Appreciation, active or passive, of marital property is jointly shared. Appreciation of separate property, such as gifts and inheritances, can be more problematic.

In dual-classification, equitable distribution jurisdictions, active appreciation that results from marital efforts is marital property; passive appreciation, which is the increase in value due to market or external forces, generally remains separate property. In both equitable and community property states, the burden of proof is one the party who contends that the property is separate.

In order the find active appreciation in separate property, courts must find 1) that the separate property appreciated during the marriage; 2) that the parties made marital contributions that caused the appreciation; 3) that there is relationship between the contributions and at least some of the appreciation.

Moreover, the concept of active appreciation of separate property can even extend to the productive efforts of second-tier managers of a separate property business.

See Separate Property.

See also Passive Appreciation.

Your Suggestion

1. Separate Funds Devoted to Marital Asset
   If separate funds are carefully (we emphasize carefully) used to improve a marital asset, and the separate funds are not commingled with marital funds to achieve the improvement, some will argue that the active appreciation in a marital home or other marital asset is not marital but rather separate property.
   Contributed on 4/3/2007 by: DivorceDex.com Staff

   Category: Property Division   (Applicable in All States)

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