Division of Assets in Divorce

/ February 17, 2014

Keys & Contract - iStockWhen a couple determines that it is time to end their marriage, what should be the easiest part of the divorce process can, and often does, turn into one of the most contentious: the division of marital assets and property. Parties will often spend thousands of dollars on attorney fees arguing over personal property ranging from big ticket items such as retirement assets or real property all the way to the seemingly less consequential items like furniture and DVD collections.

Under Minnesota law, the court is required to make “a just and equitable division of the marital property of the parties.” There are two types of property in a divorce proceeding: marital property and non-marital property.

Marital Property

Marital property is defined as real or personal property acquired by the parties at any time during the existence of the marriage before the valuation date. All property acquired during the marriage is presumed to be marital regardless of whether title is held individually or by the spouses in some form of co-ownership including joint tenancy, tenancy in common, tenancy by the entirety, or as community property.

Non-Marital Property

Non-marital property is defined to include:

  • real or personal property acquired before, during, or after the marriage as a gift, bequest, devise, or inheritance made by a third-party to one
  • spouse but not the other;
  • real or personal property acquired before the marriage;
  • real or personal property acquired by a spouse after the valuation date; or
  • real or personal property that is excluded by a valid antenuptial contract.

Valuation Date

The valuation date is an important date in a dissolution proceeding that is used to value the assets during a divorce. Under Minnesota law, the valuation date is presumed to be the initially scheduled prehearing settlement conference. This valuation date may be changed however if a different date is agreed upon by the parties, or the court makes specific findings that another date of valuation is fair and equitable. Valuation of marital assets is a frequent point of contention in dissolution proceedings and can result in costly and complex valuations performed by experts.

Just & Equitable

A “just and equitable” division of marital property does not mean that the division of marital property must be equal. Under Minnesota law, the courts have considerable discretion in determining what is just and equitable which often varies from court to court.

Factors that a court will consider in dividing your marital property include:

  • the length of the marriage;
  • any prior marriage of a party;
  • age, health and station of the parties;
  • occupations of the parties;
  • amount and sources of income;
  • vocational skills and employability;
  • the parties’ respective estates and liabilities;
  • the parties’ needs;
  • opportunity for future acquisition of capital assets;
  • the respective contributions of each party in the acquisition, preservation, depreciation or appreciation in the amount or value of the marital property; and/or
  • the contribution of a spouse as a homemaker.

The court will also consider any transfers, encumbrances, concealment or disposition of marital assets in contemplation of commencing a dissolution proceeding. If one party transfers, encumbers, conceals, or disposes of a marital asset in contemplation of their divorce proceeding, and without the consent of the other spouse, the court will compensate the other spouse by placing both parties in the same position they would have been in had that transaction not occurred. The exception to this rule is where the assets were transferred, encumbered, concealed or disposed of in the usual course of business or for the necessities of life.

Where the court finds that one spouse’s resources or property are inadequate, and in addition to awarding marital property, the court may apportion up to one-half of the non-marital property of the opposing spouse in order to prevent an unfair hardship on one spouse.

This overview of property division in a Minnesota divorce proceeding is meant to provide you with a working knowledge of how courts approach the division of property in a divorce proceeding. Under Minnesota law, courts have wide discretion in determining how the marital estate is divided and every case is different. You should consult an experienced family law attorney if you have questions or concerns about the division of property in your divorce proceeding. In addition, consulting an experienced estate planning attorney regarding pre-nuptial and post-nuptial agreements may help limit or protect what assets are considered marital property for purposes of your divorce.