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The Florida Bar Journal
July/August, 2015 Volume 89, No. 7
The Commingling of Nonmarital and Marital Funds: Untangling the Changing Character of Assets in Equitable Distribution

by Susan W. Savard

Page 56

During the course of an intact marriage, the parties enjoy a relationship of trust, and many financial decisions are made without regard to the full impact of those decisions should the marital relationship fail. For example, an inheritance by one of the parties during the marriage is placed into the parties’ joint savings account. Does placing the inheritance into joint names change the character of the funds from nonmarital to marital? Perhaps the inheritance was received before the marriage and placed into the premarital account of one of the parties. The account remained in that spouse’s sole name, but earnings during the marriage were deposited into the account and the funds in the account utilized for the payment of marital obligations and living expenses. Does the deposit of earnings during the marriage change the character of the funds from nonmarital to marital in nature even though the account remains in the sole name of one of the parties? Does the payment of marital obligations and living expenses from the mixture of nonmarital and marital funds change the character of the entire asset? Does the length of marriage have any impact on how the court views distribution of the asset upon dissolution?

This article explores the various legal theories concerning commingling of nonmarital and marital funds, discusses Florida’s recent statutory amendment and cases concerning this issue and, hopefully, provides some insight into untangling the changing character of commingled assets. This article focuses primarily on commingling of marital and nonmarital funds and does not specifically address marital efforts, enhancement, or other areas of potential hybrid assets.

Florida’s Statutory Scheme
The court must begin with the premise that the distribution of marital assets, including interspousal gifts1 and liabilities should be equal.2 If the presumption of a gift cannot be overcome and what were once nonmarital funds are classified as marital due to joint title, an argument could be made that there is justification for an unequal distribution of the marital assets. The court must consider such factors as the contributions to the marriage by each spouse,3 the economic circumstances of the parties,4 the duration of the marriage,5 or any of the other statutory factors6 that may be relevant in the particular factual scenario presented.

Prior to 2008, Florida’s equitable distribution statute provided that the presumption of a gift arose only relating to real property held by the parties as tenants by the entireties regardless of whether the property was acquired before or during the marriage. Accordingly, if a premarital home was placed in the joint names of the parties during the marriage, the transfer of title was presumed to be a gift to the marriage. In 2008, the statute was amended to provide that the presumption of a gift applies not only to real property, but also to personal property titled as tenants by the entireties. The burden of proof necessary to overcome the gift presumption for either type of asset is by clear and convincing evidence that a gift was not intended.7 Clear and convincing evidence is an intermediate burden of proof standard that requires the evidence be credible, clear, and lacking in confusion such that the trier of fact is convinced of the matter’s truthfulness without hesitancy.8 It is the highest burden of proof in civil matters.9 Accordingly, with the statutory amendments of 2008, once nonmarital funds are placed into the joint names of the parties as tenants by the entireties, an extraordinary burden exists to overcome the presumption of a gift to the marriage, and, thus, classification of the funds as marital in nature.

The statutory change seems to resolve the problem raised by the Fifth District in Archer v. Archer, 712 So. 2d 1198 (Fla. 5th DCA 1998), and Crouch v. Crouch, 898 So. 2d 177 (Fla. 5th DCA 2005), holding that F.S. §61.075 did not create the presumption of a gift when personal property was titled in joint names. These decisions were contrary to a body of caselaw that applied a gift presumption to bank accounts held jointly by unmarried couples.10 The person contributing the property had the burden of proving that a gift was not intended. For some reason, when the parties married, courts looked more to the parties’ conduct in deciding this question.11

The 2008 statutory revision addresses tenancy by the entireties, but does not address other forms of ownership, such as tenants in common or joint tenants with the right of survivorship. When the real or personal property is owned jointly by a husband and wife, there is virtually no difference between a joint tenancy with right of survivorship and a tenancy by the entireties.12 However, it is possible for a husband and wife to own real or personal property as tenants in common.13 If this occurs, does a gift presumption apply, and is the heightened burden of proof under F.S. §61.075(6)(a)4 required to overcome the presumption? F.S. §61.075(6)(a)4 provides that “the burden of proof to overcome the gift presumption shall be by clear and convincing evidence.” It is unclear whether the presumption of a gift applies in the limited situations of tenancy in common.

