How The Active Appreciation Of Non-Marital Assets Could Affect Your Property Settlement

When one spouse owns property prior to a marriage, then that particular asset is typically classified as his or her separate, or non-marital property (as long as that person doesn’t take steps to convert the property into a jointly owned asset). Property that is categorized as separate remains in the sole possession of the original owner and doesn’t need to be divided upon divorce. However, just because an asset remains separate property does not mean that the other spouse isn’t entitled to any of the appreciation in value that the property in question accumulated during the marriage.

Marital vs Separate Property 

Florida is an equitable distribution state, which means that when a couple gets divorced, they’ll need to divide all of their marital assets, or assets acquired by either party during the marriage, in an equitable, or fair manner. Assets brought into the marriage, on the other hand, as well as inheritances left to only one party are considered separate property and need not be divided. Things can become more complicated, however, if an asset that is deemed separate increases in value during the marriage. In these cases, even though the asset remains separate, a portion of that appreciation in value could be owed to the spouse, especially if that increase was due to active appreciation, meaning that the other spouse committed his or her labor or efforts to the asset. This is different from passive appreciation, which occurs despite a lack of improvements made by the other spouse.

Passive vs Active Appreciation of Non-Marital Assets 

Whether a spouse is required to share the increased value of a separate asset upon divorce will depend on whether that value went up because of passive or active appreciation. The former happens when an asset increases in value during a marriage, not because a couple made improvements or contributions to the asset to increase its value, but because of market factors, timing, or other independent events. Active appreciation, on the other hand, occurs when the spouse who didn’t own the asset before the marriage, commits his or her time, labor, or finances to the asset to increase its value.

Differentiating between passive and active appreciation of marital assets is important because it is only value that is increased actively that is divisible upon divorce. For instance, if one spouse brought a condo into the marriage and the value of that condo increased due to the state of the real estate market, then the original owner wouldn’t be required to split the increase in value of that property with his or her soon-to-be former spouse in the event of divorce. If, on the other hand, the non-owning spouse spent money or time to renovate the house during the marriage, then he or she would likely be entitled to some of the enhancement in value and appreciation of that property.

Here to Help with Your Divorce 

Do you have questions about marital versus non-marital assets, or your entitlement to a portion of your spouse’s separate property? Call experienced Fort Lauderdale property division lawyer Sandra Bonfiglio, P.A. at 954-945-7591 today for answers.

Sources:

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0000-0099/0061/Sections/0061.075.html

scholar.google.com/scholar_case?case=160736068290469807&q=Kaaa+v.+Kaaa,+58+So.+3d+867&hl=en&as_sdt=6,45