Most equitable distribution states and all but one inheritance. Property deemed marital is subject to distribution either under the doctrine of equitable distribution or community property, but a difficulty may arise when separate property appreciates during the marriage.

In mortgage was paid off with marital or community funds.

In dual-classification, equitable distribution states, party who contends that the property is separate. Courts look on appreciation as a result of marital efforts as active, and appreciation as result of market forces or third-party as passive.

In spouse by freeing him from domestic duties. Thus, the claim of a wife who gave indirect homemaker services -- put simply, being a stay-a-home mother -- face a steeper climb.

In some states, the spouse who claims the appreciation is passive.

Private businesses run by passive appreciation can become something of a Gordian knot in the case of private business that is separate property when marital or community funds are commingled with uncompensated contributions of a homemaking spouse. This situation happens very frequently, however.

The consideration of active and passive appreciation can take unexpected turns. In one New York case, when a husband sold his separate property business at a very high price, a court decided that his skills as a negotiator played a substantial rule in final sale price, and it ruled that 40 percent of the appreciation was active. In a California case, a car dealership owned by a husband, "who worked short hours and took long vacations," appreciated passively.

In most jurisdictions, the appreciation of separate property as active or passive is a matter of degree because courts recognize that it happens when a variety of real estate added significant marital value to the husband’s separate property.

In general, in a single owner all appreciation is generally active.

Some states consider the income from separate property as marital.

The management of separate property investments can become problematic when it comes to classification and division, particularly during the wide gyrations of the financial markets. When one claim that the increase should be marital, particularly when it is the husband managing the wife’s property. By the same token, a wife whose investments take a plunge may allege dissipation because her husband mismanaged her money.

Generally, courts treat increases in the value of separate property securities and investments the way they treat the appreciation of a separate property business -- by first determining whether the appreciation is active or passive. Most dual classification jurisdictions treat active and spouse may make the asset marital.

Courts have held that when a nonmarital asset appreciates because of the efforts of either party, the appreciation becomes marital. The asset need not be money. In a 1991 Montana case, a court held that a wife who had managed her husband’s collection of baseball cards should share in the appreciation of the collection.

Courts are mixed in their rulings about the spouse during a marriage.

Interest income from separate property -- interest or dividends -- may become a problem, particularly in states that treat investment income as separate property but appreciation as a marital. Accumulated interest earned in a savings account -- that is, interest earned on the income of separate property -- may be marital.

Courts are mixed on whether transmutation happens when one spouse’s separate property funds are invested in joint names.

In general, courts have refused arguments that bad investment decisions are dissipation.

One of the more difficult divorce disputes often happens when courts attempt to classify the appreciation of a nonmarital business, usually one started by a count as marital contributions; and who must meet the burden of proof.

When the owner homemaker contributions created a marital interest in the appreciation of the separately owned business.

See also Active and Passive Appreciation; Transmutation.