Property Division
A Minnesota divorce requires a married couple to split up and divide the things they own and owe. Hopefully that can be done through mutual agreement and without needing a judge to do it because the alternative is a trial. In that situation, the judge will order the division in a way that stranger wearing a black robe believes is fair and equitable.
COMMON QUESTIONS ABOUT PROPERTY DIVISION
How is property divided in a Minnesota divorce?
Minnesota law requires the divorcing couple to divide their marital assets and debts, or the property they obtained and earned during the marriage, in a just and equitable way meaning in a way that makes sense. This division involves all that they have – real estate, bank accounts, vehicles, 4-wheelers and snowmobiles, retirement accounts and pensions, household goods, tools, personal property, mortgages, credit cards, loans, and so on.
Although there are some exceptions, inheritances, gifts, and those assets and debts which existed prior to the marriage, such as a home, are non-marital property and are usually awarded to the person who brought that asset or debt into the marriage.
Minnesota Statute Section 518.58 explains how marital and non-marital property is to be divided in a divorce. Nowhere within the law is a mathematical formula or test to determine how the division must be done. It would be fantastic if it did. Instead, subdivision 1 of the Statute says in part:
the court shall make a just and equitable division of the marital property of the parties without regard to marital misconduct, after making findings regarding the division of the property. The court shall base its findings on all relevant factors including the length of the marriage, any prior marriage of a party, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, needs, opportunity for future acquisition of capital assets, and income of each party. The court shall also consider the contribution of each in the acquisition, preservation, depreciation or appreciation in the amount or value of the marital property, as well as the contribution of a spouse as a homemaker.
It shall be conclusively presumed that each spouse made a substantial contribution to the acquisition of income and property while they were living together as spouses.
The court may also award to either spouse the household goods and furniture of the parties, whether or not acquired during the marriage.
The court shall value marital assets for purposes of division between the parties as of the day of the initially scheduled prehearing settlement conference, unless a different date is agreed upon by the parties, or unless the court makes specific findings that another date of valuation is fair and equitable.
If there is a substantial change in value of an asset between the date of valuation and the final distribution, the court may adjust the valuation of that asset as necessary to affect an equitable distribution.
In the end, there is a lot of subjectivity in the concept of justly and equitably dividing property which leaves room for creativity for reaching an out-of-court settlement. Alternatively, a judge at trial has the discretion to decide what makes a just and equitable division. The outcome could very well be one neither spouse wants, needs or likes.
How does division of property work in a divorce?
Judges strongly encourage parties to use mediation as a settlement tool. While not always successful, mediation is the least expensive route because it saves time, energy, and resources. Its power is based upon compromise as it allows the parties to decide how they want their marriage to end.
It may be necessary to have a professional appraise or value assets, such as a real estate appraiser. If there is a question if property is marital or non-marital, it may be necessary to hire a professional to make this determination.
A trial is the final and last resort. After one or more days of trial, a judge must decide how the couple’s financial resources and assets shall be divided. A judge’s ruling is final unless someone appeals it to the Minnesota Court of Appeals or possibly the Minnesota Supreme Court.
Is a living trust subject to property division upon divorce?
Possibly. The answer depends upon who owns the living trust and whether it is owned by one of the divorcing parties. It is best practice to consult with a Minnesota estate planning attorney to learn how a divorce may impact a living trust and if the living trust may need to be amended in some way.
Can I file a lien on a house in a divorce property division?
Yes, but it is wise to consult with a Minnesota divorce attorney to determine if a lien is the best way to secure and protect a legal interest in the home and to verify if one has a legal interest that allows for a lien to be used.
Does a judge allow an amicable division of property in a divorce?
Absolutely. As a matter of fact, judges want a divorcing couple to amicably figure out child custody and parenting time, child support, spousal maintenance, and the division of marital debts and assets. On the other hand, when spouses cannot come to a meeting of the minds a judge must make the final decision. One or both parties may feel the judge made an inequitable or wrong ruling which in turn may cost more money and time to try to correct. Whenever possible, settle a divorce away from a courtroom.
How does bankruptcy affect the division of property in a divorce?
A divorce does not remove a person’s name from a mortgage, credit card, or medical bill, thus if a spouse is going to absorb and pay a specific credit card in both parties’ names and then files for bankruptcy after a divorce, the remaining spouse is 100% responsible for that debt.
There are situations where a bankruptcy makes sense because the divorcing couple may
have a level of debt that neither can afford on a single income complicating the final division of the marital property and debts. A divorcing couple unable to pay their current debts should consult with a bankruptcy attorney very early in the divorce process to strategize how bankruptcy could positively or negatively affect them both.
How to keep track of the assets and debts that need to be divided in a divorce?
Creating a worksheet is the best way to do this. There is no right or wrong way to create the worksheet. An Excel spreadsheet is a convenient tool since it is very easy to change and update. Another option is creating a spreadsheet using Word although it does not provide the ease of Excel. There is nothing wrong with using a pad of paper to create this worksheet.
No matter the format, a worksheet should include a separate entry for each asset, the fair market value of each asset, the balance of the debt, if any, on an asset, and any other unpaid debt. From there each person can start identifying what items they each want keeping in mind both should aim to receive 50% of what is on their worksheet unless they agree to a different percentage.