Key Concepts In Dividing Property During Divorce In Minnesota

homAt the end of the day, the vast majority of divorces in Minnesota result in an equal division of the marital estate (those assets and liabilities incurred, or accrued, during the marriage.

“Equal division,” however, is not the relevant standard. Pursuant to Minn. Stat. Sec. 518.58, the Court must make a “just and equitable division of the marital property of the parties.” What constitutes a “just and equitable” allocation? Well, usually equal – but not always.

In Minnesota, the family law judge has the ability to consider a number of statutory factors in dividing property unequally, including:

  • The length of the parties’ marriage;
  • Whether either party has been married before;
  • The age, health, occupation and sources of income of each party;
  • The vocational skills of each party;
  • The employability of each party;
  • The income of each party; and
  • The nature of the marital estate (both assets and debts).

Does this happen very often? No – except for cases involving a dissipation of assets.

“Dissipation” is described by statute as “without the consent of the other party…in contemplation of divorce, separation or annulment…” transferring, encumbering (creating debt against), concealing or disposing of marital assets, except in the usual course of business or for necessities of life.

Here are a few examples of dissipation:

  • Selling a motorcycle to a family member for $1.00, knowing it will be bought back for $1.00 following divorce;
  • Placing large amounts of debt relative to an extra-marital affair (hotel rooms, restaurants, airline tickets) on a credit card;
  • Incurring significant gambling losses;
  • Destruction of items of personal property (electronics, furniture or clothing);
  • Investment losses relating to an obvious scam; or
  • Spending large quantities of money on drugs or alcohol.

Should dissipation occur, the Court will likely allocate assets in such a way that the non-offending spouse is put back in the position they would have been, but for the dissipation – usually by allocating other assets to them. The party claiming dissipation bears the burden of proving that it occurred.

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Gambling, Alcohol Abuse, Drug Use, Cheating & Dissipating: Fault In A No-Fault Divorce State

The lawyers with Thyden, Gross & Callahan, LLP, authors of the Maryland Divorce Legal Crier, recently published an article entitled “Putting the Fault Back into No-Fault Divorce.” They point out that despite the fact that several states on the east coast have moved (like Minnesota in the 1970’s) to “no-fault” divorce, fault still creeps into the mix.

The same is true in Minnesota. While easy to simply utter “we’re a no-fault state,” we’re not entirely no-fault. Here’s a compare/contrast between they Thyden summary and Minnesota law:

Property:

East Coast. In determining how marital property is to be equitably distributed, each jurisdiction has another list of factors the court must consider.  In Maryland, there is a catch all provision that includes any other factors that the court considers appropriate.  In Virginia, one factor is circumstances contributing to the dissolution of marriage.  In DC, it is circumstances contributing to the estrangement.

Minnesota: We see fault creep into asset and liability allocations through the dissipation of assets, concealing of assets, or “sin spending.” If a party dissipates assets (sells while divorce is imminent) the non-selling spouse will likely receive their share of that asset, on the balance sheet, as part of the ultimate distribution. If a spouse conceals assets, the court may ultimately award the concealed asset, in full, to the innocent spouse. And, if one party gambles away marital assets, or incurs substantial debt in relation to alcohol abuse, cheating or gambling, the court may allocate the financial consequences of “faulty” behavior to the “sinning” spouse.

Custody:

East Coast. Marital misconduct does not necessarily make you a bad parent.  The test is best interest of the children.  But the parties think it is important that the judge know what a scoundrel the other parent is, especially if the other parent is slinging mud, too.

Minnesota. Minnesota’s “best interest standard” takes into account behavior that impedes a spouse’s ability to adequately parent a child. For example, if alcoholism led to a breakdown in the marital relationship, no impact on spousal maintenance. Custody? The court is absolutely interested in hearing about it…and how the alcohol abuse has affected the children. The same is true with domestic abuse, adultery or late night partying.

Alimony:

East Coast: In each jurisdiction, the law provides a list of factors the court must consider in determining alimony. In Maryland and DC, one of the factors is circumstances surrounding the estrangement of the parties. In Virginia, adultery can prevent a spouse from receiving alimony unless the court finds that would create a manifest injustice.

Minnesota: A list of factors for the court to consider, but the circumstances surrounding the estrangement of the parties is not one of the them. Nor is the question of adultery. Many of our clients are shocked (“outraged” is a more accurate description) to learn that their spouse’s cheating has no bearing on an award of spousal maintenance. Might a newly-elected conservative legislature in Minnesota be open to changing the statute? Wouldn’t surprise me.

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