What Counts as Marital Property in a Minnesota Divorce?

The most contentious part of getting divorced in Minnesota is often dividing marital assets. Unlike community property states that split everything 50/50, Minnesota uses “equitable distribution” – aiming to distribute property fairly, but not necessarily equally.

The first step is classifying each asset as separate or marital. Separate property belongs to each individual spouse separately and is not divided. However, all marital property is subject to equitable splitting during the divorce.

Therefore, properly identifying marital assets is crucial to protect your rights and ensure you receive a fair share. An experienced divorce attorney can help accurately categorize property and guide you through the process of equitably dividing it with your spouse.

What is Considered Marital Property in Minnesota?

Marital property generally refers to property acquired by either spouse during the marriage. Marital property includes assets obtained during the marriage, as well as property that becomes marital through actions such as the commingling of assets.

According to Minnesota Statute 518.003, there is a presumption that all property acquired during the marriage by either spouse is considered marital property, regardless of the title or ownership.

Examples of Common Marital Property

To understand what exactly constitutes marital property, it helps to look at some common examples of assets that are considered marital property subject to division in a Minnesota divorce:

The Marital Home

The home a married couple lives in during the marriage is almost always considered marital property regardless of how the title is held. Even if only one spouse is listed on the mortgage and deed, both spouses are presumed to have contributed to the home in some way during the marriage.

Unless proven otherwise, both spouses share an interest in the marital home, even if one spouse purchased the home before the marriage. Appreciation of the home’s value during the marriage is considered a marital asset. In some cases, a spouse may be able to prove a non-marital interest in the home through a prenuptial agreement.

Retirement Accounts

Retirement accounts like 401(k) plans and pensions in which contributions were made during the marriage are classified as marital property. This includes contributions from a spouse’s income during the marriage, along with any growth or employer contributions made to the account during the marriage.

Typically, the total balances of retirement accounts are not divided; rather, the marital portion is determined using a formula based on the time rule. This divides the account based on the ratio of years contributions were made during the marriage compared to the total lifetime of the account.

Bank Accounts and Investments

Bank accounts like checking and savings accounts opened during the marriage are marital property, even if they are only in one spouse’s name. Money earned and deposited into accounts during the marriage makes the accounts marital assets. The same applies to investment accounts opened and contributed to during the marriage.

Businesses

Any business interests established during the marriage are marital property subject to equitable distribution. This includes partnerships, corporations, sole proprietorships, and LLCs.

The total value of the business would be determined and then divided equitably, which may involve one spouse keeping the business assets and providing the other spouse an offsetting amount of cash or other marital property.

Vehicles

Cars, trucks, motorcycles, ATVs, snowmobiles, boats, and other vehicles purchased by either spouse during the marriage are considered marital property. This is true even if the vehicle is only titled in one spouse’s name.

So, if a wife purchased a new SUV during year 10 of marriage, the value of that SUV at the time of divorce would likely be divided between the spouses.

Personal Property

Nearly all personal property acquired during a marriage, such as furniture, jewelry, art, vehicles, recreational equipment like boats, and other household possessions, are considered marital property regardless of whose name they are titled in.

Items inherited or received as gifts from third parties during the marriage may be considered non-marital property in some cases.

Debts

In Minnesota, marital property includes assets AND debts. So, any debts like mortgages, car loans, student loans, credit cards, etc., acquired during the marriage are divisible in the divorce.

The court will equitably allocate responsibility for repaying marital debt between spouses. This may result in one spouse being ordered to assume more debt as an offset to receiving more assets.

Property That May Remain Separate in a Divorce

While the default under Minnesota law is that assets and property acquired during a marriage are marital property, there are some exceptions.

The following types of property may be considered non-marital or separate property in certain cases:

• Assets owned prior to the marriage – If an asset was acquired before the marriage, it is typically considered separate property unless actions like commingling make it marital.
• Inheritances and gifts – Inheritances and gifts acquired by one spouse from a third party during the marriage may remain that spouse’s separate property if kept sufficiently segregated.
• Compensation for personal injury – Compensation from personal injury lawsuits is generally considered separate property if it is meant to compensate an individual spouse rather than the marriage.
• Property excluded by a prenup or postnup – Spouses can agree via contract through a premarital agreement (prenup) or postmarital agreement (postnup) to classify certain property as non-marital.

Proving an asset as non-marital property requires clear evidence, like records of when the property was acquired, how it has been used during the marriage, and how it has been titled and maintained.

Simply having property solely titled in one spouse’s name does not automatically make it their separate property under Minnesota law.

An experienced Minneapolis divorce attorney can help you understand what property is likely to be deemed marital versus separate in your unique situation.

How Marital Property is Divided in a Divorce

Once assets are identified and classified as marital or non-marital, the next step is equitably dividing the marital property and debts between the spouses. Marital property is not always divided 50/50 or down the middle.

Instead, it is divided in a way the court deems “equitable” based on the circumstances of the marriage.

Factors considered when dividing marital property in Minnesota may include:

• Length of the marriage
• Age, health, occupation, and income potential of each spouse
• Child custody arrangements and parenting time
• Contributions each spouse made to acquiring or maintaining marital property
• Economic circumstances and needs of each spouse
• Tax consequences of property division
• Whether a spouse dissipated or wasted marital assets

Dividing property and debts equitably does not necessarily mean equally, particularly if one spouse is in greater economic need than the other. The division must be fair overall based on each spouse’s unique situation.

Having an experienced Minneapolis divorce lawyer assist with evaluating all marital assets and debts and negotiating an optimal property division is highly recommended.

Getting Help With Property Division

Dividing marital assets and debts during divorce can be extremely complicated. It involves valuing all property, determining appreciation, and understanding how different allocation scenarios impact both spouses.

Working with an experienced Minnesota divorce lawyer is crucial to ensure your rights are protected, and marital property is divided equitably based on your unique situation. The divorce attorneys at Martine Law can provide the guidance needed to get through this complex process and obtain a favorable outcome.

Contact us today to get started.