Property Division

In general, all property is presumed to be a part of the marital estate. However, there are certain types of property, known as “non-marital property”, that are not subject to division in a divorce proceeding. In general, non-marital property is any property that:

  • Is acquired as a gift, or as inheritance made by a third party to one but not to the other spouse;
  • Is acquired before the marriage;
  • Is acquired in exchange for or is the increase in value of property which is otherwise non-marital; or
  • Is excluded by a valid prenuptial or post-nuptial agreement.

In some cases, assets may have both marital and non-marital components. For example, it is not uncommon for retirement accounts or real estate to have both a marital accounts to have both marital and non-marital components. In the case of real estate, we apply a formula to calculate the non-marital interest. This is often referred to as the “Schmitz” formula. For example, assume that when husband and wife married, wife owned a home worth $100,000 and owed $80,000 on the mortgage. Wife’s non-marital claim in the home is 20%. If, at the time of the divorce, the home value has increased to $200,000, then wife’s non-marital claim in the home has increased to $40,000.

The attorneys at Rogness & Field are experienced in dealing with non-marital claims and can help you determine if you have a claim and the value of your claim.

In Minnesota, all marital property is divided in a “just and equitable” way without regard to marital misconduct. Marital property is any assets or debts acquired during the marriage. It doesn’t matter whose name is on an asset. If the property was acquired during the marriage, then it is a marital asset or debt and will be included on the balance sheet. In every case, there is a “date of valuation,” which is the date used to value all assets and debts to create the marital balance sheet.

If a divorce is being negotiated privately and you do not have an open court file, then the attorneys will agree on a date of valuation for purposes of settlement. If your court file is open, then the date of valuation depends on where you live. For example, your date of valuation in Hennepin or Ramsey County will be the date of your “Initial Case Management Conference” (ICMC), which usually occurs within 30 days of opening your court file. If your case is not in Hennepin or Ramsey County, then the date of valuation is the date of your first scheduled pre-trial, which is an unknown date in the future. However, attorneys in most cases agree to set a date of valuation before the pre-trial so that a balance can be prepared for settlement purposes.

In most cases, a “just and equitable” division means an equal division of the marital property. But, there are circumstances where an equal division is not appropriate. This is referred to as a “disproportionate” award of the marital estate. In these cases, one spouse could leave the marriage with up to 65% of the marital estate. Whether your case is appropriate for a disproportionate award depends on the facts of your case. If you think a disproportionate award of the marital estate is appropriate in your case, you should talk to an attorney.

There are four steps to create a marital balance sheet: 1) identify all the assets and debts; 2) value all the assets and debts; 3) allocate all the assets and debts; and 4) determine how to equalize the marital estate.

When creating a balance sheet, it is very important to pay attention to the nature of the asset. For example, all pre-tax assets (i.e.: 401(k) plans, 403(b) plans, etc.) should be listed together and all post-tax assets should be listed together (i.e., bank accounts, credit cards, cars, personal property, etc.). This ensures that each party leaves the marriage with assets and debts of the same value. For example, if Wife leaves the marriage with $100,000 in cash and Husband leaves the marriage with $100,000 in retirement, Wife gets a better deal. The present value of the retirement, because it’s a pre-tax asset, is approximately $75,000 (assuming 25% taxes).

A property division is simple or straightforward if all the assets and debts are easy to identify and easy to value. This is the case when all assets and debts have corresponding statements, such as a bank statement, investment account statement, retirement account statement, etc. A marital estate can be worth millions of dollars and still be simply to divide based on the nature of the assets.

An attorney can assist you in creating a balance sheet and property division that best fits your needs.