dissenting.
The majority opinion’s analysis is erroneous in two respects: (1) its conclusion that the presumption of marital property set forth in KRS 403.190(3) applies to an increase in value of nonmarital property; and (2) its conclusion that there was insufficient evidence to support the trial judge’s finding that the increase in value of the parties’ marital residence was at least partly due to passive appreciation, i.e., inflation, as opposed to marital contributions. A more fundamental error is the majority opinion’s complete disregard of evidence of a substantial marital contribution to the ultimate equity value of the property in question, viz: the payoff of the mortgage with marital funds.
I.
Our present dissolution of marriage act was enacted by the 1972 General Assembly. 1972 Ky. Acts, ch, 182. Section 9 of the act pertaining to disposition of property, now compiled at KRS 403.190, was adopted almost verbatim from the 1970 version of section 307 of the Uniform Marriage and Divorce Act promulgated by the National Conference of Commissioners on Uniform State Laws. See 9A Uniform Laws Annotated, Uniform Marriage and Divorce Act, § 307, Comment, at 240 (“Amendments”) (West 1987). (In 1973, those portions of the Uniform Act relating to classification of property as marital or individual (nonmarital) were deleted. Those issues are now addressed in Section 4 of the Uniform Marital Property Act. Id., *914Uniform Marital Property Act, § 4, at 109-10.) The only two subsections of KRS 403.190 relevant to the present inquiry are subsections (2)(e) and (3). Since subsection (2) creates exceptions to the marital presumption established in subsection (3), the subsections will be considered in reverse order. KRS 403.190(3) provides:
All property acquired by either spouse after the marriage and before a decree of legal separation is presumed to be marital property, regardless of whether title is held individually or by the spouses in some form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, and community property. The presumption of marital property is overcome by a showing that the property was acquired by a method listed in subsection (2) of this section.
(Emphasis added.) Except for a numbering variation, KRS 403.190(3) is a verbatim adoption of section 307(c) of the 1970 version of the Uniform Marriage and Divorce Act, supra. Of course, the converse of the first premise of subsection (3) is that property acquired by either spouse before the marriage or after a decree of legal separation is not marital property. Sousley v. Sousley, Ky., 614 S.W.2d 942 (1981); Robinson v. Robinson, Ky.App., 569 S.W.2d 178 (1978). Thus, the last sentence of the subsection applies only to property acquired after the marriage and before a decree of legal separation and specifically provides that the marital presumption with respect to such property is overcome “by a showing” that the property was acquired by one of the methods listed in subsection (2). In this ease, the after-acquired property in question was the increase in value of the parties’ residence from the date of purchase in August 1987 until its destruction by fire in August 1994.
KRS 403.190(2) provides, inter alia:
For the purpose of this chapter, “marital property” means all property acquired by either spouse subsequent to the marriage except:
[[Image here]]
(e) The increase in value of property acquired before the marriage to the extent that such increase did not result from the efforts of the parties during marriage.
(Emphasis added.) The emphasized language was not contained in section 307(b)(5) of the 1970 version of the Uniform Marriage and Divorce Act. Professor Louise Graham posits that the added language was engrafted onto KRS 403.190(2)(e) from pre-existing Kentucky case law, e.g., Colley v. Colley, Ky., 460 S.W.2d 821, 826-27 (1970). Louise E. Graham, Using Formulas to Separate Marital and Nonmarital Property: A Policy Oriented Approach to the Division of Appreciated Property Upon Divorce, 73 Ky. L.J. 41, 54n. 68 (1984-85). The parallel exception in section 307(b)(5) of the 1970 version of the Uniform Act was only for “the increase in value of property acquired before the marriage.” Thus, section 307(b)(5) did not provide for the creation of a marital interest in nonmarital property by “team efforts,” or what the majority opinion in this case refers to as “sweat equity,” but required the same result as had our interpretation of our former restoration-of-property statute, KRS 403.060 (repealed 1972 Ky. Acts, ch. 182, § 29). See generally Sandusky v. Sandusky, 166 Ky. 472,179 S.W. 415 (1915) (absent an agreement between the parties, a spouse is not entitled to reimbursement for expenditures made during the marriage to improve the other spouse’s separate (nonmarital) property). Section 4(b) of the Uniform Marital Property Act also contains a presumption of marital property; and section 4(g)(3) now provides an exception for property ac*915quired “from appreciation of the spouse’s individual property except to the extent that the appreciation is classified as marital property under Section 14 [‘Mixed Property’].” Thus, the relationship between sections 4(b) and 4(g)(3) of the Uniform Marital Property Act parallels the relationship between subsections (3) and (2)(e) of KRS 403.190. The official Comment to section 4(g)(3) of the Uniform Marital Property Act explains:
Assume that one spouse comes to a marriage subject to the Act as the owner of a valuable piece of real estate. It is individual property. If it quadruples in value, it is still individual property. While its income is marital property, the property itself and its appreciation in value is almost always individual property. One exception is the special rule announced in Section 14(b). That rule is concerned with the application to the individual property of one spouse of personal effort by the other spouse. It could apply in limited situations, but establishing it requires a very strong showing. (Emphasis in original.)
