Prejudgment Interest: Is the Time Value of Money Overlooked in Divorce Proceedings?
Florida is an equitable distribution state.[1] In Florida, the court “must begin with the premise that distribution should be equal.”[2] In the absence of a separation agreement, the date for determining what is and what is not marital property, i.e., classification, is subject to a bright-line rule: the date of the filing of a petition for dissolution of marriage.[3] However, the date for determining the value of assets and liabilities is the date as the judge determines is just and equitable under the circumstances.[4] If it is widely accepted that there is a time value of money, how does a judge determine what is “just and equitable” in determining the date of valuation? Therein lies the quandary.
One situation vexing the courts is post-filing appreciation of marital assets.[5] When a marital asset (determined at the date of filing) is controlled/operated by one spouse (the “in” spouse), that spouse has the benefit of the use of the non-operating spouse’s (the “out” spouse) one-half interest/share in the marital asset. But the “out” spouse does not benefit from the “in” spouse’s post-filing efforts, which may result in the appreciation of the marital asset. In other words, the “out” spouse has no control of his or her share of the asset and is not entitled to share in active appreciation, because the “in” spouse’s post-filing efforts are considered nonmarital under Florida law.[6]
Here is a simple example for illustrative purposes: The wife has $1 million in a brokerage account at the date of filing. The funds in the account were accumulated during the marriage. Florida is not a title control state; instead, it is the source of funds that dictates whether the asset is marital. Therefore, the entire account is a marital asset at the date of filing. After the date of filing, the wife spends significant time trading on the brokerage account, which results in an appreciation of $200,000 at the time of trial. The wife claims the $200,000 of appreciation is due to her post-filing efforts and, therefore, is non-marital. It takes the parties two years from the filing date to reach the final hearing. The husband argues that he has been deprived of the use of his one-half interest of the brokerage account funds during the two-year period and, therefore, is entitled to pre-judgment interest on $500,000 (one-half of the marital asset at the date of filing) from the brokerage account, which the wife used for her post-filing trading activity.[7] How is the husband compensated for the wife’s use of his share of the marital assets?
This article examines current Florida law on the issue of prejudgment interest as means of compensating the “out” spouse.[8] At this time, there is a split of authority from the appellate courts on this issue. The Third and Fourth districts have held that an award of prejudgment interest to the “out” spouse fell within the bounds of the trial courts’ discretion, while the First District has held that trial courts do not have the discretion to award prejudgment interest.
The Developing Law
As noted above, post-filing active appreciation — the appreciation of an asset resulting from the active efforts of a spouse rather than passive market forces — is considered nonmarital property. An award of prejudgment interest to the “out” spouse may be a way in which the “out” spouse can be compensated for the loss of use of their one-half interest in the marital asset. However, to achieve a truly equitable division through a prejudgment interest award, Florida courts are faced with certain challenges.
The first appellate case to address prejudgment interest occurred in Catalfumo v. Catalfumo, 704 So. 2d 1095, 1099-1100 (Fla. 4th DCA 1997), wherein the Fourth District reversed a trial court’s decision not to award prejudgment interest from the date of filing of the petition for dissolution of marriage.[9] During the parties’ seven-year divorce, the husband’s construction business greatly increased in value.[10] Throughout the proceedings, the husband had the benefit and use of the wife’s share of their marital assets. The Fourth District held that it would be inequitable for the wife “to be denied prejudgment interest.”[11] The court agreed with the reasoning of an Alaskan court that held awarding prejudgment interest “is not to penalize the losing party, but rather to compensate the successful claimant for losing the use of the money between the date he or she was entitled to it and the date of the judgment.”[12]
Likewise, in Schuenzel v. Schuenzel, 320 So. 3d 214 (Fla. 3d DCA 2021), a former husband was awarded prejudgment interest on mortgage, insurance, and tax payments he made on the parties’ jointly owned home over a nearly four-year period, which were the former wife’s responsibility under their marital settlement agreement.[13] Relying on Catalfumo, the Third District agreed that prejudgment interest was appropriate. However, it reversed the trial court’s calculations, which excluded a portion of the period when the former wife failed to make her requisite payments.[14] The Third District held that “prejudgment interest on the Former Husband’s mortgage, insurance, and tax payments should be calculated separately for each payment,” at the date each payment should have been made by the former wife.[15]
