Florida Divorce: Am I Responsible for My Spouse's Student Loans?

For many people, student loan debt is one of the largest liabilities they incur in life.  If you pursue graduate education, this debt can potentially exceed the mortgage on your home.  Most people justify taking out student loans because they expect to receive a lifetime of enhanced earnings and opportunities.

As a general rule, Florida law provides that student loans incurred during the marriage are marital liabilities.  See Rogers v. Rogers, 12 So. 3d 288 (Fla. 2d DCA 2009); see also Smith v. Smith, 934 So. 2d 636 (Fla. 2d DCA 2006); Adams v. Cook, 969 So. 2d 1185 (Fla. 5th DCA 2007) (trial court erred by finding that wife's law school loans were non-marital); Banton v. Parker-Banton, 756 So. 2d 155 (Fla. 4th DCA 2000) (reversing equitable distribution scheme where court's treatment of student loans as marital or non-marital appeared arbitrary).

In other words, if you get a divorce, the court will presumptively find that student loans incurred during the marriage are marital, and each party will likely be responsible for one-half of any such loans (or, the loans will offset other assets and liabilities).

This allocation of debt strikes many people as inherently unfair.  The allocation would be justified if both parties were going to share in the enhanced earnings.  But, it is inequitable to impose such an enormous financial burden on a party who will receive no associated long-term benefit from the debt.

Imagine this scenario: two recent college graduates decide to get married.  The wife takes a job working full-time as a nurse and earning $60,000 annually, while the husband decides to attend medical school. After four years, they divorce. The wife now finds herself straddled with as much as $150,000 in student loan debt, which could consume a third of her income for the next decade.

Florida courts have held that, in the absence of specific findings supporting the unequal distribution of student loan debt, the liability must be equally distributed between the parties.  See, e.g., Rogers, 12 So. 3d at 291.  The fact that one party will not receive any benefit from the other party's education due to the divorce is not a factor to be considered when allocating liability for student loan debt.  Id.; see also Smith, 934 So. 2d at 641 (that one party will not receive any benefit of the other party's enhanced income after the dissolution is not a factor for allocating student loan debt).  Thus, absent some other justification for an unequal distribution, controlling case law forbids a trial court from awarding student loan debt incurred during the marriage solely to one party or the other.

The holding in Rogers essentially takes the single most compelling reason for an unequal distribution of the student loan debt (i.e., that the party who incurred the debt is going to take all the benefit and only half of the burden) and flushes it down the toilet.  My personal view is that Rogers was wrongly decided.  The Legislature should consider amending section 61.075, Florida Statutes, to account for the inequity presented by Rogers.

A majority of other states reject the notion that student loan debt should be divided equally.  The Connecticut Supreme Court dealt with a similar scenario in Simmons v. Simmons, 244 Conn. 158 (Conn. 1998).  In Simmons, the wife worked as a nurse and supported the family while the husband attended medical school.  In the third year of husband's surgical residency, he filed for divorce.  The wife asked for the value of his medical degree (valued at $3.1 million) to be allocated as a marital asset.  The Connecticut Supreme Court concurred with the vast majority of states and held that the value of the medical degree was not subject to equitable distribution because, among other reasons, the income from the medical degree was merely an expectancy, not a presently existing property right.  Id. at 168-69.  After considering the equities of the "working spouse/student spouse syndrome," however, the court allocated the medical student loan debt solely to the husband and awarded nominal alimony to the wife.  Id.

Similarly, in Tasker v. Tasker, 395 N.W.2d 100, 105 (Minn. App. 1986), the Minnesota Court of Appeals allocated student loan debt solely to the parent that incurred the debt, even though that spouse was unemployed.  But see Roberts v. Roberts, 670 N.E.2d 72 (Ind. Ct. App. 1996) (although husband's degree was not marital property, his student loan debt was still a marital obligation).

