According to Ohio law, an increase in the value of separate property due to one spouse or either spouse’s efforts becomes marital property and is divisible in a divorce, dissolution or separation agreement. The increase in value of the separate property, which in-turn becomes marital property is marital appreciation. To better understand what it means to increase the value of separate property that makes a separate property asset divisible as a marital asset, you must first understand what separate property is:
Separate property is defined as all real and personal property and any interest in real or personal property that is found by the court to be any of the following:
- An inheritance by one spouse by bequest, devise or descent during the course of marriage;
- Any real or personal property or interest in real or personal property that was acquired by one spouse prior to the date of marriage;
- Passive income and appreciation acquired from separate property by one spouse during the marriage;
- Any real or personal property or interest in real or personal property acquired by one spouse after a decree of legal separation;
- Any real or personal property that is excluded by a valid ante nuptial agreement;
- Compensation to a spouse for the spouse’s personal injury, except for loss of marital earnings and compensation for expenses paid from marital assets;
- Any gift of any real or personal property or of an interest in real or personal property that is made after the date of the marriage and that is proven by clear and convincing evidence to have been given to only one spouse.
When parties marry and co-mingle assets, the separate property is not lost in the co-mingling of assets, as long as the identity of the separate property is traceable. A party that wants an assets classified as separate property bears the burden of tracing that asset to his or her separate property.
For example, if an individual, prior to marriage, was the owner of a business valued at $100,000.00 and that business grew over time and ten years later, that business was valued at 300,000.00 due to the labor or management by one spouse, the marital appreciation in that business would be $200,000.00 and the separate property value of $100,000.00 would remain the separate property of the spouse that owned the business prior to marriage. The $200,000.00 that is marital appreciation in the business becomes an asset that will be divided between the parties in a divorce, dissolution or legal separation action.
Middendorf v. Middendorf, 82 Ohio St. 3d 397, 696 N.E.2d 575 (Ohio 1998) was the case in Ohio that set precedent on martial appreciation when it was determined that when the efforts of one spouse contribute to the active appreciation of the separate property, the increased value of that separate property, is characterized as marital property and subject to division.
Attorney James R. Kirkland represented the Plaintiff/Appellee in Middendorf v. Middendorf, and argued that his client was entitled to one-half of the marital appreciation of her husband’s business. The case in question went to the Ohio Supreme Court and was found in favor of Attorney Kirkland’s client.
Attorney Kirkland is getting ready to celebrate 52 years of practice in the area of Divorce and Family Law. He is a highly regarded by his peers and has achieved the highest recognition that he could when becoming a member of the Academy of Matrimonial Lawyers (AAML). Additionally, Attorney Kirkland is a Certified Specialist in Family Law as recognized by the Ohio State Bar Association.
If you wish to learn more about marital appreciation and how it may impact your divorce, dissolution or legal separation, please contact Kirkland & Sommers for a free consultation. Marital appreciation is worth exploring so that you can be better prepared to protect yourself if you foresee a divorce, dissolution or legal separation in your future.