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Demographic trends —delayed marriages, considerable wealth being created pre- marriage, and an almost 50% rate of divorce—bring an urgency to the issue of apportioning the active and passive components of the growth in value of the business during the marriage.

The apportionment issue has been extensively litigated, and the rulings generally state that increased value of separate property resulting from spousal efforts (active appreciation) becomes the property of the marital partnership, and increased value attributable to other sources (passive appreciation) remains separate property.

Valuation practitioners and family law practitioners need to pay special attention to apportioning active and passive components. Demographic trends indicate that as marriages are delayed, the proportion of businesses established before marriage, and the size of marital estates gets larger, this issue is gaining in importance.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ashok Abbott, West Virginia University | Attorney Advertising

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