How is Property Divided in a Divorce?

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Minnesota is an “equitable distribution” state. This means that if the parties cannot agree on how property will be split up, the court will try to do it in a fair way. Very often this means a 50/50 split, but the Court sometimes thinks it is fair that one party should get more than half of the property. Minnesota law says marital misconduct shall not be a factor in dividing property. However, an exception to this rule may be made in the case of waste of assets or fraud.

MARITAL PROPERTY. Generally speaking, the only property divided is “marital property”. “Marital property” is property acquired by either the wife or husband during the marriage which was NOT received as a gift, inheritance, or covered by a valid pre-nuptial agreement. Certain types of damages recovered in some court cases may also be considered non-marital property. Non-marital property (owned before the marriage, received by gift, or inheritance, etc.) usually goes to the person who brought it into the marriage. In an unusual case the Court may give some (but not more than half) of your non-marital property to your spouse if your spouse’s resources are so inadequate as to cause an “unfair hardship”.

MIXED PROPERTY.  Property is often part marital and part non-marital.  For instance, a spouse may continue to contribute to a pension after he or she is married.  The part earned before marriage will be non-marital and the part contributed during marriage is marital.  If mortgage payments on a home owned by a spouse before the marriage are made with money earned during the marriage, the home will be considered part marital and part non-marital.  There are rules and cases which deal with how to allot the marital and non-marital portions of such property.  Some of the more difficult cases deal with how to allot appreciation or depreciation in value.  If more marital resources are contributed to the property, a higher percentage of the property will be deemed marital. Property is assumed to be marital unless proven to be non-marital.

REAL ESTATE. It usually makes little difference whether title is held jointly or individually. Real estate is a common example of this. Many people believe that if a spouse’s name is not on the title, the real estate is not affected by the divorce. This is not true. At a minimum, a marriage is a cloud on one’s title to the real estate. This is important when the real estate is sold. Beyond this, a spouse normally has an interest in any increase in equity of the real estate during the marriage.

PENSIONS. Many people do not realize that pension benefits are property. In some ways, Minnesota courts treat pension benefits like savings accounts. Pension benefits accumulated during the marriage are subject to distribution much as deposits added to a savings account during marriage. Courts generally prefer to award a pension to the spouse whose employment resulted in the pension. However, it is sometimes difficult to fairly divide the property if one spouse is awarded all of the pension he or she earned. The parties may both agree to split a pension between them. In these cases the Court has the power to award either spouse a share of the pension benefits earned by the other spouse.

OTHER PROPERTY.  Your lawyer must know about all of your property.  Omitted property may cause major problems years after your case is closed.  Property can include claims such as an account receivable, money owed you on account of an auto accident, money owed you on a contract, an inheritance or lottery winnings.

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