Debt and Property Division in Minnesota
Learn the basics about dividing property, assets, and debts during a divorce in Minnesota.
How do Minnesota courts divide property in divorce?
When a couple divorces in Minnesota, the law requires judges to "make a just and equitable division of the marital property." Minnesota is a no-fault divorce state, so it doesn't matter who's responsible for the breakdown of the marriage; the judge still has to divide the marital property equitably. A "just and equitable" division is one that's fair, but not necessarily equal.
Minnesota courts look at all of the following factors to reach a decision about how to divide marital property:
- The length of the marriage
- Any prior marriages
- The age, health, station, occupation, amount, and sources of income of each spouse
- Vocational skills, employability, estate, liabilities, needs, opportunity for future acquisition of capital assets, and income of each spouse
- The contribution of each spouse in the acquisition, preservation, depreciation or appreciation in the amount or value of the marital property, and
- The contribution of a spouse as a homemaker.
Of course, divorcing couples can and do reach out-of-court settlements all the time. If you're going through a divorce in Minnesota, you and your spouse can agree to divide marital property in whatever way you want. It's always wise to settle if possible, because that way you control the outcome of your case. Otherwise, it will go to trial, and a judge—who won't know nearly as much about your personal situation as you do—will be in charge.
What kinds of property can Minnesota courts divide?
There are two basic types of property: real and personal. "Real property" is connected to land and consists of things like homes, cabins, commercial property, and acreage. "Personal property," on the other hand, is everything else. Bank accounts, clothing, automobiles, retirement interests, jewelry, furniture—these are all examples of personal property. Minnesota's divorce laws provide for the division of real and personal property alike.
There are also two additional types of property: marital and nonmarital.
"Marital property," which is what has to be divided in a divorce, consists of everything a couple acquired while they were married.
"Nonmarital property," by contrast, is not divided by the courts. Nonmarital property is the property that the spouses acquire separately, usually before they're married. It belongs to them as individuals, independent of the marriage.
Minnesota law applies a presumption (a legal assumption) that any property a spouse acquires during the marriage is marital. To overcome this presumption and lay claim to nonmarital property acquired during the marriage, a spouse must prove to the judge that the property is nonmarital by a "preponderance of the evidence" (meaning, it's more likely than not that the disputed property is nonmarital).
How are gifts treated?
Gifts, inheritances and property that a spouse had before a marriage are all subject to a "tracing" requirement. For example, it's common for one spouse to receive a monetary gift or inheritance from a family member, then apply it to the mortgage on the marital home. When that happens, the gift is gone—the money has been spent on the house. But the spouse who received the gift and used it on the marital property still has a nonmarital interest.
Minnesota law requires that in these situations, the spouse claiming a nonmarital interest must "trace" the gift to a marital asset in order to be credited for the nonmarital interest. In other words, if the spouse who received the gift can furnish proof that the gift was spent on the marital asset (the house), like bank statements or cancelled checks, then the court will make sure the spouse is reimbursed appropriately.
What about debts?
Minnesota courts aren't just required to divide assets. They have to divide up the marital debts too. The judge has to decide whether debts are joint or sole. Even if a debt was incurred during the marriage, the judge could still decide that it was an individual debt that benefitted only one party, and make that party responsible for repaying it. Minnesota judges have a lot of latitude in deciding how to apportion debt.
How do courts determine the value of property?
Minnesota courts welcome expert testimony to help them decide what different kinds of property are worth. This isn't required, but it can be very helpful and can assist the judge in making an informed, accurate decision. For instance, a certified public account could explain the current and future value of a retirement account, and a real estate agent or appraiser could testify to the value of a building as compared to similar properties.
One thing to remember is that expert witnesses don't testify for free. Their services can be expensive. You and your lawyer (if you have one) will have to decide whether the expense is worth it.
When it comes to household goods and furnishings, however, Minnesota law assumes that the property owners know the worth of their belongings. So, you will be able to testify and tell the court what you think the value of these items—like clothing, furniture, appliances, computers, and dishes—should be. Because spouses tend to become sentimental about many of these items, it's common for Minnesota courts to order that some of the items be sold and the proceeds shared equally; to assign them a compromise value and split it down the middle; or to allow the spouse to keep some, but not all, of the items they requested.
What date should we use to value our property?
Minnesota law indicates that unless the spouses agree otherwise, the date of valuation of marital property is the day of the initially scheduled prehearing settlement conference. This conference, which is mandatory, is an opportunity for both sides to come together with the judge and hammer out their differences in a last-ditch effort to avoid a trial.