new carpet, and put in a new roof. Insurance proceeds paid for some of the repairs. The parties took out a line of credit to build the marital home and took out a loan to repay the line of credit. The home sold for over a million dollars. The sale proceeds were deposited into a bank account. The trial court ruled that the entire proceeds from the sale of the home were marital assets.
The Florida Court of Appeal reversed the trial court and ruled that the expenditure of marital funds to improve a nonmarital asset does make the entire asset a marital asset. Only the increase in the value of the asset is considered to be a marital asset. The party that asserts that they are entitled to receive the benefit of the increase in value of the home has the burden to prove that an enhancement to the value of the home occurred. Once that party proves that marital funds or marital labor were used to enhance the value of the property, the other party has the burden to show that a portion of the increased value should not be included in the division of property and assets. The trial court must determine the amount of the enhancement and must determine which part of the enhancement was attributable to marital money or marital labor. The court should look at the value of the property prior to the enhancements and the value of the property after the enhancements were made. The court should then determine the amount of the appreciation that is attributable to marital labor or and the amount of the appreciation that is attributable to marital money.