Minnesota Divorce Basics: Invading Non-Marital Property

propertydivIn terms of dividing the assets and liabilities of the parties following divorce, the first step in the analysis involves determining which assets are “marital” and which assets are “non-marital.”

Simply stated, marital assets are those acquired during the marriage, through marital efforts. Non-marital assets are those that one spouse: (1) brings into the marriage; (2) inherits during the marriage; (3) receives as a gift during the marriage; or (4) acquires through the sale of other non-marital property.

The general rule is that non-marital assets are awarded, in their entirety, to the spouse who demonstrates that their property interest is, indeed, non-marital. There are, however, exceptions.

In some situations, the Court may determine that it is appropriate to divide a non-marital asset. Pursuant to Minn. Stat. Sec. 518.58, Subd. 2:

If the court finds that either spouse’s resources or property, including the spouse’s portion of the marital property … are so inadequate as to work an unfair hardship, considering all relevant circumstances, the court may, in addition to the marital property, apportion up to one-half of the property otherwise [non-marital] to prevent the unfair hardship. If the court apportions property other than marital property, it shall make findings in support of the apportionment. The findings shall be based 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, and opportunity for future acquisition of capital assets and income of each party.

The practical reality is that the Court will rarely invade non-marital property. There are two common situation in which the Court will do so: (1) if one spouse will be left insolvent; or (2) if non-marital interests represent the entire estate of the parties.

If the estate of the parties contains some marital and some non-marital interests, the Court may unequally allocate marital property in lieu of a division of non-marital interests.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someoneDigg thisShare on RedditShare on TumblrShare on StumbleUpon

Podcast: Valuation & Division of Assets & Liabilities In Divorce

In this edition of The Family Law Show we summarize how judges value and allocate assets and debts as parties dissolve their marriage.

Every case, regardless of the age, income or educational level of the litigants, will involve an analysis of the relevant property interests of the couple – even if they’ve only been married for a short time.

Topics discussed in this podcastinclude the concealing of assets, tools for uncovering assets, the difference between marital and non-marital property, and the general rule of an equal division of assets and debts, despite the relevant statute requiring a “just and equitable” distribution.

Run Time: 13:24

Download this episode (right click and save)

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someoneDigg thisShare on RedditShare on TumblrShare on StumbleUpon

Minnesota Divorce: Asset & Debt Division Summary

Minnesota law categorizes property as marital or non-marital.

Marital property is usually divided equally while non-marital property is allocated entirely to the party who maintains the non-marital interest. Non-marital property involves the interest a party has in property accumulated prior to a marriage or property received as a gift or inheritence by one spouse, individually, during a marriage. Marital property involves any property that the parties accumulate during their marriage, including home equity, retirement assets, business interests, bank accounts, investments, motor vehicles and other property of value.

In order to ascertain the value of property, experts are typically retained. These include real estate appraisers, actuaries, business valuators and other individuals with specialized knowledge in determining the market value of various assets.  These experts can be retained by one or both of the parties.

Once all property interests are valued, a balance sheet is put together to reflect the allocation each party will receive.  Naturally, one party will receive more property than the other as items are divided.  When this occurs, a cash payment (equalization) is typically made from the spouse receiving more property to the spouse receiving less property in order to equalize the cumulative value of the assets they receive as a result of the dissolution of marriage.

Debts are typically treated the same way as assets.  Quite often, the court will allocate all debts incurred during the marriage equally.  Debts that remain from a time preceding the marriage are typically allocated to the party incurring the debt.  The same is true for debts incurred post-separation. The value of a particular debt is usually verified through a recent statement. Typically, if the party is allocated an asset they will take any debt that accompanies it.  A prime example involves an automobile.  If one spouse takes a car, they will likely have to accept responsibility for the debt associated with it.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someoneDigg thisShare on RedditShare on TumblrShare on StumbleUpon

Jackpot by Josh! Idaho Lottery Winner’s Estranged Husband To Recoup 40 Million Bucks

Holly Laiti has yet to speak publicly, but sources indicate that the 29 year old Idaho resident is the second winner in the second-largest mega-millions jackpot in its history. One interesting twist? Her estranged husband has been arrested nearly a dozen times, and convicted of offenses such as domestic assault, drug possession and providing alcohol to a minor. That’s not where the story ends.