In some cases, student loans are used to provide support for the family while the student spouse is attending classes.  To the extent that the loans were used to pay marital living expenses, it is proper to treat the debt as marital and allocate it accordingly.  See, e.g., Forristall v. Forristall, 831 P.2d 1017 (Okla. Ct. App. 1992) (husband's student loans were marital because his medical education was a joint goal of the marriage and loan proceeds were used in part to support the family); McConathy v. McConathy, 632 So. 2d 1200, 1206-07 (La. Ct. App. 1994) (student loan debt was marital because it was incurred with the expectation that it would benefit the marriage, and part of loan proceeds were used to support the family); Hicks v. Hicks, 969 S.W.2d 840 (Mo. Ct. App. 1998) (husband ordered to pay one-half of wife's student loans, which were used to buy groceries, pay bills, and provide daycare while the wife was in school).

Perhaps Florida courts (or lawmakers) should look to how Colorado courts have allocated student loan debt.  See, e.g., In re Marriage of Speirs, 956 P.2d 622 (Colo. Ct. App. 1997).  In Speirs, the Colorado Supreme Court recognized that:

a spouse's pursuit of higher education during marriage represents a common goal of both parties to increase their economic standing. Both marital partners may expect to share in the rewards of such education, and it is not unusual for one spouse to assist the other in the accomplishment of that goal by providing a level of financial support as well as assuming responsibility for the tasks of everyday life. It is also a common reality that student loans are obtained not only to finance tuition costs, but also to provide for the general support of the family while the spouse attends school.

See 956 P.2d at 624.  Based on the foregoing, the Speirs court held that student loans should be treated as marital liabilities, but explained that:

treating student loans contracted during marriage as marital debts in no way forecloses the trial court's ability to award such debts to the spouse actually incurring them. Rather, removing such debts from the class of separate liabilities enhances the trial court's ability to enter the most equitable distribution of the marital estate based upon all of the circumstances affecting the parties' situation at the time of dissolution.

Id.  In Speirs, the trial court found that the student loans were marital.  Id. at 625.  The trial court allocated solely to the wife the portion of her student loans that were used to pay wife's law school tuition.  Id.  And, the trial court allocated equally to both parties the portion of wife's student loans that were used to pay marital expenses.  Id.  Both parties appealed, with the wife arguing that the entire loan obligation should have been marital and the husband arguing that none of the liability for her student loans should have been allocated to him.  Id.  The Colorado Supreme Court rejected the contentions of both parties and affirmed the trial court's equitable distribution of the wife's student loans.  Id.

In Florida trial courts, parties and family law attorneys must recognize that Rogers and Smith continue to govern equitable distribution of student loan debt incurred during the marriage.

In Florida, as in almost all other states, professional degrees and licenses are not assets that are subject to equitable distribution.  See, e.g., Joachim v. Joachim, 942 So. 2d 3 (Fla. 5th DCA 2006) (holding that a professional educations and licenses are not assets subject to equitable distribution). But, ironically, the debt used to acquire these non-marital assets is marital.

Rogers and Smith both reject any notion that trial courts can or should effectuate an unequal distribution of student loan debt based on the fact that one spouse will gain substantially all of the benefit of a non-marital asset, namely that spouse's enhanced education and income potential.  This creates a somewhat unique problem because debt usually follows the asset for which it was incurred.

When distributing assets and liabilities, court are supposed to be able to consider any "factors necessary to do equity and justice between the parties." See Fla. Stat. § 61.075(j).  Rogers and Smith thus appear to conflict with section 61.075(j), Florida Statutes.  If trial courts cannot allocate debt based on which party stands to benefit from the debt, perhaps an unequal distribution might be justified under one of the following bases:

(b) The economic circumstances of the parties.
(c) The duration of the marriage.
(e) The contribution of one spouse to the personal career or educational opportunity of the other spouse.
(g) The contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

See Fla. Stat. § 61.075.

Alternatively, parties may look to an alimony award to fight this inequity.  In some instances, courts are authorized to use lump sum alimony to "balance inequities resulting from property disposition in the final judgment." See Banton, 756 So. 2d at 156.  For a lump sum alimony award, however, the spouse's ability to pay cannot not be based on earnings to be accumulated in the future. See, e.g., Hughes v. Hughes, 438 So. 2d 146 (Fla. 3d DCA 1983).  One potential alternative solution for working spouse/student spouse dilemma might be to award nominal alimony until the "student" obtains his or her professional degree or license.

Regardless of how it is accomplished, our lawmakers or courts should find some solution to the problem of saddling one spouse with the other's student loan debt, especially in connection with a short-term marriage.

