Special Equity is a concept by which marital assets are unequally distributed to spouses during the process of divorce. It is a special case in which one of the spouses has contributed funding, property, or some type of service that was not intended to be a part of the unified marital investment ventures. The term special equity was originally used in 1932 by a Florida court as a way of calculating and awarding alimony to an unfaithful wife. Special Equity is almost completely obsolete. However, in such cases where it is still used, these are the methods by which it would be calculated:
The burden of proof of due special equity lies with the spouse who is claiming such. He or she would have to first prove that the funds or property in question were not associated with the marital property. Secondly, he or she must prove that the funds or property were not given as any kind of gift to the other spouse. In order to prove that funds should not be included in the marital property, it must be clearly shown that they were kept separate from joint marital funds. If this can not be shown, then the likelihood of special equity being granted is low.
The following documents should be gathered by the claimant and made brought into the courts : bank and investment account information, retirement and pension documents, insurance policies, credit card statements, household bills, stock certificates, statement of pensions, private party loans, mortgage and other loan statements, and property appraisals. Any visual proof of non-liquid assets would also be beneficial. An inventory would need to be made of all property that specifically belongs to the spouse requesting the special equity payment. The division of these assets would be addressed in pre-divorce litigations and negotiations.
Once an inventory is made, then it must be proven which assets, funds, and investments would be non-marital. Inherited items, things brought into the marriage, and gifts to one spouse from a third party are considered non-marital.
The next step is separating the personal liabilities of each party. For instance, a car note acquired by one spouse would be a separate liability of that spouse. Debts incurred before the marriage by one spouse are also considered to be the separate debt of that particular spouse.
Once all assets and liabilities are separated, then the amount of liabilities is subtracted from the value of the assets. If the spouse claiming special equity had proven that his or her contributions were not a part of the marriage, then a judge will decide on a fair payment of special equity to that person.