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Increase In Value Of Premarital Stock In Husband’s Employer Can Be Marital or Non-marital

February 17, 2016 by  
Filed under Uncategorized

 

 

In Witt-Bahls v. Bahls the Fourth District Court of Appeals for the State of Florida considered whether the increase on the value of stock purchased by the Husband prior to the marriage in his employer should be considered marital or premarital.  The Court ruled that the facts of the case before it did not warrant the appreciation in the value of the stock being considered a marital asset because the appreciation in the value of the stock was not due to the Husband’s active effort.

“Marital assets are subject to distribution between the formerly married parties. §61.075(1), Fla. Stat. (2015).  Marital assets include “[t]he enhancement in value and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both.” Id. § 61.705(6)(a)1.b.

The enhanced value of stock from a company for which the owning spouse works can be considered a marital asset and be subject to equitable distribution. See, e.g., Pagano v. Pagano, 665 So. 2d 370, 372 (Fla. 4th DCA 1996). However, it can also be a nonmarital asset if marital effort or assets are not used in so enhancing its value. See, e.g., Oxley v. Oxley, 695 So. 2d 364, 367-68 (Fla. 4th DCA 1997). The question raised in this appeal is whether the husband exerted the sort of “effort” required to move the appreciation value from the nonmarital category to the marital one.

The details of our prior case law make the answer to that question quickly apparent. In Robbie v. Robbie, 654 So. 2d 616 (Fla. 4th DCA 1995), we held that the appreciation of stock owned by the general manager of the Miami Dolphins – a business enterprise run largely by the husband’s family-was a marital asset. Id. at 617.  Similarly, in Pagano, we held the same with regards to the appreciation of stock owned by the president and operations manager of a family wholesale plumbing supply business. Pagano, 665 So. 2d at 371-72. In Minton v. Minton, 698 So. 2d 936 (Fla. 4th DCA 1997), we again held that the appreciation of stock from a family-owned business for which the husband was chief operating officer of two subsidiaries and vice president of two others was a marital asset. Id. at 369-97.  The pattern here is clear.

The case at bar demonstrates neither of the key features in the cases described.  Kiewit is not a business enterprise owned or run by the husband’s family. Nor was the husband in a position of significant authority in the company. Although he had some supervisory responsibility, the most reasonable description of his position would seem to be “middle manager”.

As was the case in Oxley, we today avoid a holding that “would effectively make all spouses partners in the increased value of all nonmarital assets that does not result from passive appreciation.” Oxley, 695 So. 2d at 368. Instead, we hold that, because the wife failed to establish that the husband occupied a significant management role in Kiewit, the appreciation of the Kiewit stock was not due to active effort and is therefore not a marital asset.”

If you need to talk to an attorney about your divorce, equitable distribution, and what the law may consider marital or non-marital please contact us to arrange a consultation.

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