If you have questions about your rights in a divorce or family law matter, please contact an experienced Tampa family law attorney.

By Richard J. Mockler

Equitable Distribution: The Marital Interest in a Non-Marital Property or Premarital Home

As couples marry later in life or have second marriages, one or both of the parties already owns a home. As a result, in many divorce cases, the parties live in a home owned solely by one of the parties.  In these cases, a common question is whether the non-owner spouse has any interest in the home.

Equitable distribution in Florida is governed by section 61.075, Florida Statutes.  When dealing with the division of a couple's assets and liabilities, the first step in the analysis is for the court to set aside any non-marital assets and liabilities.  The court is then tasked with distributing the marital assets and liabilities between the parties, with the premise that such assets and liabilities should be divided equally.

Under section 61.075(6)(a)(1)(b), Florida Statutes, marital assets are defined to include the "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."

If marital funds are used to enhance a non-marital asset, the value the enhancement is therefore marital. Accordingly, if the parties built a home on non-marital property, the enhanced value relating to the structure is marital.  The relevant statutory language also clearly provides that, under certain circumstances, the appreciation of a non-marital asset is indeed a marital asset. See Kaaa v. Kaaa, 58 So. 3d 867, 870 (Fla. 2010).  In particular, the passive appreciation of a non-marital asset, such as a home, is properly considered a marital asset where marital funds or the efforts of either party contributed to the appreciation.  Id.  The Florida Supreme Court has held that, if one party uses marital funds to pay the mortgage on a non-marital property and the non-owner spouse makes "contributions" to the property, some portion of the passive appreciation on the home is subject to equitable distribution.  Id. at 871.  

The Florida Supreme Court adopted the following methodology for determining how the appreciated value is properly allocated between the parties:

If a separate asset is unencumbered and no marital funds are used to finance its acquisition, improvement, or maintenance, no portion of its value should ordinarily be included in the marital estate, absent improvements effected by marital labor. If an asset is financed entirely by borrowed money which marital funds repay, the entire asset should be included in the marital estate. In general, in the absence of improvements, the portion of the appreciated value of a separate asset which should be treated as a marital asset will be the same as the fraction calculated by dividing the indebtedness with which the asset was encumbered at the time of the marriage by the value of the asset at the time of the marriage. If, for example, one party brings to the marriage an asset in which he or she has an equity of fifty percent, the other half of which is financed by marital funds, half the appreciated value at the time of the petition for dissolution was filed, § 61.075(5)(a) 2, Fla. Stat. (1993), should be included as a marital asset. The value of this marital asset should be reduced, however, by the unpaid indebtedness marital funds were used to service.

See Kaaa, 58 So. 3d at 872.

Thus, when non-marital real property is encumbered by a mortgage that was paid by marital funds, a pro-rata portion of the passive appreciation in the property's value that accrues during the course of the marriage is a marital asset subject to equitable distribution.

If you have questions concerning your Florida equitable distribution or property division rights, please contact an experienced Tampa family law attorney.

By Richard Mockler

Tampa Family Law Mediators Directory

We recently developed a new website that serves as a directory of Tampa family law mediators. 

Many attorneys tend to mediate with the same proven mediators. But, a scheduling conflict or other issue circumstances may require you to seek an alternative. Provide this link to your staff or opposing counsel to help select a qualified mediator who can help resolve your case.

If you mediate cases in Tampa and you would like to appear on the site (no charge), please don't hesitate to contact me.

TampaFamilyMediators.com

Florida Law on Morality, Adultery, Homosexuality, and Child Custody

Under Florida law, Courts are required to make all parenting decisions based on the child's best interests. The Florida legislature has set out 20 factors for courts to consider when establishing a parenting plan or making a parenting or custody determination.  See Fla. Stat. § 61.13(3).

The parenting factors address many issues, such as which parent is more willing to share time, handles more of the parenting responsibilities, acts on the interest of the child, has been caring for the child, demonstrates knowledge of the child's circumstances, provides a consistent routine, communicates with the other parent, avoids violence, and maintains a home free of substance abuse. See Fla. Stat. § 61.13(3).  These considerations are largely non-controversial.

