In Thompson v. Wolfram, the Indiana Court of Appeals addressed a common source of conflict in dissolutions involving prenuptial agreements: what happens to the appreciation of separate property during the marriage? This case provides important guidance for those in family court, underscoring that the precise wording of a prenup controls the outcome. 

Background of the case

The husband and wife signed a prenuptial agreement the day before their wedding in 1996. The agreement stated that all property each party owned at the time of marriage (and kept titled separately) would remain that spouse’s “sole and separate property” and not be divided upon divorce. 

When the parties filed for dissolution in 2016, one asset became the centerpiece of their dispute: the Husband’s retirement accounts, which had grown to nearly $1 million. The husband argued that his entire retirement portfolio remained separate property under the prenup because the accounts existed before the marriage and always remained titled solely in his name. The wife, however, countered that while the initial value at the time of marriage may have been separate property, the accrued growth and appreciation should be considered marital property and divided accordingly.

The trial court’s ruling

In this case, the trial court agreed with the wife. It held that the prenuptial agreement clearly established the non-marital status of the property the husband owned at the time of the wedding. However, the agreement said nothing about future contributions, earnings, or appreciation generated during the marriage. Due to that silence, and because Indiana’s marital estate statute requires courts to place all assets into the “marital pot” before dividing them, the court found that appreciation on the husband’s retirement accounts was marital property and subject to equitable distribution. 

The husband appealed, arguing that the prenup’s broad language should be read to include all later growth. 

The appeal

The Court of Appeals affirmed the trial court. Applying Indiana’s version of the Uniform Premarital Agreement Act (UPAA) and standard contract interpretation principles, the court held that:

• Prenuptial agreements are contracts, and their wording must be enforced as written
• When a prenup identifies certain assets as separate property but does not address their future appreciation, that silence cannot be filled in by inference.
• Indiana’s “one pot” marital estate rule (Indiana Code § 31-15-7-4) requires that all property owned at dissolution (including appreciated value) be included in the estate unless specifically excluded by a valid agreement. 

Since the agreement did not exclude appreciation, the court concluded that the trial court properly awarded the wife one-half of the accumulated value of the retirement funds.

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