St. Paul Family Law Attorney John Lesch Explains Non-Martial Assets
During the dissolution of a marriage, the task that often spurs the most conflict is dividing up assets. “Who–keeps–what” can be 
confusing to follow and can spur contention. This disagreement is often seen as petty, although much of the time the disagreement the parties have is less about the stuff and more about what it represents.
Questions about who contributed more to the marriage and who is at fault for the divorce often arise. This conversation can get even more complicated with the addition of how parties view the equity of a child support or parenting time arrangement.
Thankfully, Minnesota law has simplified one piece of this conflict by declaring rules about what is considered an asset obtained outside of the marriage and what is considered an asset obtained inside of the marriage and giving judges tools to consider what property should go to which party.
St. Paul Divorce Attorney John Lesch can help guide you through the process as an experienced family law attorney experienced with handling non-martial asset issues. Contact Lesch Law for a free, confidential case evaluation.
Based in St. Paul, we practice throughout Ramsey County, Hennepin County and throughout the Twin Cities.
Separate vs. Community Property States
Minnesota is what is considered a “separate property” state and not a “community property” state. In a separate property state spouses own separately all earnings and acquisitions from earnings during the marriage, unless they agree to a joint form of ownership. In a community property state, spouses retain separate ownership of property brought to the marriage, but own all earnings (although not gifts necessarily, among some other exceptions) and acquisitions from earnings during the marriage in equal, undivided shares. In states that do not have community property laws, like Minnesota, assets are legally owned by whoever’s name appears on the deed or registration.
However, this only applies to legal ownership of property during a marriage, not necessarily what your spouse does or does not come out of a divorce owning. While your spouse might not be able to access a bank account created by you before your marriage during your marriage, they may come out of the divorce with half of this account anyway.
Put simply, community property states exist on the assumption that marriage is a complete unity of financial interests as well as personal interests and that both spouses have agreed that their agreement is fair and equal while separate property states exist under the theory that there is some amount of autonomy that exists regarding the assets of a married couple. This theory sets the stage for the way family law and estates & trusts law is structured in a particular state.
Moving from a community property state to a separate property state (and vice-versa) during the course of your marriage but before a divorce can lead to legal complications. It is especially important to get the help of an experienced family law attorney if you are dealing with legal complications as a result of moving from a community property state to a separate property state.
What is a non-marital asset in Minnesota?
Marital property is defined in Minn. Stat. § 518.003 subd. 3b.
“Marital property” means property including housing, land or financial accounts like 401Ks or pension plans acquired by the parties during their marriage. Interestingly, marital property can be created even in a marriage which is later annulled, meaning that if you won the lottery during your two-day marriage that was later annulled, the winnings could theoretically be considered marital property. Marital property can exist regardless of whose name is on the property – both names do not have to the be on the property for it to be considered marital property.
If a spouse has debt and their name is not on real property (a house or land), the house or land cannot be forced to be used to pay off the debt, this includes tax liens. All property is presumed to be the marital property of a couple unless proven otherwise.
How is non-martial property defined in Minnesota?
“Nonmarital property” is property that was acquired at any time before the marriage, during the marriage, or after you have decided to end the marriage that:
- is a gift or inheritance given to one spouse but not the other spouse.
- is acquired before the marriage.
- is acquired by the spouse after the date the worth of property is evaluated in anticipation of the divorce.
- is excluded by a pre-nuptial agreement.
- is the increase in value of property in a pre-nuptial agreement, a gift or thing acquired before or after the marriage. This includes interest acquired during the marriage on an investment made before the marriage.
- is a personal injury or other type settlement directed at compensating you, and not your spouse.
A non-marital asset is generally considered completely one spouse’s property to keep in the event of a divorce. However, there are exceptions to this rule and a court can certainly find that a spouse has a right to non-marital assets in a divorce (see below).
Assets that are Part Marital and Part Non-Marital
There are several ways that non-marital property can be converted into marital property.
One of these ways is by comingling the property. If you put non-marital money in a joint account owned by both spouses, particularly if this account is active and money is flowing out of it, it is difficult to tell what money is being spent – the marital money or the non-marital money? Courts are likely to find that by co-mingling the property you have converted it into marital property, and it is therefore partly owned by your spouse.
Another way that non-marital property can be partially converted into marital property is by adding assets to the property both before and after the marriage. For example, if house is bought before a marriage but the mortgage is paid during the marriage and expensive improvements are made on the house increasing the value during the marriage, it is partially marital property and partially non-marital property.
Because a house cannot simply be split down the middle the way a bank account could be, a particularized accounting process is likely to be employed for a fair resolution. This resolution could include selling the house and splitting the money or one party buying the other party out either by trading off other assets or paying cash.
In some circumstances it is possible to extricate what has now become a tangle of both marital and non-marital property. In some circumstances, this is not possible or a court will deem the property strictly marital.
It is incredibly important to keep account of what money was invested into what during a marriage. While most married couples do not foresee an impending divorce while making joint investment decisions, organized and thoughtful accounting can avoid many headaches – including the issues created if the marriage is ever dissolved.
Who Gets What? What’s Yours Is Ours, What’s Mine Is Ours
The rules governing division of marital property are outlined in Minn. Stat. § 518.58.
Community property states often mandate a strict 50/50 split of marital assets. Minnesota law requires a just and equitable, but not necessarily equal, division of marital property. This sounds vague and it is – Minnesota gives a large amount of discretion to a judge in deciding what division is property is fair in a divorce.
The court takes into consideration the following factors when deciding who gets what marital property:
- 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, opportunity for future acquisition of capital assets
- income of each party,
- the contribution of each 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.
Can my spouse get part of my non-marital property?
If the court finds that either spouse’s resources or property, including the spouse’s portion of the marital property as defined above, 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 non-marital property to the spouse with less assets, to prevent the unfair hardship. The court will need to explain their basis for apportioning non-marital property.
Before deciding whether to apportion non-marital property to the other spouse, courts will consider:
- 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.
Non-marital property is most often apportioned to a spouse that has contributed to the marriage as a stay at home parent, has not worked in many years and/or there is a gross discrepancy between the assets and/or income of one spouse compared to the other spouse.
Contact the Lesch Law — Minnesota Family Law Attorney
Whether you are struggling with division of assets, child custody, child support, spousal maintenance or just considering the implications of a divorce, consulting with an experienced attorney is important in understanding your rights and making educated choices while entering into a divorce.
Let the experienced attorneys at Lesch Law guide you through the process to achieve the best possible results. Contact us today to discuss your options.