Thus, while the National Conference of Commissioners on Uniform State Laws subsequently adopted an exception similar to KRS 403.190(2)(e), the Commissioners recognized that the burden should be on the proponent of the marital interest to make “a very strong showing” that an increase in value of one spouse’s individual (nonmarital) property was attributable to marital efforts.
I agree with the majority opinion that the initial burden is on the proponent of the nonmarital interest to prove that property acquired during the marriage falls within one of the exceptions in KRS 403.190(2). However, I also agree with the Commissioners on Uniform State Laws that once it is established that a property interest acquired during the marriage is but an increase in value of a nonmarital asset or interest, the burden shifts to the proponent of the marital interest to show that any portion of the increase was due to a marital contribution. As Professor Pe-trilli notes in his treatise, KRS 403.190(2)(e) “contains an exception to an exception.” Ralph S. Petrilli, Kentucky Family Law, § 24.9, at 301 (2d ed. Anderson 1988). I agree and would hold that evidence that a property interest acquired during the marriage is but an increase in value of a nonmarital asset or interest rebuts the marital presumption and the presumption, thus, disappears. Commentary to KRE 301, Evidence Rules Study Committee, Final Draft (1989); cf. Magic Coal Co. v. Fox, Ky., 19 S.W.3d 88, 95-96 (2000). Absent any other proof, the increase in value follows the nonmarital interest, but evidence that all or any part of the increase is due to marital contributions creates an exception to the exception necessitating apportionment of the marital and nonmarital interests. Newman v. Newman, Ky., 597 S.W.2d 137, 139 (1980).
The proponent of the nonmarital interest should not have the burden to prove that the increase was due to “inherent causes,” Graham, supra, at 57, i.e., passive appreciation due to inflation, by disproving every other possible influence on the value of the asset. Nevertheless, the insurance payoff in this case was $63,000.00; and simple mathematics shows that, at an inflation rate of five percent per annum (a conservative estimate for the period 1987-1994), a house purchased in August 1987 for $46,868.90 would increase in value to $65,949.26 by August 1994, viz:
[[Image here]]
*916[[Image here]]
In Newman v. Newman, supra, we specifically rejected the result reached by the Court of Appeals and the majority opinion in this case, i.e., simply reimbursing the owner of the nonmarital interest for his nonmarital contribution and dividing the increase in value as marital property.
Polly argued that the proper disposition of the property would have been to reimburse William for the full amount of his contribution ($55,000) and the difference, which would be marital property, be divided as other marital property (60%-40%).... The trial court did not concur in that formula. The Court of Appeals did not concur in that formula, and neither does this court. We do concur in the formula used by the trial court in arriving at the monetary value of the interest (sic) of the parties.
Id. at 139. The trial court’s formula approved in Newman was similar to that more fully defined in Brandenburg v. Brandenburg, Ky.App., 617 S.W.2d 871 (1981) and utilized by the trial court in this case.
II.
Even if Appellant were required to disprove the existence of marital improvements to the value of the parties’ residence, the majority opinion’s conclusion that he failed to do so is belied by the record. It was uncontested that the residence was purchased with a $7,500.00 down payment and a mortgage loan of $39,368.90, and that the $7,500.00 down payment was traced to the sale of an antique automobile owned by Appellant prior to the marriage. During the course of his proof, Appellant called Appellee as a witness as if on cross-examination, CR 43.06, in an attempt to elicit information with respect to any claimed marital contributions to the value of the residence:
Q. Jeff has testified that the total amount of money you put into the house was this money that was borrowed [and] this $7,500, which is roughly $47,000, would you agree to that statement?
