We've been talking about marital and non-marital property and how the law deals with the division of property in a divorce or separation. When we left off in our last post, we were talking about property acquired before the marriage that increases in value during the marriage. Illinois courts must consider several factors in these matters, including the contribution each spouse made to the increase in value.
In other states, the court would determine if the appreciation was passive or active and base the final disposition on the outcome. How would a court look at our example of a pearl necklace that Wife owned before marriage and that increased in value during the marriage?
The necklace is an example of passive appreciation -- neither spouse had anything to do with it. However, if Husband owned an antique Roadster before the marriage, and after the wedding poured thousands of dollars of marital income into restoring it, the appreciation would be marital property. It's even trickier with real property.
Active appreciation is based on the contribution of the parties, direct or indirect. Say Husband gave Wife a business idea that turned her pre-marital small business into a multi-million dollar enterprise. His contribution was direct. While Wife was on the road selling her improved widgets, Husband cared for the house and kids and generally made it possible for Wife to devote 100 percent of her time to the business. That would be an indirect contribution. Both are weighed in this state.
Illinois is an Equitable Distribution state, so property division is a little more involved -- property doesn't have to be divvied up equally, but the final disposition should be fair and equitable. Wisconsin, for example, is a Community Property state, and marital property is split 50/50. (Eight other states are Community Property states.)
Along with investments and tangible goods, debt is considered property -- a fact all too real for many couples after the recession. But that is the subject of another post on another day.
Source: Forbes.com, "Understanding How Assets Get Divided In Divorce," Jeff Landers, 04/12/11