In a three to two decision, the Supreme Court in Arkansas has reversed 29 years of decisional law in order to return to the statutes as written in the state. The Court found that three precedent setting cases beginning in 1987 through 2008 did not follow the state's statutes which were plainly written. In this case, Moore v. Moore, 2016 Ark. 105, the Justices ruled that the statutes specifically excluded the increase in value of non-marital assets from property division due to a divorce.
Beginning with the ruling of Layman v. Layman, 292 Ark. 539, in 1987, a standard of "active appreciation" of non-marital assets came into play in a divorcing couple's property division. This standard weighed the efforts of the owning and non-owning spouses when determining whether non-marital property should be re-classed as marital property. In formulating such weight, turning the previous non-marital asset into a marital asset, division was then deemed appropriate between the divorcing parties.
With this ruling in Moore v. Moore, the Justices determined that it was "appropriate to return to the statute's plain language, which states that 'the increase in the value of property acquired prior to marriage', is non-marital."
The Justices also pointed out in their ruling that the normal exceptions to the property division statute, permits the division of non-marital property in a divorce, in certain cases. This statute permits the division of non-marital property if the Court deems it equitable in the case of: length of marriage, age, health, occupations, and sources of income, employability and so forth. But the court must determine its bases for not returning the non-marital property to its owner.
Take away: Each state is governed by its own statutes. However, rulings in one state are noticed by others, with changing tides possibly beginning anew elsewhere. It is also important to note that commingling of assets within a marriage will change the very nature of an asset from non-marital to marital status, thus leaving the asset open to division should a divorce occur.
We are ready to discuss this Arkansas Supreme Court ruling and its implications. Contact your advisor at Smolin. We can help avoid the potential pitfalls awaiting you, and present positive alternatives for your path.