A. Yes.
Q. ... [W]ere there any other things you did to the house after you had it constructed with this mortgage money and $7,500?
A. What do you mean?
Q. Did you do any other improvements later after you borrowed this money with the $7,500?
A. Yes, we, I did all the wallpapering, painting and staining.
Q. Let me ask you this question, as far as wallpapering, staining and painting, did you say you and Jeff did that?
A. I did most of that.
Q. Was the money borrowed, used to buy the paint, the stain and the wallpaper of the borrowed money and the $7,500?
A. I made some crafts and things and used some of that money and as soon as we got the money, a little at a time.
Q. Let me ask you this question. Do you have an opinion as to how much the paint, stain, and wallpaper you put in there?
A. No.
Q. Let me ask you, I’m not trying to put you on the spot, I’m trying to *917get an idea, would it be more than $500 or less? As far as the cost of them?
A. I don’t really know.
Q. Do you think it’s more than $500?
A. (Inaudible.)
Q. Can you give a closer estimate or not, if you can’t, that’s all right.
A. (Inaudible.)
Q. Do you have an opinion to give the court as to what the staining, the painting and the wallpaper, how much it would increase the value of the house?
A. Quite a bit, I mean that’s what made it was the inside. I mean the decorating of the inside.
Q. Do you have an opinion as to how much that increased the value, in other words, when the money was borrowed and the house was built the $47,000 roughly, do you have an opinion as to what the value of the painting, the wallpapering and the staining, if you have one? If you don’t, I understand that.
A. I don’t know.
During the presentation of her proof, Appellee testified as follows:
Q. Now you testified to the painting, staining and things like that?
A. Yes.
Q. Did you do anything else?
A. Yes, I made curtains ... (inaudible).
Such was the sum and substance of the evidence with respect to any marital improvements contributing to the increase in value of the residence. I am unable to discern what other evidence the majority of this Court would have Appellant produce to disprove any marital contributions to the increase in value of this residence. Should he have hired an expert to testify that since the increase in value was not due to any marital contributions, it was probably due to inflation?
The reason Appellant’s attorney persisted in questioning Appellee about the monetary value of her claimed marital contributions is that nonmonetary contributions have, from Brandenburg until today, been disregarded in apportioning marital and nonmarital interests in transmuted property. Brandenburg v. Brandenburg, supra, at 873, overruling Robinson v. Robinson, supra. This is consistent with the view of the Commissioners on Uniform State Laws, as expressed in the official Comment to section 4(g)(3) of the Uniform Marital Property Act, supra, that the proponent of the marital interest must establish that interest by “a very strong showing.” Under Brandenburg, that burden is met by proof of an expenditure of marital funds, but not by evidence of “sweat equity.” Id. at 873. Apportionment in Kentucky has traditionally followed what Professor Graham characterizes as the “source of funds” rule. Graham, supra, at 47. By recognizing “sweat equity” as a marital contribution, the majority has overruled Brandenburg, sub silentio, and, in doing so, has eviscerated any hope for consistency in property divisions in divorce cases by vesting trial courts with virtually unfettered discretion to “find” amorphous “sweat equity” contributions to apportion into nonmarital assets and thereby reduce the value of nonmarital estates. This case is a perfect example. The Brandenburg requirement that marital or nonmarital contributions be monetary in nature before considered for apportionment purposes was first ignored by the trial judge, who found a $1,000.00 marital contribution based on Appellee’s “sweat equity” testimony. Worse, both the Court of Appeals and now this Court have effectively found a $15,864.14 marital contribution based on that same testimony. Under Branden*918burg, Appellee’s nonmonetary contributions to the value of the residence should not have been considered. However, since Appellant did not cross-appeal from the trial court’s apportionment, I would, at worst, affirm the trial court’s finding of a $1,000.00 marital contribution.
III.