Courts are also required to consider the "moral fitness of the parents."  See Fla. Stat. § 61.13(3)(f).  This factor is extremely subjective, and it does not frequently play a significant role in custody determinations.

For the trial court to consider a parent’s "moral fitness" in connection with establishing a parenting plan or determining parental responsibility, the conduct in question must have a “direct effect or impact” upon the minor child.  See Smith v. Smith, 39 So. 3d 458, 460 (Fla. 2d DCA 2010).  Moreover, the connection between the conduct and the harm to the child must have an evidentiary basis.  See id. (quoting Jacoby v. Jacoby, 763 So.2d 410, 413 (Fla. 2d DCA 2000)); see also Willis v. Willis, 818 So. 2d 530, 533 (Fla. 2d DCA 2002).   “A connection between the actions of the parent and the harm to the child...cannot be assumed.”  See Packard v. Packard, 697 So. 2d 1292, 1293 (Fla. 1st DCA 1997).

Further, when a parent's alleged adultery is at issue, the act of adultery should not be taken into consideration in determining custody unless the trial court finds that the adultery has a direct bearing on the child’s welfare. See Smith, 39 So. 3d at 461; Dinkel v. Dinkel, 322 So. 2d 22, 24 (Fla. 1975); Willis, 818 So. 2d at 533. Marital misconduct is not necessarily an appropriate standard for determining the best interests of the child.  See Farrow v. Farrow, 263 So. 2d 588, 590 (Fla. 2d DCA 1972); McAnespie v. McAnespie, 200 So. 2d 606, 609 (Fla. 2d DCA 1967).  Even if a parent commits adultery, it may be better for that parent to have custody of the child.  See Willis, 818 So. 2d at 533.  “Adultery may or may not have any direct bearing on the welfare of a child of tender years.”  Id.  The mere possibility of a negative impact on the child is not sufficient.  See Willis, 818 So. 2d at 533.

Florida courts have also rejected any notion that the potential of societal disapproval for immoral behavior may be used as a justification for favoring one parent in a custody case.  See Lofton v. Sec’y. of the Dept. of Children and Family Services, 377 F.3d 1275, 1300 (Anderson, J., dissenting from the Denial of Rehearing En Banc) (citing Maradie v. Maradie, 680 So. 2d 538 (Fla. 1st DCA 1996)).

In Maradie v. Maradie, 680 So. 2d 538, 540 (Fla. 1st DCA 1996), the parties presented considerable testimony about the sexual conduct of each parent and its relation to the parent's "moral fitness" under section 61.13(3)(f), Florida Statutes.  Among other things, the former husband presented evidence that his former wife was bisexual and had been involved in lesbian relationships.  Id.  The court-appointed psychologist testified, however, that there was no evidence that the former wife's sexual orientation impaired her parenting ability or had negatively impacted the child.  Id.  Nevertheless, the trial court awarded custody of the parties' daughter to the former husband.  Id.  The trial court based its decision on the following reasoning:

The testimony reveals that Mrs. Maradie, with her homosexual lover, spend nights and sleep together in the same bed, kiss, hold hands and speak in terms of endearment in front of the child. The possibility of negative impact on the child, especially as she grows older and reaches her late pre-teen and early teen years, is considerable.  The Court does not have to have expert evidence to reach this conclusion, but can take judicial notice that a homosexual environment is not a traditional home environment, and can adversely affect a child. To say that this cannot be considered until there is actual proof that it has occurred is asking the Court to abdicate its common sense and responsible decision-making endeavors.

Maradie, 680 So. 2d at 540-41.  Florida's First District Court of Appeal explained that the trial court was permitted to consider a parent's sexual conduct in determining the parent's moral fitness under section 61.13(3)(f).  The trial court, however, was required to focus on whether the parent's behavior had a direct impact on the welfare of the child.  Id. at 541.  The trial court certainly was not permitted to take "judicial notice" of the "fact" that a homosexual environment is not traditional and can adversely affect a child.  Id. at 541.