Commingling is an issue of classification of an asset as marital versus nonmarital. Classification of an asset is the first analysis the court must consider14 before the determination of valuation or distribution of marital assets and liabilities can be made. Whether the presumption of an equal distribution of marital assets can be overcome to merit an unequal distribution of marital assets and liabilities is a separate and distinct consideration.15 It should be noted that the standard of review for the scheme of equitable distribution is an abuse of discretion,16 while the standard of review for the trial court’s legal conclusion of whether an asset is marital or nonmarital in nature is de novo.17

The Theories of Commingling and Changing the Classification of Assets
There are three distinct theories relating to commingling of funds and whether commingling transforms the funds from nonmarital to marital in nature. The first theory, the strict transmutation approach, concludes that any commingling whatsoever results in the transformation of the entire asset into a marital asset. The second theory, the tracing approach, adopts the view that if the nonmarital funds are not so intertwined with marital funds that they can be traced to their nonmarital origins, they remain nonmarital property. The third theory examines the intent of the parties. Florida courts have taken inconsistent and varied approaches to the commingling issue and whether the deposit of marital funds into an otherwise nonmarital account transforms the entire asset into one fully subject to equitable distribution between the parties. The majority of our courts, however, look to whether the funds are traceable to their nonmarital origin or whether they have become irretrievably commingled so as to dissolve the nonmarital character and transform them into a marital asset. The inquiry is fact intensive. A brief discussion of each, together with applicable Florida caselaw, follows.

• Strict Transmutation — Under this theory, when marital and nonmarital funds are commingled, all nonmarital contributions automatically transform into a marital asset without consideration of any other facts.18 The underlying reasoning is that “[m]oney is fungible and, once commingled, it loses its separate character.”19 “Fungible” has been defined to be “regarded as commercially interchangeable with other property of the same kind.”20

In Abdnour v. Abdnour, 19 So. 3d 357 (Fla. 2d DCA 2009), the husband came into the marriage with stock holdings in a brokerage account in his sole name. During the marriage, marital funds were utilized to purchase additional, differing stocks, and establish a cash account under the umbrella of the main brokerage account. All of the equity holdings were later liquidated and placed in a cash account from which mutual funds were purchased. A jointly owned mutual fund was also liquidated and deposited into the cash account. The court held that when the husband liquidated all of the equity and mutual fund shares and deposited them into the cash account, the assets in the account, specifically the proceeds from the husband’s premarital stock, became irretrievably commingled. Prior to the husband’s liquidation of the equity positions and his deposit of the proceeds into a cash account, it would have been relatively easy to trace the portion of the account attributable to the husband’s premarital stock holdings. The court held that by placing the proceeds of both the nonmarital stock and the stock purchased during the marriage into the same cash account, “[a]ny assets that previously might have been said to have any nonmarital character were dissolved into the commingled cash account.”21 Once commingled, the husband’s premarital stock lost its separate character and was transformed into a marital asset.

• The Tracing Approach — Before 2008, Florida opinions relating to commingling appear to favor this approach when nonmarital funds were deposited into a jointly titled account. However, with the statutory amendments discussed above, the obstacles that must be overcome to prove commingling are two-fold: the heightened burden to overcome the gift presumption and whether the funds can be sufficiently traced. The court can, however, consider whether the nonowning spouse was the one who deposited the funds into joint names or whether the funds were placed into an account of convenience.22

In Steiner v. Steiner, 746 So. 2d 1149 (Fla. 2d DCA 1999), the husband deposited both his earnings from employment and rental income from his premarital properties into a premarital account in his sole name. The parties’ living expenses were paid from this account, as were the mortgage obligations for the rental properties. Shortly following the marriage, the husband sold one of the rental properties and used a portion of the proceeds as a down payment for a new rental property, titled in his sole name. A portion of the sale proceeds were also utilized as a down payment for the marital residence, also titled in the husband’s sole name. The court found that by depositing the rental income from his premarital properties into the same account as the husband’s marital earnings, and paying marital expenses out of that account, the account itself became marital property. Additionally, the ongoing payment of the mortgages on the husband’s premarital rental properties from the marital account entitled the wife to an interest in the mortgage reductions paid out of the account on all four properties. The court directed that the parties share equally in the funds in the account as well as share in the mortgage paydowns from the account. The down payments by the husband on the last rental property and the marital home traceable to the proceeds of sale of his premarital rental homes was his nonmarital asset. This case provides insight as to when tracing of commingled funds is sufficient and when it is not.

Intent of the Parties — Florida caselaw concerning nonmarital inheritances and whether they are marital or nonmarital in nature has customarily focused on the intent of the recipient spouse. In evaluating assets that come to one spouse by inheritance, the task for the trial court in a dissolution proceeding is to determine whether the recipient intended that the assets remain nonmarital or whether the recipient’s conduct during the marriage gives rise to the presumption of a gift to the other spouse.23 Evidence of an intent that an inheritance remain nonmarital arises when the nonmarital property is placed into a separate account, no other funds are deposited into it, and the account is never intermingled with the parties’ other funds.24 The 2008 revision to §61.075 concerning the presumption of a gift for a jointly titled account may well give way to a new interpretation of how these assets should be classified.

