A key issue in determining marital property involves the “commingling” of property that was either brought into the marriage or received by gift or inheritance during the marriage. Another key–and sometimes connected–issue is the increase in value of separate property during the marriage.
The recent case of Gregg v. Gregg, No. 2008–CA–02025–COA (Decided March 23, 2010) provides examples of these key issues and also creates what may be some confusion.
Prior to marriage Joe owned a home into which the couple moved after marriage. The couple renovated and added on to this home. The court determined that this home was marital property because they had lived in it and spent joint funds on the renovation. This is consistent with what is known as “commingling” by “marital use.” On the other hand, Pat had a home acquired before the marriage, but the couple never lived in it. The Court found that even though Joe performed some chores on the home, the chores were not significant enough to cause the home to lose it’s separate identity. The Court also held that the increase in the value of the home was not marital property. This would be consistent with law that holds that “passive” increases in the value of non marital property are not marital.
The confusion: Joe had an IRA which had $38,000 in it at the time of the marriage and $86,000 in it at the time of the divorce. He argued that the increase in value was not marital property; that it was a “passive” increase which was not the result of marital effort or contribution. Joe’s position is consistent with the overwhelming majority of jurisdictions that hold: “Appreciation in separate property is marital property if it was caused by marital funds or efforts; otherwise, it remains separate property.” Equitable Distribution of Property, by Brett R. Turner, (McGraw Hill 1983, 2nd ed.) Contrary to prevailing authority, the Court of Appeals, stated simply, “the retirement income which was accumulated during the marriage is marital property.”
Perhaps there are some facts which would explain this. It is hoped that the court clarifies this apparent deviation from traditional views on the “passive” increase in separate property.