Is The Appreciation Of Separate Property Considered A Marital Asset?
This is one of the more complicated concepts in family law. When a married couple gets divorced in Maryland, all of their property is classified as either separate property (it belongs to one of the spouses) or marital property (it will be divided between the spouses). However, the value that certain property accrues during the marriage can be considered marital property even if the original asset belonged to only one spouse. Here is where it gets complicated.
If, for example, let’s say you bring a business into the marriage. Since the business was started before the marriage began, it’s considered your own separate property. With hard work and little luck, your business booms after you get married. The value that the business accrued during the marriage can be considered marital property, even though the value that the business had before the marriage is not. Confused yet? Don’t be. Below, the Maryland divorce lawyers at Schlaich & Thompson, Chartered, will unpack this difficult concept below.
When separate property appreciates during the marriage
Generally speaking, appreciated value doesn’t “automatically” become property of the marriage. If separate property appreciates during the marriage without any actions by either spouse, the appreciated value will remain separate property. As an example, if one spouse invested money before the marriage and left the funds in that investment without making any changes during the marriage, the appreciated value is generally considered property of the individual spouse. If, however, separate property appreciates during the marriage as a result of specific actions taken by the spouse during the marriage, the investment would be considered marital property and thus subject to division.
For example, let’s say that Husband purchases a vacation home before he gets married. This would generally make the vacation home his separate property. However, Wife argues that the value of the vacation home doubled while the spouses were married. She believes she is entitled to half of the accrued value of the vacation home.
Passive versus active appreciation in value
The courts will consider whether one or both spouses contributed the appreciation in value or actively had a role in its appreciation. In some cases, the courts will award the original spouse ownership of the asset if neither spouse took any actions to cause the asset to appreciate in value. In that case, it will be up for debate whether the asset is marital or separate property. However, active appreciation, in which the other spouse contributed to the value of the vacation home (let’s say by renovating it), will almost always be classified as marital property.
Talk to a Bel Air, MD Family Law Attorney Today
Schlaich & Thompson, Chartered, represents the interests of spouses during their divorce. Call our Bel Air family lawyers today to schedule an appointment, and we can begin discussing your concerns right away.
