Splitting Assets in A Divorce in Minnesota
Getting divorced can be a complicated process with many legal and financial considerations. One of the most significant issues that must be addressed is how you and your spouse will divide your assets and debts. This division of property is an important part of the divorce agreement and decree.
How assets are divided in a Minnesota divorce depends on whether the item is considered marital or non-marital property. It also depends on whether Minnesota follows community property or equitable distribution rules when splitting marital assets.
What are Marital Assets and Separate Property in Minnesota?
In Minnesota, the law distinguishes between separate property, which belongs to only one spouse, and marital property, which is acquired during the marriage. Marital property is divided between spouses when a divorce is finalized. Separate property typically stays with the spouse who acquired it.
Marital property generally includes:
- Assets purchased or accumulated during the marriage – House, cars, furniture, jewelry, antiques, art, frequent flyer miles, etc.
- Income earned from jobs during the marriage – Salaries, wages, bonuses, etc.
- Retirement benefits accrued during the marriage – 401(k)s, pensions, IRAs, etc.
- Appreciation of non-marital property during the marriage – If a spouse owned a house prior to marriage and it was appreciated during the marriage, the appreciation is considered marital property.
Separate property generally includes:
- Assets owned prior to the marriage – Premarital house, car, furniture, jewelry, etc.
- Inheritances acquired by one spouse prior to or during the marriage.
- Gifts received by one spouse during the marriage – Birthday, holiday, or special occasion gifts just to one spouse
- Compensation for personal injury of one spouse during the marriage – Settlement funds, disability benefits, workers’ compensation, etc.
However, it’s important to note that separate property can become marital property if it appreciates in value during the marriage and is co-mingled with joint funds. An experienced divorce lawyer can help determine what assets are marital and should be divided versus separate property that can be exempt.
How Minnesota Divides Marital Property
Once the court identifies marital and non-marital assets, the next question is how to divide the marital property fairly between divorcing spouses. Different states use different systems:
- Community property states – marital property is divided equally 50/50.
- Equitable distribution states – marital property is divided fairly but not necessarily equally.
Minnesota is an equitable distribution state for dividing marital assets in divorce. This means marital property can be divided unevenly as long as the court considers it a fair division under the circumstances.
The court looks at several factors when determining what is equitable, including:
- Length of the marriage
- Age, health, and income of each spouse
- Whether one spouse cared for the home and children
- Each spouse’s contribution to acquiring marital property
- Economic circumstances and employment prospects of each spouse
- Tax consequences of property division
- Other factors making one division fair and the other unfair
Equitable distribution gives the court flexibility to account for situations where one spouse made significantly higher economic contributions during the marriage or needs more assets due to poor health and inability to work.
Dividing Assets in a Divorce
Beyond the general approach, there are some rules in Minnesota that apply to dividing specific assets in a divorce:
Dividing Real Estate
The marital home is often the most significant asset. Minnesota is an equitable distribution state so that the house can be awarded fully to one spouse or divided based on a percentage of ownership. One spouse may buy out the other spouse’s interest in the home after divorce. Or the home may need to be sold, and proceeds split.
Dividing Retirement Accounts
Retirement plans like 401(k)s and pensions earned during marriage are considered marital property. The value is determined at the time of divorce. The funds are typically divided using a Qualified Domestic Relations Order (QDRO). This splits the account between spouses without tax penalties.
Marital debt like mortgages, car loans, and credit cards taken in either spouse’s name during marriage must also be divided. The court looks at factors like who benefits from spending and who has a better ability to pay. Debts can be divided equally or assigned more to one spouse.
What If We Can’t Agree How to Split Property in Divorce?
Ideally, you and your spouse can come to an agreement on how to equitably divide your assets, debts, and property as part of an uncontested Minnesota divorce. If you are unable to agree, the court will divide your marital assets.
When dividing property in a contested divorce, the court will:
- Identify marital property versus non-marital property.
- Determine the fair market value of all assets.
- Consider arguments made by you and your spouse on what is equitable.
- Divide assets and debts accordingly.
This can be a lengthy process, often requiring financial affidavits, appraisals, oral arguments, and trials. Having an experienced family law attorney make your case to the judge can really impact the property division outcome.
Get Help Dividing Assets from a Minnesota Divorce Lawyer
Having an experienced Minnesota divorce lawyer can help ensure your rights and interests are protected during asset division. At Martine Law in Minnesota, our divorce attorneys have the expertise to help you understand how property will be classified and divided in your unique situation.
We can advise you on building a strong case for an equitable division of assets that considers your contributions during the marriage, financial needs after divorce, and other important factors. If you end up in court, we can powerfully argue for a property split that is fair and financially protects you and any children going forward.
Don’t leave property division to chance. Contact us today to discuss your options for splitting assets in your Minnesota divorce.