“Estranged” is not a legally operative term. “Divorced” is. The couple, apparently, have not dissolved their marriage, despite living apart for an extended period of time. The result? Josh Laiti, Holly’s husband, is the country’s newest millionaire – to the tune of 40 million big ones – despite the fact that his marriage to Holly been, essentially, over for years.

This seems like an appropriate time to address the distinction between marital and non-marital interests.

Marital Property. “Marital property” involves assets acquired during the marriage, not otherwise defined as “non-marital property (discussed below). Marital property is subject to a “fair and equitable” division among the parties – almost always “equal.”

Non-Marital Property. “Non-marital property” involves assets:

  • Acquired before the marriage;
  • Acquired as a gift, or inheritance, made by a third party to one spouse, but not the other;
  • Acquired in exchange for other non-marital property; or
  • Acquired after the valuation date in the dissolution action.

In Minnesota, the valuation date, by statute, is the date of the “first scheduled pre-trial conference” (often many months following commencement of the divorce). However, in many counties, the date of the initial case management conference (almost immediately following the filing of the action) serves as the valuation date.

Appears Idaho’s law is similar to Minnesota. As a result, in the absence of filing for divorce, there is no “valuation date” to speak of among the Laitis. No other statutory definitions of non-marital property apply. Jackpot marital. Money divided between husband and wife.

Lucky Laiti. Unlucky lady.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someoneDigg thisShare on RedditShare on TumblrShare on StumbleUpon

Personal Injury Settlements: Marital Or Non-Marital Property Under Minnesota Law?

Minnesota divorce statutes distinguish between marital and non-marital property. Marital property involves property acquired during the marriage, while non-marital property involves an asset that was brought into the marriage or received as an inheritance or gift to one spouse but not the other during the marriage. I’m often asked how Minnesota law treats a personal injury settlement. The answer rests in the nature of the recovery.

In Minnesota, an injury survivor can recover damages for a host of “losses,” including past and future wage loss, past and future medical expenses and pain and suffering.

Because wages are considered marital property, the past wage loss portion of an injury settlement is deemed marital in nature. The same is true of proceeds received to pay for past medical expenses: a marital liability. As a result, this portion of the personal injury or worker’s compensation award is subject to division among the parties.

However, an award for future wage loss and payment received for future medical care is non-marital. Earnings realized following a dissolution of a marriage remains the exclusive property of the earning spouse. Similarly, a debt incurred by a spouse following divorce must be paid by the person who incurs the obligation. Therefore, these portions of an injury settlement are non-marital in nature and are not subject to division.

Similarly, payments made for pain, suffering and loss of enjoyment of life are not subject to division. In a literal sense, your body is non-marital in nature. You brought, for example, your hand into your marriage. Your hand is not subject to division if the marriage dissolves. If you lose your hand in an accident, you have lost a non-marital asset. Compensation for the lost non-marital asset is non-marital as well.

Difficulty rests in the fact that most personal injury cases are settled before trial. The parties will sign a release form. However, that release form does not typically break down the award into neat categories, leaving room for argument on both sides. A jury verdict form, however, will break down the portion of the award given for wage loss, medical bills and pain and suffering.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someoneDigg thisShare on RedditShare on TumblrShare on StumbleUpon

How Does Title Impact Property Division?

One of the more common questions we face from a potential client involves title to property- whether a car, boat, house, ATV, business, bank account or otherwise. They ask, “My spouse says that because my [insert the property interest] is not titled in my name, I am not entitled to any of it. Is that true?”

One highly unique aspect of family practice is the fact that the litigants, unlike basically all other lawsuits, often continue to speak with one another (and even live together) during litigation. Sometimes that can be productive – if the parties are discussing issues in good faith. Other times, one spouse is simply trying to play games and get inside the head of the other. Our suggestion? Don’t get your legal advice from your soon-to-be ex.

Here’s the answer: Title to property is essentially meaningless in divorce court. Minnesota law defines marital property as anything accumulated by the parties during their marriage. Marital property is subject to equal division. The timing of the purchase, not the title, dictates the ownership interest for purposes of a divorce.

Of course, the law recognizes non-marital property, which is not subject to division. Non-marital property has a very specific definition. For the sake of this post, understand that nowhere in the definition of non-marital property is the concept of “marital title” addressed. Unless a piece of property was brought into the marriage by one spouse or received as a gift to one spouse but not the other during the marriage, the property at issue will likely be divided equally among the parties.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someoneDigg thisShare on RedditShare on TumblrShare on StumbleUpon