Taking Action

Get Answers Start Your Divorce Stop Your Divorce Divorce Forms Online Support DivorceDesk

Divorce Tools

Online Divorce Online Negotiation Custody Tracker QDRO Preparation SEE ALL

Info Categories

Contemplating Divorce Children & Divorce Divorce, Dollars & Debt Divorce Laws Divorce Process Divorce Negotiation SEE ALL

State Resources

California Florida Illinois New York Texas SEE ALL

More Information

Articles Checklists Research Center Cases of Interest Dictionary Encyclopedia Encyclopedia (pop-up) Blogs

For Professionals

Generate Clients Free Network Page Submit Articles Case Management Sign In

The Divorce Encyclopedia
Source of Funds

Term Definition Source of Funds - comes into play when a single asset has both marital and separate interests.
Application in Divorce Very often one spouse may own a home before marriage and then use marital funds to pay it off after the marriage. Thus, the home is said to have both marital and separate interests.

The phrase source of funds describes a principle applied when an asset is acquired, paid for or improved with funds that are both marital and separate.

Courts in equitable distribution jurisdictions apply a rule that states that the source of funds determines the character of an asset -- either marital or separate. A home acquired with marital funds is marital; a motorcycle acquired with separate funds is separate. This is easy to apply when the value of an asset does not change between the date of acquisition and the date of valuation for divorce.

The value of assets frequently changes between the date of acquisition and the date of valuation. Very frequently, for example, houses appreciate dramatically during the ownership of a divorcing couple. In this cases, the courts consider "any increase caused by marital efforts" to be martial. These marital efforts are, for example, improvements to the marital home, such as adding a bathroom or an addition, and they are active.

When the increases are passive -- that is appreciation of the asset as a result of market forces -- "the marital and separate estates share the increase in proportion to the marital and separate contributions."

In applying the source of funds rule, the courts generally consider the value added, not the amount spent.

See also Active and Passive Appreciation; Commingling.

Add the Divorce Encyclopedia
to Your Website

The Research Center

Give Our Research Center a Try. Gain access to the same research material that lawyers often use to establish and win divorce cases. This material consists of legal journal articles and case explanation/analysis documents on a wide range of topics. If you think your situation is unique, your answers will most likely be here. In order to gain access to this area, you must establish an account, but you can search the documents before deciding.

The Divorce Source Difference

Since February 1st, 1997 (when we initially launched Divorcesource.com) we have helped millions of people contemplating or experiencing divorce. The reason we have been able to reach so many people is because we have made it a priority to listen to our customers. We have built a trust by listening and delivering what the customer needs, rather than what we think they want. This is the Divorce Source difference.

Easily Connect With a Lawyer or Mediator
Have Divorce Professionals from Your Area Contact You!
Enter Your Zip Code:

Custody Scheduling and Tracking

Easily Connect With a Lawyer or Mediator
Have Divorce Professionals from Your Area Contact You!
Enter Your Zip Code:


Start Your Divorce File for Divorce


Settle Your Divorce Negotiate Your Divorce


Track Child Custody Track Custody & Visitation

Guarantee Official PayPal Seal Facebook Twitter Versign Secure Site