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Appreciation and Depreciation of Separate Property

Are you contemplating divorce and want to know how your separate property will be treated? Or are you contemplating marriage and want to best protect your separate property?

In Ohio, separate property generally remains separate property. If, over time, the separate property is comingled with marital property then the party claiming the separate property has the burden to trace the comingled property back to when it was separate property. If this cannot be done easily and clearly, then the separate property is presumed to be marital property.

The appreciation or gain on separate property is a different story. If the appreciation of the separate property was due to the efforts of either spouse during the marriage, then the appreciation will be considered marital property.  While the court is clear on what happens to the appreciation on separate property, it is split over what should happen to the depreciation on separate property. Two different cases, both from 1999, come to different conclusions. The first case argues that because “depreciation” is not found in the statute that governs the appreciation of separate property, the depreciation from separate property should not be held against the marriage. The second case argues that because the parties can share in the appreciation of the separate property, they should also share in the depreciation of the separate property. In the end, it is up to each individual court to decide which precedent to follow.

If you are not yet married, then you most likely can protect the future appreciation of your separate property by including it in your prenuptial agreement. Your prenuptial agreement should state that in case of divorce or dissolution, separate property, including the appreciation of such, remains separate property. Contact an attorney to discuss how to best protect your separate property before getting married or during a divorce.


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