Divorce: Dividing Asset Appreciation, Proving and Valuing Passive vs. Active Efforts

When attempting to divide assets in a divorce equitably, one issue that creates difficulties is the appreciation of property--any appreciation that may have accrued during the marriage or while the divorce is pending.

The title to the asset does not control who is entitled to the appreciation. This determination depends on the asset's value at different times, when the increased value occurred, and why. Counsel must understand the difference between increases in value arising from passive and active efforts, direct and indirect efforts, and what some courts call tangential versus foundational contributions.

The party claiming appreciation usually bears the burden of proof to justify an award. Courts have developed various tests that the non-titled spouse must navigate to recover appreciated value, but the decisions are often unclear. Counsel should be familiar with the types of evidence needed.

Listen as this experienced panel of family lawyers reviews the recurring issues and best strategies for ascertaining, valuing, and equitably dividing property appreciation in a divorce.

1. Distinguishing separate and marital property
   • Active and passive appreciation
   • Direct and indirect contributions
   • Tangential and foundational contributions
2. Burdens of proof
3. Nature of evidence
4. Set off, recoupment, taxes

The panel will review these and other significant issues:

• What constitutes "active efforts" of a spouse and how are they proven?
• What are the relevant dates of valuation?
• Do courts account for future appreciation and future tax consequences?
• What happens when the worth of marital property changes after the date of separation?
• What happens when a spouse may have caused an asset or different assets to depreciate?