Opinion ID: 2587753
Heading Depth: 4
Heading Rank: 3

Heading: T. Rowe Price account

Text: Karl had a T. Rowe Price account with a value of $30,179 as of September 30, 2001. The superior court found that although this account may have been premarital, it lost that characterization when Karl applied the cash in the account toward the marital residence. Karl argues that because he funded this account with premarital earnings, the court erroneously characterized it as marital. He also contends that the court erroneously relied on an account balance statement dated September 2001, when the parties were cohabiting, but had filed for divorce. He argues that if the court intended to invade Karl's property to balance the equities, it did not state this intention. [36] Mada points out that this account contained $13,564 in 1990 and $38,268 at the beginning of 2001. She argues that there was no explanation for the increase in value and that it was Karl's burden to explain this increase. [37] Mada argues that she had shown that a large amount of money Karl received during the marriage had not been deposited into the parties' account; therefore, the court could infer that Karl contributed marital funds to this account. This, she claims, would justify finding that the account was marital due to active appreciation. She also argues that Karl used half of the funds in this account for a marital purpose, to renovate the house, transmuting the account into a marital asset. Separate property may become marital through either transmutation, as described above, or active appreciation, which occurs when marital funds or marital efforts cause a spouse's separate property to increase in value during the marriage. In contrast to transmutation, which converts an asset completely from separate to marital, active appreciation recognizes that a separate asset can become partly marital by growing in value during the course of a marriage. Under the latter theory, the asset's value at the inception of the marriage retains its separate character, but any subsequent increase in value is treated as marital property to the extent that it results from active marital conduct: Appreciation in separate property is marital if it was caused by marital funds or marital efforts; otherwise it remains separate.[ [38] ] To decide that active appreciation took place the court must make three subsidiary findings. First, it must find that the separate property in question appreciated during the marriage. Second, it must find that the parties made marital contributions to the property. Finally, the court must find a causal connection between the marital contributions and at least part of the appreciation.[ [39] ] The burden of proving marital contributions and an increase in value is on the party who seeks to classify the appreciation as active. [40] The burden of proving that the marital contributions did not cause the increase in value rests with the party who owns the asset. [41] The superior court did not clearly state whether transmutation or active appreciation made this asset marital. Using part of a premarital account for a marital purpose does not change the balance of the account into marital property so long as no new contributions of marital funds to the account are made. Karl testified that there were no contributions to the account during the marriage. Furthermore, this type of account is not normally subject to active appreciation. [42] We therefore conclude that the increase in value resulted from passive appreciation, and that the account remained premarital property. Because it was an abuse of discretion to classify this account as marital, we reverse the ruling as to this account and remand.