The intent of the parties was examined by the court in the post-statutory revision case of Mondello v. Torres, 47 So. 3d 389 (Fla. 4th DCA 2010). The court concluded that the wife had intended to keep her inheritance as her separate property and shielded from the husband. The wife, however, had made a gift to a friend of the husband in the amount of $200,000. When the funds were repaid, rather than depositing them into the inheritance account in her sole name, the repayment was deposited into an account that also received repayment of a jointly made loan to the same individual in the amount of $419,000, as well as the proceeds of a refinance of marital real estate in the amount of $417,000. Three months later, the wife transferred her $200,000 back into the inheritance account in her sole name. In addition, she loaned the husband, from the inheritance account in her sole name, $25,000 for the payment of living expenses. These funds were later transferred back from the parties’ joint account into the wife’s sole inheritance account. The appellate court looked to the wife’s conduct and found that no gift was intended. It was not her intent and her conduct during the marriage did not give rise to the presumption of a gift to her spouse. The wife returned to her account the exact amount of the loan she made months earlier to a third party, and further that the $25,000 deposit from the joint and marital account was repayment of a loan for the exact amount of the loan she had given for marital expenses, despite the fact that both transfers back to her sole account had been made from jointly held or commingled accounts. It should be noted that there were issues of credibility at the time of trial, all of which were resolved in the wife’s favor.

Without more, the mere payment of marital expenses from an otherwise nonmarital account does not transform the nonmarital account into a marital asset. While F.S. §61.075 now addresses the presumption of a gift when personal property is titled jointly by the parties as tenants by the entireties, when nonmarital property remains in the sole name of the husband or wife, no presumption of a gift arises. The presumption arises only with regard to previously nonmarital assets, which are commingled in a joint account holding marital funds. When commingling is absent, the party claiming that the property has been transformed from nonmarital to marital has the burden to establish that a gift was intended.25

“Using some portion of nonmarital funds to pay marital expenses does not convert the remaining non-marital funds into a marital asset.”26 At most, only that portion of the nonmarital funds withdrawn and utilized for marital purposes lose their nonmarital character.27 The remaining money retains its character as a nonmarital asset. Additionally, the court may award credits to the party expending nonmarital funds, which were utilized to maintain and preserve a marital asset.28

Intent of the parties was also examined in Vigo v. Vigo, 15 So. 3d 619 (Fla. 3d DCA 2009). Here, the husband used his nonmarital funds to purchase a condominium in his sole name, which became the marital home. The husband also used nonmarital funds to maintain and pay the expenses for the condominium. The court examined whether there was a gift intended by the actions of the husband and whether donative intent existed, whether there was delivery or possession of the gift and surrender of dominion and control of one-half interest in the condominium to the wife. The court concluded that the husband’s intent and actions constituted a gift to the wife of one-half of the interest in the condominium, despite the fact that it remained in his sole name and was purchased with the husband’s nonmarital assets.

Conclusion
In determining equitable distribution, the court must first identify the assets of both parties; classify them as marital or nonmarital in character; value the assets; and then distribute them between the parties. The nonmarital assets of each party are set aside to that party and are exempt from equitable distribution. The determination of whether an asset is marital or nonmarital in nature, and, thus, subject to equitable distribution, can become complex if commingling has occurred. This determination requires a factually detailed analysis. The statutory changes and presumptions discussed in this article come to bear on the outcome, and perhaps unintended consequences to the parties, resulting from their actions before the marital discord began.


1 Fla. Stat. §61.075(6)(a)1(c) (2014).

2 Fla. Stat. §61.075(1).

3 Fla. Stat. §61.075(1)(a).

4 Fla. Stat. §61.075(1)(b).

5 Fla. Stat. §61.075(1)(c).

6 Fla. Stat. §61.075(1)(a)-(j).

7 Fla. Stat. §61.075(6)(a)2-4.

8 See In re Davey, 645 So. 2d 398, 403 (Fla. 1994).

9 Black’s Law Dictionary (7th ed. 1999) (clear and convincing is also defined as “[e]vidence indicating that the thing to be proved is highly probable or reasonably certain”); W.R. v. Dep’t of Children & Family Serv., 896 So. 2d 911 (Fla. 4th DCA 2005). This is a greater burden than preponderance of the evidence, the standard applied in most civil trials, but less than evidence beyond a reasonable doubt, the norm for criminal trials. It is also the heightened burden imposed in the termination of parental right cases.

