USA – OKLAHOMA Trends and Developments Contributed by: Aaron Bundy and Danya Bundy, Bundy Law
tion that their separate property is untouchable. Unfortunately for them, that is not the case. There are at least three ways that separate prop - erty is vulnerable to attack in dissolution of mar - riage cases and there is a growing trend for use of the following three strategies. Claiming everything is marital until proven otherwise In the event of divorce, the out spouse may not readily concede the separate nature of any of the other spouse’s property. Even in clear cases involving well-designed premarital family trusts, the out spouse will put the in spouse through their paces to demonstrate the separate nature of all assets and sources of income. Depend - ing on the circumstances, including the length of the marriage and the quality of preservation of records, proving the premarital, separate nature of property can be a laborious and expensive process. Although property acquired during a marriage may be separate if it was acquired using separate funds, the out spouse will likely invoke the marital presumption to suggest that the property is marital simply because it was acquired during the marriage. It will then be incumbent upon the in spouse to produce suf - ficient historical transaction records to satisfy a judge that the property remained separate. Even when the separate nature of the property is unquestionable, the out spouse then turns to a second tactic. Claiming separate property was enhanced by either spouse during marriage Divorce courts are required by state statute to divide property acquired by the parties jointly during their marriage. Case law (appellate deci - sions) says that courts should also divide any enhancement in the value of what is otherwise separate property if the increase in value was the result of efforts, funds, or skills of either spouse
during the marriage. An increase in value due to spousal effort is called active appreciation. Spousal contributions are distinguished from economic factors or market forces unrelated to efforts of labour (or passive appreciation). This means that separate property may have a divis - ible component if it increased in value owing to the effort of either spouse during the marriage. Suppose that, prior to marriage, a spouse owned a tract of land. If the land increased during the marriage owing to inflationary or economic fac - tors, such as a general increase in property val - ues, that increase would not be subject to divi - sion in a divorce. However, if either spouse made improvements on the land during the marriage that increased the land’s value, that increase in value during the marriage is divisible in the event of a divorce. If it is proven that either spouse increased the value, the trial court must equita - bly divide the enhanced value. The non-owning spouse claiming a share of an in-marriage increase in separate property value bears the legal burden of proof to show: • the value of the property at the time of the marriage; • the value at the time of trial; and • that the enhancement was the result of effort by either spouse as opposed to economic conditions or circumstances beyond the par - ties’ control. As the non-owning spouse is the out spouse with limited access to information, extensive, expensive discovery may be necessary to assess the viability of an enhancement claim. The in spouse, who may have already gone to great lengths to show that the property at issue is separate property, faces a compounding obli - gation to produce more records and information.
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