Divorce and Appreciation of Separate Property

In a divorce, appreciation of separate property is considered to be separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the non-titled spouse, in which case the appreciation may be considered marital property. The leading cases addressing these issues are Price v. Price, 69 N.Y.2d 8 (1986) , and Hartog v. Hartog, 85 N.Y.2d 36 (1995). Services of a non-titled spouse as homemaker, spouse, parent and wage-earner are entitled to consideration. Where the efforts of the titled spouse were aided, whether directly or indirectly, by the non-titled spouse, the appreciation is the product of the marital economic relationship and is subject to equitable distribution. To analyze each situation that may arise in a divorce case, the Court of Appeals devised a three-prong test which asks the following questions:
(1) Did the separate property appreciate in value?
(2) Was the appreciation due, in part, to the efforts of the titled
spouse? (i.e., causation)
(3) Were the efforts of the titled spouse aided, directly or indirectly, by
the non-titled spouse?

The burden is on the non-titled spouse to prove the extent of the appreciation. The causation issue has proven to be controversial. The Price Court adopted the use of an active/passive test for determining whether the appreciation was caused or aided by the efforts of the titled spouse. In that case it is clear that the question of whether the non-titled spouse’s role contribution to the appreciation depends primarily upon the nature of the asset and whether its appreciation was due in some measure to the time and efforts of the titled spouse. Court of Appeals’ decision in Hartog holds that while the non-titled spouse does not need to prove a direct causal link between the activities of the spouses and the increase in separate property, appreciation is marital property only in the same proportion that the active efforts of the spouses bear to the active efforts of others and any additional active or passive factors. Thus, the Price Court focused on requiring the non-titled spouse to prove that the efforts of the titled spouse caused or contributed to the appreciation, but the non-title spouse should also be eligible for an award upon a showing that the appreciation was due to the efforts of the non-titled spouse, rather than the titled spouse.

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