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With the specter of deflation (falling prices) haunting the U.S. economy, the consequences and problems of the inflationary eras of the 1970s and 1980s may be as far from the minds of matrimonial practitioners as it is from the thoughts of central bankers. Nevertheless, if you have matrimonial clients from long-term marriages, an awareness and understanding of the meaning of inflation may help you obtain a more equitable distribution of marital property for those who brought separate property into the marriage.
Separate Property and Appreciation
The laws for distribution of marital property in most states recognize a classification for certain assets known as separate property. This is, generally, an asset owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage, or purchased with separate funds after the marriage. The appreciation of separate property will remain separate property, provided that the appreciation is not derived from the efforts of either spouse. However, if the appreciation of the property is attributable to the efforts of either spouse, then the appreciation of the separate property will be considered marital property. This is often the case with closely held businesses.
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