Not to Be Overlooked: Increased Value as an Asset in Divorce

Not to Be Overlooked: Increased Value as an Asset in Divorce by Sandy Balick

{2:42 minutes to read} The divorce process will focus on the distribution of a couple’s assets and liabilities, in a practice referred to as equitable distribution. In my last blog post, I noted the important distinction between separate (non-marital) and marital property.

One potential asset straddles the line between separate and marital, and this will be referred to here as “increased value.” In the divorce process, a non-titled spouse may claim a portion of the increased value of an otherwise separate asset. While the requirements for establishing such a claim are stringent, increased value may be too significant to be overlooked in the distribution process.

New York law requires a claiming spouse to prove:

1. The fund or asset increased in value during the marriage;

2. The asserted increase is the result of the direct or indirect contributions of the non-titled spouse; and

3. The non-titled spouse is able to quantify both the baseline value of and extent of the asset’s appreciation during the marriage.

Proof in court comes at a very significant cost since experts (CPAs, for example) are usually needed to establish the necessary values and assist in defending these values from the likely assault of the titled spouse’s defense to the claim.

Proving spousal contribution to increased value may be less of a practical burden. Indirect contributions to increased value may be sufficient, although no definitive list of what these contributions might consist of exists. The courts, reflecting a traditional view of marriage have, however, made clear that contributions as “homemaker and parent” may well suffice.

Once the claiming spouse satisfies the prerequisites to increased value, the court itself will determine, with a view to the relative economic contributions of the respective spouses, what the actual division of the proved increase will be. It is likely to be a percentage not greater, and perhaps somewhat less than, 50%.

Armed with knowledge of the rules surrounding increased value and mutual disclosure, mediating couples have repeatedly shown themselves capable of applying the hard work and fairness the courts so often bring to matrimonial cases. Litigation is expensive and full of uncertainties. Mediation offers a valuable and efficient alternative.

Sanford (Sandy) Balick, Attorney & Mediator, NY Sandy Balick signature
Sanford E. Balick, Esq.
Founder & Principal Mediator
Consensus Point Mediation, LLC.

Phone: (646) 340-3434
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