Taking it off the Table: Measuring Passive Appreciation of Assets in Divorce

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Matrimonial attorneys representing business owners frequently need to clearly separate the total growth in value of the business during the marriage between growth attributed to efforts of spouses (active) and to external factors and market forces (passive).

Empirical analysis presented in this paper indicates that the proportion of performance attributable to external factors lies between 40% and 96% for the sample of industries analyzed.

The proposed regression model provides a clear and concise approach to determining the passive and active appreciation. The results are statistically robust.

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