In Ward v. Ward, 742 So. 2d 250, 254 (Fla. 1st DCA 1996), Florida's First District Court of Appeal again clarified that the sexual orientation of the custodial parent does not, by itself, justify a custody change.  In Ward, the trial court changed custody from the former wife, who was a lesbian, to the former husband, who was previously convicted of second degree murder for killing his first wife.  Id. at 252.  On appeal, Florida's First District Court of Appeal found that the trial court was not focused on the fact that the former wife was a lesbian, but rather on the best interests of the child.  Id.  The trial court concluded that the former wife was involved in a relationship that directly and adversely affected the child.  Id. at 254.  The First District Court of Appeal held that the trial court did not abuse its discretion by changing custody because the determination was without regard to the sexual orientation of that relationship.  Id.

In Packard v. Packard, 697 So. 2d 1292, 1293 (Fla. 1st DCA 1997), the trial court awarded custody to the former husband where the wife was a lesbian who had been living with a woman with whom the parties had been involved in a menage a trois during their marriage.  Id.  Interestingly, at the time of the divorce, the former husband was living with his new girlfriend, her children, and the parties' daughters.  The former wife argued that the trial court based its custody decision solely on her sexual orientation.  Id.  The former husband's living arrangements were also fairly viewed as "untraditional."  Id.  The former wife argued that it was therefore discriminatory for the trial court to base its custody determination on the finding that a more "traditional family environment" would be provided by the former husband.  Id.  Florida's First District Court of Appeal again explained that the trial court may consider a parent's sexual conduct in determining the parent's moral fitness under section 61.13(3)(f), but that in such consideration "the trial court should focus on whether the parent's behavior has a direct impact on the welfare of the child."  Id.  In other words, the trial court's primary consideration must be on the conduct involved and whether the conduct has had or is reasonably likely to have an adverse impact on the child. Id.  The Court of Appeal reversed the trial court's custody determination and remanded the case with instructions to follow the foregoing principles when considering the parties' moral fitness.  Id.

In Jacoby v. Jacoby, 763 So. 2d 410 (Fla. 2d DCA 2000), the former husband's case centered largely on his former wife's sexual orientation.  The trial court made remarks about the negative impact of the mother's  sexual orientation on the children.  Id. at 413.  The Second District Court of Appeal found that the trial court's comments were conclusory and unsupported by the evidence.  Id.  Specifically, the trial court found that "the community" shared the former husband's belief that homosexuals are immoral and should not be entrusted to rear children.  Id.  The trial court further found that a "strong stigma" attaches to homosexuality and that while being reared in a homosexual environment does not appear to alter sexual preference, it does affect social interaction and that it is likely that the children's peers or their parents will have negative words or thoughts.  Id.  The Second District Court of Appeal, however, found that even if the trial court's comments about the community's beliefs and possible reactions were correct and supported by the evidence, "the law cannot give effect to private biases."  Id.  With respect to the custody decision, the Second District further reasoned that "even if the law were to permit consideration of the biases of others, and even if we were to accept the assumption that such would necessarily harm the children, the bias and ensuing harm would flow not from the fact that the children were living with a homosexual mother, but from the fact that she is a homosexual."  Id.  Accordingly, the Second District Court of Appeal held that the trial court's "reliance on perceived biases was an improper basis for a residential custody determination."  Id.  The trial court also improperly concluded that the children's exposure to the Baptist religion coupled with living with a homosexual parent would necessarily created confusion for the children.  Id. at 414.  The lower court also made a number of other leaping conclusions in support of its decision to award custody to the heterosexual father.  Id. at 414-15.  None of these jumps conclusions were supported by the evidence, and the Second District Court of Appeal reversed the trial court's decision.  Id. at 414-15.  In short, when making its custody determination, the trial court permissibly penalized the mother for her sexual orientation without evidence that it harmed the children.  Id. at 415.

All of these decisions by the Florida courts make clear that homosexuality alone cannot be the basis for an adverse custody decision.  The trial court must link any allegedly "immoral behavior" to a direct affect on the minor children.  That connection must be supported by evidence in the record.  The link cannot be the product of speculation or judicial notice.  In other words, before a court can make any judgment concerning a party's homosexual or other allegedly "immoral" conduct, the court must be prepared to explain who the conduct at issue resulted in a direct impact on the minor child.

If you have questions about child custody issues in Florida, please contact an experienced Florida family law attorney.