As discussed previously, once it has been determined that a separate business interest appreciated in value during a marriage, learned treatises and case law often delineate the active passive analysis into the following elements:
Learned treatises and case law in equitable distribution jurisdictions typically first determine the part of the separate property appreciation during the marriage that was due to market forces, and remove this appreciation from consideration as it is typically not divisible. Any remaining separate property appreciation during the marriage is then carefully analyzed to allocate the remaining appreciation between the active efforts of third parties and the active efforts of the divorcing spouses. From a conceptual standpoint, some equitable jurisdictions have characterized separate property appreciation during the marriage caused by the active efforts of third parties as being essentially the same as appreciation from market forces, and is therefore typically not divisible.
The allocation of separate property appreciation during the marriage between the active efforts of third parties and the active efforts of the divorcing spouses is a fact specific process that requires researching and investigating factors including but not limited to the following:
The above information is then used by the business appraiser to develop a reasonable method to allocate separate company interest appreciation between third parties and divorcing parties. Reviews of learned treatises and case law reveals that, depending upon case facts and the particular jurisdiction, weight can be given to factors including but not limited to the following:
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