What Assets Cannot Be Split in a Minnesota Divorce?
Going through a divorce can be an emotionally and financially difficult time. When a marriage ends, one of the most complex issues to resolve is how to divide marital assets and debts equitably. This process is called property division.
While most marital property is divisible in divorce, some assets are considered separate in Minnesota. Understanding what can and cannot be split in your divorce case is crucial to protecting your rights and reaching a fair settlement.
How Are Assets Divided in a Minnesota Divorce?
Minnesota is an “equitable distribution” state regarding divorce asset division. This means that marital property is divided in a fair and just manner, though not necessarily equally. The court seeks to distribute assets proportionately to each spouse’s contribution to acquiring them.
The process of property division typically involves:
- Identifying all marital assets and debts
- Determining the fair market value of each item
- Deciding who will retain or receive each asset and liability
Both spouses are expected to complete a financial affidavit detailing income, expenses, assets, and debts. This helps provide a clear picture of the marital estate.
What is Considered Marital Property in Minnesota?
Minnesota Statute 518.003 subd. 3b defines marital property as anything acquired by either spouse during the marriage, with some exceptions. This includes:
- Income and earnings of both spouses
- Retirement accounts like 401(k)s and IRAs
- Pensions and annuities
- Real estate and homes
- Bank accounts and investment accounts
- Businesses started during the marriage
- Vehicles, jewelry, art, and other personal property
- Debts accrued during marriage
Property acquired prior to the marriage or received by gift or inheritance during the marriage is generally considered non-marital property belonging solely to one spouse in Minnesota.
What Assets Are Not Divided in a Minnesota Divorce?
While most assets acquired during the marriage are divisible in a Minnesota divorce, there are some exceptions the court cannot split between spouses.
Non-Marital Property Owned Before Marriage
Any property brought into the marriage by one spouse is considered that spouse’s separate, non-marital property. This includes assets like:
- Real estate or homes owned before marriage
- Businesses started before marrying
- Vehicles owned before the marriage
- Investments and financial accounts held before marrying
- Retirement accounts established before marriage
- Family heirlooms and collectibles
Unless this separate property became commingled with marital assets during the marriage, it remains the individual property of that spouse and is not subject to division.
Gifts and Inheritances
Gifts and inheritances received by one spouse from a third party during the marriage are also classified as non-marital property belonging solely to the recipient spouse. The court has no jurisdiction to divide gifts and inheritances in a Minnesota divorce. This includes assets like:
- Inheritances of money, property, or other valuables
- Gifts given to only one spouse
- Life insurance payouts to one spouse
Notably, gifts given jointly to both spouses are generally considered marital property subject to division.
Property Acquired After Separation
Under Minnesota Statute 518.003 subd. 3b. Any assets or property acquired by a spouse after the valuation date are considered non-marital property.
The valuation date is established as the earlier of:
- The date of the initially filed divorce petition
- The date the couple physically separated and no longer lived together
So, any property or assets acquired after separation – such as income earned, gifts received, or property purchased after separation – belong solely to the acquiring spouse.
Property Titled Only in One Spouse’s Name
In Minnesota, the fact that property is only titled in one spouse’s name does not necessarily make it non-marital property. However, property titled solely in one spouse’s name acquired prior to marriage or received as a gift or inheritance may be considered separate property belonging only to that spouse.
Pensions and Retirement Accounts
Retirement assets like pensions and 401(k)s are generally considered marital property up until the valuation date. Contributions made after separation may be considered non-marital property that cannot be divided by the court.
How Non-Marital Assets are Handled
When dividing marital property in a Minnesota divorce, the court must make an equitable division of only the marital assets and debts. Non-marital property is set aside for the owning spouse.
However, there are a few ways non-marital property may impact the overall divorce settlement:
- If the marital property was used to improve the non-marital property, the marital estate may be entitled to reimbursement. For example, if marital funds were used to remodel a home owned before marriage.
- The court may consider substantial non-marital property owned by one spouse when determining an overall equitable distribution.
- A spouse may be ordered to pay the other spouse non-marital property in lieu of marital property, such as when dividing a business or real estate holdings.
While the non-marital property itself cannot be divided, the court has some discretion when handling non-marital assets to ensure an equitable outcome. Discuss any concerns about protecting non-marital property with an experienced Minnesota divorce lawyer.
Can Non-Marital Assets Become Marital Property?
In some cases, non-marital property can lose its status and essentially become marital property subject to division in a Minnesota divorce. This occurs if separate assets have been commingled with marital property to the point where they have lost their separate identity.
Some examples of commingling include:
- Putting the non-marital property in joint names with your spouse
- Using income earned from non-marital assets for family expenses
- Using marital funds to pay down debt on non-marital property
- Depositing money from separate accounts into joint accounts
Extensive commingling can make it difficult to trace non-marital assets and prove they should be excluded from the division.
How to Protect Assets in a Minnesota Divorce
The reality is property division often becomes a battle in contentious divorce cases. Spouses may fight relentlessly to get the largest share of marital property possible.
If you want to protect assets from your spouse in a divorce, some options include:
- Prenuptial agreement: Signing a prenup before marriage is the best way to protect non-marital assets in the event of a divorce. You and your spouse agree in writing on how to divide property.
- Postnuptial agreement: If already married, a postnup can be signed to designate separate property, not subject to division if you divorce. This requires financial disclosure and written consent by both spouses.
- Avoid commingling assets: Be careful not to commingle marital and non-marital assets in joint accounts or joint names. This helps maintain a separate identity.
- Settle out of court: Trying to settle a divorce outside of the courtroom through mediation or collaborative divorce can help you retain more control over the division of assets and debts.
A Minnesota family law attorney can help build a strong case for protecting your separate property and obtaining a fair settlement. Don’t navigate a divorce without legal guidance.
Working with a Minneapolis Divorce Lawyer from Martine Law to Protect Your Assets
The seasoned divorce attorneys at Martine Law have helped many Minnesota residents achieve favorable property division results. Our legal team will aggressively protect your rights and provide counsel each step of the way.
To discuss your situation in a free consultation, contact our Minneapolis office today. We have experience with all types of divorce cases and asset division matters. Call now to get representation on your side during this challenging time.