Contrarily, in Iarussi v. Iarussi, 353 So. 3d 75 (Fla. 1st DCA 2022), the First District refused to award prejudgment interest because such an award was not specifically authorized by the equitable distribution statute.[16] The court reasoned, “Because they both jointly owned all of the marital assets subject to distribution, it necessarily follows that neither could have suffered a deprivation of property warranting prejudgment interest prior to entry of final judgment.”[17]
In the most recent decision addressing this issue, Vindel v. Stewart, 388 So. 3d 228, 239 (Fla. 3d DCA 2024), the Third District reversed a trial court’s failure to award prejudgment interest. After three years of litigation from 2018-21, the former wife received the bulk of her equitable distribution.[18] During those three years, however, the wife had no access to a substantial portion of her share of the marital assets.[19] Nonetheless, the trial court denied the wife’s request for prejudgment interest, finding it would “be inequitable to charge the Former Husband for delays largely occasioned by the pandemic.”[20] Relying on its prior decision in Schuenzel, which relied on Catalfumo, the Third District held that the trial court’s reasoning was “not supported by competent substantial evidence and fail[ed] to consider the primary purpose of an award of prejudgment interest,” as two of the three years of the delay were not caused by the COVID-19 pandemic.[21] The appellate court specifically pointed out that the reason for the delay may not be relevant. It stated, “the purpose of prejudgment interest is to make a party whole from the date of the loss of use of his or her equitable distribution, to compensate him or her for losing the use of his or her money during that period.”[22]
Prejudgment Interest in Other Contexts in Dissolution Cases
There are other circumstances in which prejudgment interest is awarded according to the equitable distribution statute. F.S. §61.075(10)(b) (2025) provides that if installment payments are ordered, “the court may require security and a reasonable rate of interest or may otherwise recognize the time value of the money to be paid in the judgment or order.” This section specifically recognizes the time value of money in equitable distribution where installment payments are made to equalize the division of the marital estate. The statute also provides that the court may require a “reasonable rate of interest,” not necessarily the statutory rate of interest.
Prior to the enactment of F.S. §61.075(10)(b) in 2018,[23] Florida common law had evolved to recognize a spouse’s entitlement to interest on an equitable distribution equalizer payment.[24] The rate of interest was within the court’s discretion.[25]
When does the interest start to accrue on an equalizer payment? It accrues from the time the interest becomes vested, i.e., the entry of final judgment. For example, in Sullivan v. Sullivan, 31 So. 3d 191 (Fla. 4th DCA 2010), the Fourth District found that a trial court abused its discretion when awarding prejudgment interest on an equalizing payment from the date of the filing of the petition.[26] The trial court had valued and distributed the marital assets as of the date of the final judgment. Therefore, no time had elapsed between the party’s entitlement and award of equitable distribution.
Factors To Consider in Determining if Prejudgment Interest Is Appropriate
A precondition to the consideration of an award of prejudgment interest must be in cases in which the date of filing is being used to value a significant marital asset and there were post-filing efforts of the “in” spouse. Otherwise, the asset being valued closest to trial will already include the appreciation in the asset to be divided between the parties. When the valuation is close to trial, there will be little justification for an additional award of interest, as the parties are then similarly situated.
If the pre-condition is met, the court should consider the duration of the litigation. It is the delay or deprivation of the use of an asset that may justify compensation to the “out” spouse. The delay must be significant enough to warrant compensation with interest, in recognition of the time value of money.
Next, there must be appreciation on the value of the asset. If the asset has gone down in value, without a finding of misconduct, there is no basis for the award.
When should prejudgment interest begin to accrue? In other circumstances, that occurs when the right is vested. Here, there is no actual vesting as the interest is a beneficial interest. Therefore, the court should have the discretion to determine when the interest begins to accrue.
What should the interest rate be? When considering prejudgment interest for the loss of a party’s use of an asset during marital litigation, the court should have the discretion to consider an interest rate other than statutory interest. For example, if the post-filing active appreciation was double the statutory rate of interest (ROI), should that ROI be used? Should the “out” spouse be guaranteed the statutory rate as a floor?
