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How asset participation can affect separate property

Louisiana's status as a community property state means it is important for couples to understand what is and what is not considered marital property, as such property will be divided among the two spouses in the event of a divorce. Sometimes the distinction between separate and marital property is not clear because some separate property may actually contain value that could be considered marital property. This is where asset appreciation comes in.   

A wife or a husband may own a piece of separate property that over time increases in value. Should the wife or husband divorce, the owner of the asset would expect to retain the asset and all the value it accrued. But this may not always be the case. If the other spouse has performed any action to increase the asset's value, the other spouse could claim to be entitled to that asset's increased value.

The Huffington Post describes how such participation can take place. A husband or a wife owns a business which grows in value over the years. During this time, the other spouse has helped the husband or wife through any number of actions, like providing helpful business advice or entertaining business clients at the office or at a private residence. Sometimes it can be just a matter of taking on household duties like doing chores or tending to the children, which provides freedom for the business owner to travel to business conventions or work more hours.

However, there are ways your asset may increase in value without your spouse having anything to do with it. For instance, a bank account may receive more value because of added interest over time. A piece of property can also become more valuable due to market forces. Generally, if the market, the economy or other outside influence creates value, you are likely to keep that value for yourself even if you get divorced.

As Findlaw points out, however, you could wind up giving your spouse a stake in your separate property if you are not careful. If you take money from a bank account both you and your spouse possess and invest it into an asset you own, the other spouse can claim to have helped influence your asset's value. Likewise, if you buy a piece of property with money belonging to you and your spouse, that property will be considered marital property since your spouse's money contributed to it.

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