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Jerry Reiss ASA**

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1st Step (Essential)
Benefit Valuations
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Transmutation Issues
TRANSMUTATION ISSUES
 
There are legal principles that  apply to  non-marital  assets brought into the  marriage that convert these assets into marital property.   Usually  the  person who owned the assets at the time of  marriage  is  afforded  an  opportunity to demonstrate that the assets in  fact have not been transmuted.    Because the demonstration requires applying these principles  to  assets  which  have  a  financial  value,  the  valuator  is  an  important part  of  the  team since  the legal defense placed before the court  is  joined  at  the hip with  an understanding of the transactional process which gave rise to the presumed transmutation, and why  what actually happened demonstrates that nothing has changed.   

INTERSPOUSAL GIFTS

 

LIQUID FUNDS 

 

When non-marital funds are combined with marital funds inside joint accounts there is a presumed interspousal gift that occurred.  This is a rebuttable presumption.  In order to overcome the presumption, the spouse who previously owned the money will have to show that gifting was not intended and it will have to be demonstrated with clear convincing evidence.  The most often recognized way to do this is to be able to trace the funds through separately defined assets having distinct characteristics.  Tracing is one of the services offered.

 

MARITAL RESIDENCE

 

A presumed interspousal gift occurs when a separately titled house is transfered to joint ownership.  Showing contrary intent is much more difficult with real property.  That does not mean that it cannot be done.  While tracing funds may be part of the process, clear contrary intent must be established by a preponderance of evidence.   Such demonstrations are very rare.  But even failing at that that does not leave the previous owner with no other options.  If certain statutory factors can be met, the previous owner can request that the court do an unequal division of property  (in many but  not all states).  Tracing funds shows what impact non-marital assets may have played in the development of marital assets, distinguished from marital effort.  This may be an important piece of evidence that will assist the court in making its ruling.

 

 

 

     

 

 COMMINGLED ASSETS

 

FUNDS

 

Commingling of funds occur when marital funds are mixed with non-marital funds.  When it occurs inside joint accounts this causes a presumption of an interspousal gift, and if it is not rebutted the transaction transmutes the property into marital property.  But when it occurs inside a non-marital account, the funds are commingled.  While the intuitive presumed gift has not occurred, many courts employ circular reasoning finding that a gift occurs if the funds cannot be traced.  Yet tracing funds is sufficient as proof, but courts accept other forms of proof in overcoming the rebuttable presumption.  All assets are presumed marital and the person claiming a non-marital asset, or a non-marital portion, has a separate burden to demonstrate that portion; and if he or she cannot, the property that started out as non-marital is converted into marital property.  Confusing that commingled liquid assets cannot be separated without tracing a non-marital portion (which is financially incorrect), some courts have similarly confused the burden to demonstrate a non-marital portion with the burden of overcoming an interspousal gift, and have come full circle to rule that unless the funds can be traced, mere commingling produces an interspousal gift.  The client needs to check with his or her attorney to see if the contrasting issues were tried in his or her state and consider trying it.  See Commenator article inside publication links for a complete analysis of issues.

 

NON-MARITAL  BUSINESS, REAL ESTATE, & ACCRUED RETIREMENT BENEFITS

 

Marital property is created within such assets when a marital contribution is added to the property.   This occurs when either an infusion of marital money occurs or when the property is improved with marital labor.  The mistake made by the vast majority of attorneys is distinguishing an improvement based on marital labor from the basic asset without inquiring whether the marital labor created all of the growth, some of the growth, or whether the growth could have reasonably occurred with no marital effort.  This affects whether, and by how much marital property is creatred.  Only the best financial experts can assist your attorney with this issue.   Mr. Reiss has been instrumental with creating case law in Floirda on this precise issue.

 

The expert can make the difference in whether you share an overvalued marital property value, an undervalued marital property value or a correct amount of property.  There are a number of different approaches to separating out the non-marital value or in seeking an unequal division of property.

 

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