When is enhancement of value a marital asset?

When it comes to divorce, most people focus on equitably dividing tangible assets. However, courts may also look at assets one spouse owned before the marriage, but said asset has since grown in value over the course of the marriage. This is the enhancement of value, and it comes into play in divorces more often than you may think. 

In a landmark court case called Mitchell v. Mitchell, a husband owned a home prior to the marriage, but over the years, the couple enhanced it using marital funds. The court found that the upgrades to the house, mostly wallpapering, was negligible, but the house increased in value due to the passive force of the housing market. The court found this increase in value was marital property, and the couple had to divide the valuation accordingly. 

How should people handle such assets?

It is not just houses that can fall into this category. Many people own vehicles before going into a marriage. However, over the years, they may pull from marital funds to make repairs and enhance it. With this, the vehicle becomes marital property in the eyes of the law. 

The state of Florida recognizes two types of property in divorces. Separate property, in which one person owns an item through purchasing it through his or her own funds. There is also marital property, which occurs when the couple uses both of their funds to acquire something. 

As a result, if you want property to remain yours just in case you end up divorced, then you need to only put your funds into renovations. This can be hard to prove if you and your spouse share a joint bank account. You may want to consider maintaining a joint account but still have your own separate accounts to show you paid for something all on your own. You should also detail what happens to certain pieces of property in a prenuptial agreement, provided the division is still fair to both parties. 

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