WHY YOU NEED A PRENUPTIAL AGREEMENT NOW MORE THAN EVER

Florida law allows a spouse to acquire an interest in your premarital home simply by marriage and the passage of time. This is not something most people are aware of until it is time for divorce. The law in particular that makes this happen is found in Florida Statutes section 61.075(6)(a)(1). This is known as the coverture fraction, and it allows your spouse to claim an interest in your premarital (purchased prior to the marriage) home based upon a complex calculation that takes into account the increase in value of the home, the paying down of the mortgage, the passive and active appreciation in value of the home. The law requires that the court shall (must) apply the formula unless a party shows circumstances sufficient to establish that application of the formula would be inequitable under the facts presented.

One way to prevent this from happening is to have a well drafted prenuptial agreement before getting married, and in the agreement specify that both spouses waive any interest in the premarital real property of the other, including any increase in value, passive or active, as well as payment of any mortgage or note. Without the protection of a prenuptial agreement, you may end up owing your spouse a substantial amount of money at the time of divorce based upon your home increasing in value or paying down the mortgage, even if the home is bought by you prior to the marriage, and even if your spouse is not added to the deed or title.

The relevant section of the Florida Statutes section 61.075(6)(a)(1) states “Marital assets and liabilities” include: a. Assets acquired and liabilities incurred during the marriage, individually by either spouse or jointly by them. b. The enhancement in value and appreciation of nonmarital assets resulting 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. c. The paydown of principal of a note and mortgage secured by nonmarital real property and a portion of any passive appreciation in the property, if the note and mortgage secured by the property are paid down from marital funds during the marriage. The portion of passive appreciation in the property characterized as marital and subject to equitable distribution is determined by multiplying a coverture fraction by the passive appreciation in the property during the marriage.
(I) The passive appreciation is determined by subtracting the value of the property on the date of the marriage or the date of acquisition of the property, whichever is later, from the value of the property on the valuation date in the dissolution action, less any active appreciation of the property during the marriage as described in sub-subparagraph b., and less any additional encumbrances secured by the property during the marriage in excess of the first note and mortgage on which principal is paid from marital funds.
(II) The coverture fraction must consist of a numerator, defined as the total payment of principal from marital funds of all notes and mortgages secured by the property during the marriage, and a denominator, defined as the value of the subject real property on the date of the marriage, the date of acquisition of the property, or the date the property was encumbered by the first note and mortgage on which principal was paid from marital funds, whichever is later.
(III) The passive appreciation must be multiplied by the coverture fraction to determine the marital portion of the passive appreciation of the property.
(IV) The total marital portion of the property consists of the marital portion of the passive appreciation, the mortgage principal paid during the marriage from marital funds, and any active appreciation of the property during the marriage as described in sub-subparagraph b., not to exceed the total net equity in the property at the date of valuation.
(V) The court shall apply the formula specified in this subparagraph unless a party shows circumstances sufficient to establish that application of the formula would be inequitable under the facts presented.

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