Enhancement and Efforts
In a recent decision, the Florida Fourth District Court of Appeal held that the appreciation of a wife’s nonmarital advance against inheritance was not a marital asset. The court found that the husband had not met his burden of proving that either party’s “efforts” resulted in enhancing the value and appreciation of the wife’s $830,000 advanced inheritance.
What Is a Marital Asset?
The court’s decision is based on the definition of “marital asset” under Florida law. A marital asset is defined as “any property acquired by either spouse during the marriage, except property acquired by gift, devise, or descent.” In order for the appreciation of a nonmarital asset to be considered a marital asset, the party seeking to do so must prove that the appreciation was the result of the “efforts of either party.”
Research and Selecting vs. Active Trading
In this case, the money in question was invested in mutual funds held in wife’s name, using a buy and hold strategy. The husband argued that the research and selection of the mutual funds were done as a “joint marital venture” which had “contributed” to the $892,687.94 enhancement to the invested funds. However, the court found that such “contribution” was not sufficient to be deemed as “efforts of either party.”
The court noted that the husband’s involvement in the investment decisions was limited to researching and selecting the mutual funds. He did not actively trade the funds or make any other decisions that would have affected their value. As a result, the court concluded that the appreciation of the wife’s nonmarital inheritance was not a marital asset.
This decision is a reminder that the appreciation of a nonmarital asset is not automatically considered a marital asset. In order for the appreciation to be considered marital, the party seeking to do so must prove that the appreciation was the result of the “efforts of either party.”
If you you would like to read the full case, here it is: Naranjo v. Ochoa, July 5, 2023