When individuals own significant assets, such as businesses, stock options, investment accounts, and the like, the issue of appreciation of these assets may arise when the parties decide to divorce. From a purely financial perspective, appreciation is the amount of increase in value that an asset or piece of property accrues over time. Appreciation may be due to outside market forces, which classifies it as passive appreciation. This type of appreciation is not the result of any effort by the property owner. By contrast, active appreciation accrues as a result of the efforts of a property owner and/or his or her spouse to increase the value of a certain asset.
For the purposes of a divorce, a business that one spouse owned for several years prior to the parties’ marriage is not a marital asset that is subject to division in the divorce. However, what may be subject to division as marital property under Georgia law is any active appreciation that accrued as a result of the couple’s efforts during the marriage. Thus, if a husband owns a small company prior to the marriage, but the company grows astronomically during the marriage, in large part due to the efforts of both spouses who actively work to grow and operate the business, the active appreciation, or increased value of the company due to the parties’ efforts may be divisible as marital property.
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Scott Shaw is founder and principle of Shaw Law Firm LLC, founded in 1995 and dedicated solely to divorce, family law and child custody matters that must be addressed and decided in the state of Georgia. Shaw Law Firm serves the greater Metro Atlanta area, particularly the counties of Fulton, Gwinnett, Cobb, Cherokee, Forsyth, Paulding, Henry, Fayette, Coweta, Newton, Walton, Bartow and Douglas. Schedule a consultation today at 770-594-8309.