In many states, if you have separately owned property that increased in value during your marriage, that increase is considered marital property in a divorce.
Active Appreciation v. Passive Appreciation
Some states differentiate between active and passive appreciation when deciding if the increase in the value of separate property should be considered as marital property.
Defining Active and Passive Appreciation
Active appreciation is appreciation that was created as a result of direct or indirect efforts of the other spouse. Here’s an example: your wife helped you grow your business through providing advice or did household chores or fed the kids while you went on a business trip or stayed later at work. Passive appreciation is appreciation that stems from outside sources – examples include supply and demand and inflation.
Property Considerations with Marital Property
It is also very important for you to know if you reside in a Community Property State or an Equitable Distribution State. In Community Property states the state considers both spouses to be equal owners of all marital property. In these states 50-50 split is the rule. The Community Property States include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. The remaining states are Equitable Distribution states. In these states settlements should be fair and equitable, but they do not need to be equal. Some factors taken into account when dividing assets are: length of the marriage, income or property brought into the marriage by each spouse, standard of living established during the marriage. Because there are so many factors and things to consider it is advised to seek the advice of a divorce attorney that can help walk you through the divorce and settlement process. For advice on divorce and property division and all it’s aspects, you need the expert law firm of Korol and Velen, certified family law specialists. Schedule a consultation today.