A final consideration should be the post-filing use of funds. If the “in” spouse has been using the income/appreciation from the asset to maintain the status quo and provide support to the family, then taxing the “in” spouse with payment of interest may be inequitable. The trial court must have broad discretion on this issue, which must be decided on a case-by-case basis. Factors for the trial court to consider have been outlined in Morris v. Morris, 724 P.2d 527 (Alaska 1986),[27] and relied upon in Mathers v. Brown, 21 So. 3d 834, 838 (Fla. 4th DCA 2009):[28] 1) length of time; 2) amount at issue; 3) did the asset appreciate?; 4) was there undue delay (caused by a party)?; and 5) any other factor the court deems reasonable. It may be appropriate to add to these factors: 1) Is the asset being valued at date of filing? (If no, inquiry ends); 2) did the asset appreciate? (If no, inquiry ends); 3) length of time for the delay; 4) was delay attributable to the “in” spouse? 5) amount at issue; 6) when should interest start?; 7) what interest rate is to be applied?; 8) how were funds used post-filing?; 9) any other factor the court deems reasonable.
Obviously, if a case takes several years to resolve, the court should have the ability to consider if the “out” spouse should be compensated for the loss of their use of one-half of the asset. Therefore, the length of time from filing to conclusion should be considered by the court. Perhaps there should be a requirement that the length of time, at a minimum, exceeds one year from the date of filing.
If the court is required to apply a statutory interest rate untied to the actual appreciation, the “in” spouse is charged with assuming all the risk of the use of funds and effectively serves as a guarantor to the “out” spouse. Therefore, the court should look at the actual appreciation and determine whether the actual appreciation, statutory interest, or some other formula would be most equitable to balance all the equities.
If, as the court in Iarussi determined, there is no statutory basis, then perhaps legislative intervention is necessary to expressly empower the court to consider enumerated factors and determine if an award of prejudgment interest is appropriate.
In conclusion, there are very limited circumstances in which a court should consider if prejudgment interest is appropriate. But if the purpose of equitable distribution is to make an award that is equitable and just, the tool of prejudgment interest should be available to a court to effectuate that statutory mandate.
[1] Fla. Stat. §61.075 (2025). There are 41 equitable distribution jurisdictions in the U.S. Florida is also a dual property equitable distribution state, as opposed to an all-property state, meaning the court must classify property as marital or non-marital. Only marital property is subject to division. Fla. Stat. §61.075(1) (2025).
[2] Fla. Stat. §61.075(1) (2025). A majority of states hold that the division of property is based on a balancing of equitable factors with no presumptive starting point, putting Florida as the minority on this issue. One practical effect of the presumptive starting point is that the burden of proof is on the party seeking an unequal division. E.g., Lapomarede v. Pierre, 399 So. 3d 346, 351 (Fla. 4th DCA 2024); Chaten v. Chaten, 334 So. 3d 633, 634 (Fla. 4th DCA 2022); Steinhauer v. Steinhauer, 252 So. 2d 825, 831 (Fla. 4th DCA 1971). This burden is distinct from the burden placed on a party to prove that an asset is non-marital. Fla. Stat. §61.075(8) (2025).
[3] Fla. Stat. §61.075(7) (2025).
[4] Id. See generally 2 Brett R. Turner, Equitable Distribution of Property §7:4 (4th ed. 2024).
[5] Turner states, “Another situation in which courts tend to choose an early date of valuation occurs when an asset undergoes active appreciation during separation. Active appreciation is appreciation caused by the postseparation funds or efforts of one spouse alone; it is distinguished from passive appreciation, which is caused by inflation or market forces. When assets are acquired or debt is incurred through active efforts after the marital partnership has effectively terminated, there are strong policy reasons why the asset or debt should be valued before the date of the property division hearing.” Id. at 1048. Thus, generally, “When marital assets have appreciated passively since the filing date, the date of the final hearing generally should be used. When marital assets have appreciated due to the work efforts of either party since the filing date, the filing date should be used.” Parry v. Parry, 933 So. 2d 9, 14 (Fla. 2d DCA 2006) (quoting Victoria M. Ho & James Rhett Brigman, A Seven-Step Analysis of Equitable Distribution in Florida Part I: Classification and Valuation of Marital Property, 73 Fla. B. J. 62, 67 (May 1999)). For illustrative cases, see Silva v. Claffey, No. 4D2024-0269, __ So. 3d __ (Fla. 4th DCA Feb. 5, 2025) (circumstances justifying the use of a valuation date closer in time to the commencement of the dissolution of marriage action rather than the trial date include a sharp increase in the value of a marital asset due solely to the efforts of the owner spouse or a dramatic reduction in value due to dissipation or wasteful conduct of the owner spouse) (citing Perlmutter v. Perlmutter, 523 So. 2d 594 (Fla. 4th DCA 1987)); Donahue v. Donahue, 398 So. 3d 1052, 1055 (Fla. 2d DCA 2024) (when marital assets have appreciated passively since the filing date, the date of the final hearing generally should be used in equitable-distribution proceeding); Reese v. Reese, 363 So. 3d 1202, 1208 (Fla. 6th DCA 2023) (when marital assets have appreciated passively since the filing date, the date of the final hearing generally should be used); Weininger v. Weininger, 290 So. 3d 928, 934 (Fla. 3d DCA 2019) (when selecting a date from which to value marital assets, courts generally avoid selecting a date that would result in distributing an increase in property value that was due to non-marital efforts).
