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Pre-Marital Agreements and Joint Property

Written by on Oct 2, 2009| Posted in: Estate Litigation

What’s mine is mine and what’s yours is mine…prenuptial agreement, joint property and hand grenades

Sharyn and Leslie Turchin, like many couples these days, entered into a pre-marital agreement prior to their marriage ceremony whereby they both renounced any ownership rights to the other person’s property in case there was a termination to their marriage by divorce or death.   Thereafter, Leslie Turchin, using his premarital assets acquired two residences, one described as the Coconut Isle and the other as the Aqua Vista. He recorded title with both his name and his wife’s.  Both properties were subsequently sold during the marriage. The proceeds from the sale of the Coconut Isle property were deposited in the parties’ joint checking account. Thereafter, the husband withdrew most of the funds in order to satisfy his personal obligations with the balance of the withdrawn funds being deposited in the husband’s individual bank account. As part of the purchase price of the Aqua Vista property, the buyers executed a mortgage in favor of both the husband and wife.  Leslie Turchin died testate and his estate planning documents directed that the remaining balance on the Aqua Vista mortgage be forgiven.

As expected, a fight in probate court ensued, and Sharyn complained that she was entitled to all of the proceeds from the sale of the Coconut Isle property and all gains realized from the reinvestment of those proceeds. The main thrust of her argument was that she was entitled to the proceeds of the sale of the property because the property was titled in both names and, therefore, there was a presumption that her husband intended to gift the property to her.   Sharyn also argued she was entitled to the unpaid mortgage proceeds on the Aqua Vista property, even though Leslie’s estate plan directed for the loan to be forgiven.

Sharyn was correct that Florida law holds that a gift is presumed when property is purchased by one spouse but placed in both names.  The question of whether this presumption is trumped by the terms of pre marital agreement was the critical issue faced by the Fourth District Court of Appeals in Turchin v. Turchin, –So.2d–, 34 Fla.L.Weekly D1848a (September 9, 2009, 4th DCA).

The Fourth District Court of Appeals looked to an earlier case involving the payment of alimony where there was a pre marital agreement in Hannon v. Hannon 740 So.2d 1181 (Fla. 4th DCA 1999):

“A primary purpose of premarital agreement is to modify or shrink the general discretion of [a] judge in doing equity between the parties. The agreement itself is intended to define the mutual equities, and the trial judge is not free to ignore its provisions or to render them ineffective.”

Therefore, while Sharyn Turchin was absolutely correct that a gift is presumed under Florida law when property is purchased by one spouse but placed in the names of both parties, this presumption does not apply when the antenuptial agreement specifically designates how the jointly held property is to be distributed.   Thus, Sharyn was entitled to only one-half of the proceeds from the sale of the Coconut Isle property that was left in the parties’ joint account. With respect to the proceeds from the satisfaction of the Aqua Vista mortgage, the court, again relying upon the terms of the prenuptial agreement, ruled that she had no right to or interest in the proceeds.

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