Did you know that you could have an enhanced value claim to the premarital assets of your spouse? Generally, assets obtained by either party prior to the marriage is the non-marital property of that spouse. However, you may have an enhanced value claim to the increased value of a premarital asset that accumulated during the marriage provided certain requirements are met. It is important that you know your rights regarding enhanced value claims and that you address them with your divorce lawyer. Below is an overview of the requirements to make an enhanced value claim.
1. Enhanced Value Claims Must Be Based on Marital Efforts
The increased value of the premarital asset must be due to marital labor or effort during the marriage. This could be efforts made by either spouse. Marital labor or efforts means that one spouse was actively involved with making the asset increase in value by either physical or mental efforts or contributed funds to such asset during the marriage. This means that mere passive increase of value will not be subject to an enhanced value claim.
For example, an enhanced value claim could apply to the improvements made to a premarital home or the payment of the mortgage on that home using marital funds during the marriage (keep in mind that any income earned by either spouse during the marriage is considered marital income). It could also apply to a premarital retirement account if one spouse continues to make contributions to that account during the marriage.
It is important to recognize that the enhanced value claim does not transform the non-marital character of the asset to a marital asset. Instead, it is only the increased value that is subject to division by the judge in your divorce. This means your spouse would have to pay you one half of the increased value of the assets. The judge cannot award you that entire asset in the divorce.
2. Your Divorce Lawyer Must Prove the Amount of the Enhanced Value Claims
The valuation of your enhanced value claim is critical. The judge cannot award you an enhanced value claim unless your divorce lawyer proves its value to the judge. This means your divorce lawyer must have proof of what the non-marital asset was worth at the time of the marriage and what it was worth at the end of the marriage (the end date is referred to as “valuation date” and is often a topic of dispute in a contested divorce).
Proving the value of an enhanced value claim is tricky and may require expert testimony. Your divorce lawyer must know what documents to request in discovery to prove the enhanced value claim. Your divorce lawyer must also know when expert testimony is necessary. For example, an enhanced value claim to a premarital business may require the testimony of a business evaluator. These types of valuations are complex and expensive, so you need to make sure your divorce lawyer has experience dealing with these issues. You only get one chance to get it right. If you don’t, you run the risk of leaving money on the table in your divorce.
Contact us to schedule a consultation to learn more about your enhanced value claim.