Non-marital property is generally awarded to the owner of the property, unless it would cause an “undue hardship” not to share it with the other spouse. Non-marital property generally loses its non-marital status if it’s merged with marital property unless it can be easily traced back to the non-marital property.
Determining whether income or appreciation received from the non-marital property becomes marital property can be somewhat complicated. Income received from non-marital property is deemed marital property because it’s a product of the asset. It can liquidated and sold during the marriage. However, appreciation of the asset is deemed non-marital property because it’s intrinsic to or part of the asset. It can only be realized when the asset is sold. For example, rental income and stock dividends from non-marital property are marital property. To further complicate matters, courts treat active and passive appreciation of non-marital assets differently. If a non-marital asset increases in value due to the actions of the spouse who does not own the non-marital property, the increased value becomes marital property. For example, if a spouse inherits a house that is non-marital property, but the other spouse spends time renovating or taking other actions to increase the value of the house, that value becomes marital property which is divided between the spouses if their marriage is dissolved.