Law...

Tracing Separate Property

In some states, the "separate" component traced is only the value at the time of the marriage. Suppose a house was worth $50,000 at the date of the marriage. By the time of the divorce, it's now gone up to $80,000. So there has been $30,000 of appreciation.

Some states' courts would divide the house as follows: 1) $50,000 to the original owner; 2) of the $30,000 appreciation, $15,000 to the original owner and $15,000 to the spouse.

Other states give the original owner credit for the increase in value as well. Those states would give the full $80,000 to the original owner.

In the case of bank and securities accounts, the courts sometimes treat the during-marriage contributions as a layer that sits on top of the separate-property layer.

Suppose an account started as a separate property account with $30,000. And suppose that couple drew out $20,000 from the account over the course of the marriage. And suppose that the couple added $5,000 to the account over the course of the marriage. A judge might look at that and conclude that the entire remaining $15,000 is separate property. The reasoning would be that the marital funds deposited ($5,000) were more than withdrawn as part of the $20,000 of withdrawals. What's left must be entirely separate property.

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