10 See, e.g., Julia v. Russo, 984 So. 2d 1283 (Fla. 4th DCA 2008) (holding a presumption of gift where a bank account held with a girlfriend was titled joint tenants with right of survivorship and stating that this presumption can only be overcome by clear and convincing evidence); Varela v. Bernachea, 917 So. 2d 295 (Fla. 3d DCA 2005) (holding that a creation of joint account with mistress created a presumption of a gift, which could only be overcome by clear and convincing evidence); Mercurio v. Urban, 552 So. 2d 236 (Fla. 4th DCA 1989) (holding a presumption of a gift when the stock was held as tenants in common).

11 Spielberger v. Spielberger, 712 So. 2d 835 (Fla. 4th DCA 1998) (placing nonmarital money in a premarital account to which the wife’s name was later added did not create a presumption of a gift when account was not accessed by wife or used for marital purposes); compare with Strough v. Strough, 933 So. 2d 603 (Fla. 1st DCA 2006) (placing nonmarital money in account with husband, which was used by both parties, created a presumption that the wife intended a gift).

12 See Beal Bank, SSB v. Almand and Assoc., 780 So. 2d 45 (Fla. 2001) (created a presumption that joint ownership of a bank account by a husband and wife, absent a different designated form of ownership on the signature card, creates a tenancy by the entireties as to creditors).

13 See id. at 53.

14 See Fla. Stat. §61.075(3)(a).

15 See Fla. Stat. §61.075(1).

16 See Bell v. Bell, 68 So. 3d 321 (Fla. 4th DCA 2011) (citing Bardowell v. Bardowell, 975 So. 2d 628, 629 (Fla. 4th DCA 2008), quoting Kovalchick v. Kovalchick, 841 So. 2d 669, 670 (Fla. 4th DCA 2003)).

17 See Bell, 68 So. 3d at 321 (citing Mondello v. Torres, 47 So. 3d 389, 392 (Fla. 4th DCA 2010)).

18 Brett R. Turner, Equitable Distribution of Property §5.65 (3d ed. 2010) (Classification II. Burden of Proof, Changes in character: The doctrine of transmutation; Transmutation in general: Three distinct doctrines).

19 Abdnour v. Abdnour, 19 So. 3d 357, 364 (Fla. 2d DCA 2009); Pfrengle v. Pfrengle, 976 So. 2d 1134 (Fla. 2d DCA 2008); Belmont v. Belmont, 761 So. 2d 406, 408 (Fla. 2d DCA 2000).

20 Black’s Law Dictionary (2d pocket ed. 2001).

21 Abdnour, 19 So. 3d at 364.

22 See Valentine v. Van Sickle, 42 So. 3d 267 (Fla. 2d DCA 2010) (while husband was out of town for business purposes, wife received check in husband’s name, which represented a personal injury award to husband; opened an account in both parties’ names; and deposited the personal injury settlement proceeds into the newly created jointly titled account).

23 Lakin v. Lakin, 901 So. 2d 186, 190 (Fla. 4th DCA 2005).

24 Id. (citing Farrior v. Farrior, 736 So. 2d 1177 (Fla. 1999); Behrman v. Behrman, 376 So. 2d 294 (Fla. 2d DCA 1979)).

25 Grieco v. Grieco, 917 So. 2d 1052 (Fla. 2d DCA 2006).

26 Lakin, 901 So. 2d at 190; Grieco, 917 So. 2d at 1052; Hamilton v. Hamilton, 758 So. 2d 1213 (Fla. 4th DCA 2000); Mondello v. Torres, 47 So. 3d 389 (Fla. 4th DCA 2010).

27 See Grieco, 917 So. 2d 1052; Pinder v. Pinder, 750 So. 2d 651, 653 (Fla. 2d DCA 1999).

28 See Grieco, 917 So. 2d at 1056.


Susan W. Savard is an active member of the Family Law Section, and serves on the executive council of the section and several committees. She has authored articles appearing in both The Florida Bar Journal and the Family Law Commentator and has lectured for numerous continuing legal education seminars. She is board certified in marital and family law and is an attorney with West, Green & Associates, P.L., in Orlando. The author thanks Judge Ray McNeal for his wisdom, guidance, and input in reviewing the first draft of this article. The editor thanks Tami L. Augen Rhodes for her assistance in editing this article.

This column is submitted on behalf of the Family Law Section, Maria C. Gonzalez, chair, and Sarah Kay, editor.

[Revised: 06-23-2015]