Posted by Nydia Streets of Streets Law in Florida Divorce
The intentional waste, depletion or destruction of marital property can be taken into consideration when a court divides assets and debts between divorcing spouses. A spouse who withdraws marital money from a bank account can be held responsible for the amount withdrawn even if the amount is put into an irrevocable trust. This was an issue in the case Collier v. Collier, 1D19-2070 (Fla. 1st DCA July 27, 2022).
The parties were reportedly in a tumultuous marriage which included allegations that the former husband had an affair which led to his mistress and her boyfriend extorting him, that the former husband committed domestic violence against the former wife, and that the former wife forged checks on the former husband’s account. Approximately one year before filing for divorce, the former wife transferred millions of dollars in marital funds into a revocable trust. These funds represented money earned by the couple in their three-decade marriage and their joint veterinarian business. While the divorce proceedings were ongoing, the former wife transferred the funds from the revocable trust into an irrevocable trust. The trial court assigned these funds to the former wife in equitable distribution resulting in her having to pay the former husband an equalizing payment of $1.92 million. The former wife appealed.
The appellate court held “Her transfer of the funds from the revocable trust and other personal accounts to the irrevocable trust effectively turned the marital funds over to a third party and put them out of reach of both the spouses, but particularly beyond the control of the former husband. The question before the trial court was whether those expatriated marital funds should be counted as part of the marital estate and characterized as having been distributed to her. The court resolved that controversy by correctly looking to paragraph (1)(i), which specifies the following relevant factor as a justification for a deviation from a straight equal distribution of marital assets: ‘The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within 2 years prior to the filing of the petition.’ § 61.075(1)(i), Fla. Stat.
The court concluded “The former wife’s primary tack on appeal is to question how the trial court assessed these facts and the former wife’s intent. The former wife claimed she set up an irrevocable charitable trust because she and the former husband had lived below their means, would never be able to spend all their money, and wanted something to survive them. [. . ] The trial court, however, looked at all the evidence and reached a different conclusion. Our review ‘must fully recognize the superior vantage point of the trial judge and should apply the ‘reasonableness’ test to determine whether’ there has been an abuse of discretion. [. . .] Reasonableness means that reasonable people ‘could differ as to the propriety of the action taken by the trial court.’[. . . ] But it also means that ‘there is logic and justification for the result’ reflected in the distribution. Id. In this respect, we also look to ensure that the trial court did not exercise its discretionary power ‘in accordance with whim or caprice.’ Id. The voluminous record points to no whim or caprice in how the trial court approached this component of the distribution. The trial court’s order details how it assessed the former wife’s transfers and the circumstances under which she made them. Candidly, it is hard to see how one reasonably could conclude that the former wife’s transfer of millions of dollars of assets into a trust beyond the reach of both parties in the middle of a divorce proceeding—with the former wife as the only beneficiary while she is alive—was done for any marital purpose. At a minimum, reasonable minds could differ, and that is enough to bring our review to an end.”
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