EMORY NELSON SUMLIN vs NORMA JEAN SUMLIN

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Emory Nelson Sumlin, the former husband, appeals the trial court’s final judgment

of dissolution of marriage. We affirm the trial court’s order striking the former husband’s

answer and counterpetition without further discussion. See Ries v. Ries, 984 So. 2d 612

(Fla. 4th DCA 2008) (holding that trial court could prevent husband from presenting

evidence regarding equitable distribution, alimony, and attorney fees where husband did

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not file financial affidavit, and failed to respond to discovery). We also affirm the

dissolution of the parties’ marriage, but reverse the plan of equitable distribution and

remand for the trial court to consider the tax consequences of the former husband’s

retirement account and to account for the full marital portion of the former wife’s 401(k)

withdrawal.

The parties were married in December 2001 and had no children together. After

the former wife filed the petition for dissolution of marriage, the trial court conducted a trial

at which the former wife introduced numerous documents concerning the parties’

finances, including bank, brokerage, and retirement account statements. The former wife

also testified as to the marital and nonmarital assets and liabilities. In addition, the former

wife presented an accounting expert to testify as to the value of certain accounts and

assets, including the former husband’s business, and submitted into evidence an

equitable distribution worksheet, which proposed an equitable distribution scheme that

resulted in an equalizing payment to the former wife. The trial court subsequently entered

a final judgment that adopted the accountant’s valuations. The court also set forth the

equitable distribution scheme proposed by the former wife, and ordered the equalizing

payment to be secured by a piece of property distributed to the former husband, which

was the former husband’s primary residence during the dissolution proceedings. The

former husband contends that there are errors in the equitable distribution plan that

should be corrected. We agree and remand for further proceedings.

The former husband argues that the trial court erred when it considered the tax

consequences applicable to the former wife’s pension and 401(k) account, assets that

she received as part of equitable distribution, but failed to similarly consider the tax

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consequences related to the former husband’s Merrill Lynch retirement account, which

he received as part of equitable distribution. The former husband is correct.

“Consideration of the consequences of income tax laws on the distribution of

marital assets . . . is required and failure to do so is ordinarily reversible error.” Miller v.

Miller, 625 So. 2d 1320, 1321 (Fla. 5th DCA 1993); see Diaz v. Diaz, 970 So. 2d 429, 432

(Fla. 4th DCA 2007) (determining that trial court erred in failing to consider tax

consequences to former husband’s pension and DROP account when dividing parties’

assets). The purpose of considering tax consequences is to ensure that one party is not

“charged with the full value of an asset that is burdened with an inevitable payment of

taxes.” Vaccaro v. Vaccaro, 677 So. 2d 918, 922 (Fla. 5th DCA 1996). The trial court

should consider the effect of the burden so that neither party gains an unfair advantage

or suffers an unfair burden because he or she receives a particular asset in distribution.

Id. Accordingly, we reverse for the trial court to consider the tax consequences of the

Merrill Lynch retirement account to the former husband, taking evidence if necessary.

See Kvinta v. Kvinta, 277 So. 3d 1070, 1073 (Fla. 5th DCA 2019) (reversing and

remanding for consideration of consequences of income tax laws on distribution of former

husband’s pension).

Likewise, the former husband correctly argues that the equitable distribution

worksheet contains an error regarding the former wife’s withdrawal of a portion of her

401(k) account. The former wife testified that she withdrew $133,945.07 from her 401(k)

in 2015 to make a down payment on her non-marital residence and to pay the penalties

and taxes associated with the early withdrawal. The amount withdrawn was 53.60%

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marital, equaling $57,459.20 after applying a 20% tax rate.1 However, the equitable

distribution worksheet credited the former wife with only $28,730. Because the former

wife testified that she utilized the full marital portion for her own use, the entire $57,459

marital value of the 401(k) withdrawal should have been allocated to the former wife.

Accord Marshall-Beasley v. Beasley, 77 So. 3d 751, 759 (Fla. 4th DCA 2011) (finding that

in equitable distribution, former wife properly received $351,112 credit for net amount of

former husband’s withdrawal from 401(k) account to purchase property because 401(k)

account necessarily was going to be taxed).

Accordingly, we reverse the portions of the final judgment relating to the equitable

distribution of the parties’ marital assets and liabilities, and remand for a recalculation of

the equitable distribution award. Because we must remand, we decline to address the

former husband’s claim regarding the trial court’s order that he secure the money

awarded to the former wife against the property awarded to him.