What the majority opinion completely overlooks is that the payoff of the mortgage indebtedness was, itself, a marital contribution to the equity value of this residence. This is not a case, as in Newman or Brandenburg, where we are required to determine the marital and non-marital interests in an existing asset that is encumbered by a mortgage indebtedness. This residence was purchased partially with Appellant’s $7,500 nonmarital money and partially with a $39,368.90 mortgage loan that was paid off during the marriage with marital funds.
Under Brandenburg, any reduction of the mortgage principal by application of other than nonmarital funds is a marital contribution. Actually, Brandenburg first said that the marital contribution included “the amount expended after the marriage from other than nonmarital funds in the reduction of mortgage principal” (and/or capital improvements). Brandenburg, supra, at 872 (emphasis added). However, the apportionment formula actually promulgated in that ease treated the marital contribution as the amount by which the mortgage principal was reduced during the marriage, not the amount expended to accomplish that reduction. By emphasizing the creation of equity instead of funds expended to create equity, the Brandenburg formula usually leverages the non-marital interest to the detriment of the marital interest because, in a normal mortgage contract, payments made during the early life of the mortgage (and, usually, the early life of the marriage) are assigned primarily to interest and very little to principal. John W. Potter and Ellen B. Ewing, Apportioning Marital and Nortr-Marital Interests in a Single Asset, Ky. Bench <& Bar, Vol. 9, No. 2, at 14, 15 (1983). Thus, in a marriage of short duration, as much as 90% of mortgage payments made during the marriage may have been assigned to interest and as little as 10% to principal, ie., creation of equity; yet, payments assigned to interest are not considered marital contributions under Brandenburg. Of course, the Brandenburg approach to mortgage reduction cannot be fairly applied in this case because, although some mortgage payments may have been made, the balance owed on the mortgage in August 1994 was actually greater than the original mortgage loan in August 1987.
As suggested by Professor Graham, and as promised but not delivered in Brandenburg, a true “source of funds” approach to apportionment would credit the marital interest with amounts expended from other than nonmarital funds in the nature of (1) mortgage payments, whether applied to principal or interest, (2) taxes and insurance payments, and (3) expenditures for capital improvements. Cfi Graham, supra, at 69-73. This “investment” approach to the Brandenburg formula was advocated by the author of this opinion at domestic relations seminars at the University of Kentucky in April 1985, the University of Louisville in October 1985, and the annual meeting of the Kentucky Bar Association in June 1988. Unfortunately, like the Brandenburg approach, the “investment” approach cannot be applied in this case because neither party presented any evidence of amounts actually expended in the way of monthly mortgage payments, taxes and insurance, or capital improvements.
*919Nevertheless, we do know that the remaining balance of the mortgage on this residence was paid in full during the marriage with the proceeds of an insurance policy purchased during the marriage. If the mortgage had been paid off by, e.g., monthly mortgage payments over the duration of the mortgage, the marital contribution under Brandenburg would have been $39,368.90. Under the investment approach, the marital contribution would have been all payments made on the mortgage loan, whether applied to principal or interest. The result should be no different here, except that the final payoff was $39,635.86. Thus, including the unauthorized, but uncontested, application of Ap-pellee’s $1,000.00 “sweat equity” contribution, the marital interest (MI) and the nonmarital interest (NMI) in this property can be calculated as follows:
[[Image here]]
Since the $39,635.86 mortgage payoff is treated as a marital contribution, the payoff must be credited against the marital interest. The marital interest thus becomes:
[[Image here]]
The trial judge concluded under the facts of this case that a division of marital property “in just proportions,” KRS 403.190(1), would be an equal division. Accordingly, Appellee should have been awarded $6,774.37 and Appellant $16,589.77 as their respective shares of the remaining insurance proceeds:
[[Image here]]
Brandenburg contains a specific disclaimer that apportionment formulas other than the one defined in that case may be “utilized ... in arriving at an equitable division of property as long as the relationship between the contributions of the parties is established.” Id. at 873. Often, as here, the formula to be used will be dictated by the evidence offered by the parties. The apportionment formula used in this opinion virtually mirrors the formula described by Judges Potter and Ewing in their 1983 article, supra, and is the only formula capable of being fairly applied to the facts proven in this case.
For the foregoing reasons, I respectfully dissent.
JOHNSTONE, J., joins this dissenting opinion.