December 7, 2018

Division of Property and Debts in a Divorce

In Minnesota, all property acquired during the marriage by either party is presumed to be marital property. This means that earnings and property acquired by either spouse are viewed as joint property. The philosophy underlying this is that marriage is a full partnership, and that the contributions of a homemaker are equal in value to those of the bread-winner.

This marital property includes pensions and retirement investments acquired or earned during the marriage, as well as equity in property built up during the marriage. The controlling legal principle which determines the Court’s division of marital property is the rather broad standard of what is “just and equitable.” In general, this means that each party gets half the value of all the marital assets. There are two main forms of non-marital property:

  1. Property acquired before the marriage (or in exchange for property acquired before the marriage).
  2. Property acquired as a gift or inheritance made by a third party to one spouse but not the other (or any property acquired in exchange for such property).

Why is this important? Because unlike marital property, non-marital property belongs wholly (100%) to the person who acquired it. Although the Court has some authority to award a spouse up to one half of the non-marital property of the other spouse, this is only in cases of unfair hardship, and is extremely rare.  It is important to remember that the burden of proof is on the person claiming a non-marital interest in property to prove that the property is in fact non-marital. Therefore, when you acquire property by gift, or want to protect pre-marital property from being awarded to your spouse, you must be very careful not to commingle the property with marital property e.g., don’t deposit it into any joint accounts, or it becomes very difficult to trace.

As with property, the Court is required to apportion marital debt in a manner that is “just and equitable.” Unlike with marital property, however, the Court has much broader discretion to apportion the debt, as long as the apportionment has an acceptable basis in fact and principle. Normally, each party will be assigned half of the marital debt. Even so, if one or the other party has debt that was more of a benefit to that spouse as an individual, the Court may apportion the debt differently. A party is not free to rack up a credit card or other debt in one’s pure self-interest, and expect the other spouse to pay half, particularly where the debt was incurred without the other party’s knowledge or without the other party’s consent.