Increase In Value Of Premarital Assets During Marriage: Subject To Equitable Distribution? Or, If There’s A divorce, Do You Split It Down The Middle?

Well, it depends.

Assets such as a partner’s interest in 401(k) or other retirement plans or investments brought into a marriage are considered to be non-marital and thus are not subject to equitable distribution in the event of a divorce. Income or appreciation routinely derived from non-marital assets during the marriage are also considered to be non-marital, unless the parties treat such income as a marital asset.

But, if either party actively manages the premarital assets, for instance by trading stocks and bonds, enhancements in value and appreciation of the assets are considered to be marital in nature and the investment could be treated as a marital asset because of extensive marital time spent on the investment. Chapman vs. Chapman, (FL 4th DCA 2004)

The Courts do not consider “active management” to include moving funds around. If funds in an employer-sponsored retirement plan or investment can be moved by the employee among a variety of investment vehicles without withdrawing any funds, such transfers are not considered to be Actively managing the assets, and appreciation or income is considered to be non-marital.