Division of Assets in Divorce

The Basics of the Division of Marital Property

Minnesota law requires the district court to make a “just and equitable” division of marital property, after considering all relevant factors, to be discussed further.[1] According to Minnesota Law, “marital property” is defined as property, real or personal, acquired by the parties, or either of them, at any time during the existence of the marriage relation between them, but prior to the date of valuation under section 518.58, subdiv.1.

In general, separate property consists of:

  • Any property that was owned by either spouse prior to the marriage;
  • An inheritance received by the husband or wife (either before or after the marriage);
  • A gift received by the husband or wife from a third party (your mother gave you her diamond ring);
  • Payment received for pain and suffering portion in a personal injury judgment.

However, separate property can lose its separate property status if you commingle it with marital property or vice versa. For example, if you re-title your separately owned home by adding your husband as a co-owner or if you deposit the inheritance from your parents into a joint bank account with him, then that property will most likely now be considered marital property.

All other property that is acquired during the marriage is usually considered marital property regardless of which spouse owns the property or how the property is titled.

As such, marital property consists of all income and assets acquired by either spouse during the marriage including, but not limited to: Pension Plans; 401Ks, IRAs and other Retirement Plans; Deferred Compensation; Stock Options; Restricted Stocks and other equity; Bonuses; Commissions; Country Club memberships; Annuities; Life Insurance (especially those with cash values); Brokerage accounts – mutual funds, stocks, bonds, etc; Bank Accounts – Checking, Savings, CDs, etc; Closely-held businesses; Professional Practices and licenses; Real Estate; Limited Partnerships; Cars, boats, etc; Art, antiques; Tax refunds.

Further, in Minnesota, if your separately owned property increases in value during the marriage, that increase is also considered marital property. The increase will be assessed according to passive or active appreciation. Active appreciation is appreciation that is due, in part, to the direct or indirect contributions or efforts of the other spouse. Only active appreciation is considered when attributing marital value to separate assets.

When determining the division of assets, Minnesota follows the “equitable distribution” rule. Equitable division means that division need not be equal, simply fair and equitable.

Accordingly, the following factors are considered when determining if the division is equitable:

  • The length of the marriage;
  • The income or property brought into the marriage by each spouse;
  • The standard of living established during the marriage;
  • The age and physical/emotional health of each spouse;
  • The income and earning potential of each spouse;
  • The financial situation of each spouse when the divorce is finalized;
  • The contribution of a spouse to the education, training or earning power of the other;
  • The needs of the custodial parent to maintain the lifestyle for the
  • children;
    Other factors that the court may consider relevant.

Due to the broad discretion given to the court in determining what is equitable, predicting the outcome of your divorce is difficult, if not impossible. For that reason, it is best to stay out of court if possible. You and your spouse are much more equipped to determine what is fair based on your history and knowledge of what is best for your family.

[1] Minn.Stat. § 518.58, subd. 1 (2000).

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