[6] Reese, 363 So. 3d at 1202; Fla. Stat. Ann. §61.075(7). See also Weininger, 290 So. 3d at 934 (recognizing that “courts generally avoid selecting a [valuation] date that would result in distributing an increase in property value” resulting from nonmarital efforts and finding no abuse of discretion in the trial court’s valuation of the retirement account as of the date of filing where “the post-filing contributions were nonmarital because [the husband] earned the contributions by continuing to work for Delta during the nine years of protracted divorce proceedings while the parties lived apart”); Jahnke v. Jahnke, 804 So. 2d 513, 516 (Fla. 3d DCA 2001) (recognizing that “assets should not, ordinarily, be valued as of a post-dissolution date because the subsequent change in the property’s value due to nonmarital labor or efforts cannot be distributed” but finding no abuse of discretion in trial court’s valuation of assets, including pension and management savings plans, as of the date of the final hearing rather than the earlier dissolution date).
[7] The husband could also argue that the wife’s efforts did not cause the appreciation; the appreciation was passive, not active, and he is entitled to share in the appreciation. See Chapman v. Chapman, 866 So. 2d 118, 119 (Fla. 4th DCA 2004).
[8] See generally Danny R. Veilleux, Annotation, Prejudgment Interest Awards in Divorce Cases, 62 A.L.R. 4th 156 (originally published in 1988).
[9] Catalfumo, 704 So. 2d at 1100.
[10] Id. at 1097.
[11] Id.
[12] Id. (citing Morris v. Morris, 724 P.2d 527 (Alaska 1986)); accord Mathers v. Brown, 21 So. 3d 834, 839 (Fla. 4th DCA 2009); see also Fields v. Fields, 58 S.W.3d 464 (Ky. 2001); Cf. Kearney v. Kearney, 129 So. 3d 381, 391-92 (Fla. 1st DCA 2013) (“Because the third partial settlement agreement included past, present and future distributions from Mainline to Mr. Kearney, the trial judge did not err in determining that it would be inequitable to allow Ms. Kearney to receive prejudgment interest in addition….”).
[13] Schuenzel, 320 So. 3d at 217.
[14] Id. at 215-16.
[15] Id. at 217.
[16] Iarussi, 353 So. 3d at 80.
[17] Id.
[18] Vindel, 388 So. 3d at 236.
[19] Id.
[20] Id.
[21] Id. at 237.
[22] Id.
[23] 2018 Fla. Sess. Law Serv. Ch. 2018-56 (H.B. 639).
[24] E.g., Paneson v. Paneson, 825 So. 2d 523, 524 (Fla. 2d DCA 2002); Rey v. Rey, 598 So. 2d 141, 145-46 (Fla. 5th DCA 1992).
[25] Rey, 598 So. 2d 141; Cotton v. Cotton, 439 So. 2d 309, 311 (Fla. 2d DCA 1983); but see Erp v. Erp, 976 So. 2d 1234, 1240 (Fla. 2d DCA 2008) (the law generally mandates a statutory rate of interest on monetary awards from the date of the entry of the judgment).
[26] Sullivan, 31 So. 3d at 192-93.
[27] See note 12.
[28] Id.
Natalie Lemos is a partner at Leinoff & Lemos, P.A. The firm practices exclusively in family law. Lemos has been board certified in marital and family law for more than 20 years. She is a fellow in the American Academy of Matrimonial Lawyers and the IAFL.
Matthew E. Cambó has practiced family law exclusively for approximately 10 years. He is currently an associate at Aronson, Mayefsky & Sloan, LLP. The firm practices exclusively in family law, with offices in New York and multiple locations in Florida.
This column is submitted on behalf of the Family Law Section, Aimee Gross, chair, and Meghan McDonough, editor.
