What Is the Difference Between Marital and Separate Property in Minnesota?

Marital And Separate Property In Minnesota

If you and your spouse are considering a divorce, the topic of property distribution will undoubtedly come up. Property can include your family home, investments, and any other assets you or your spouse acquired during the marriage.

In some states, all property is considered community property. However, that’s not the case in Minnesota. Instead, Minnesota is a separate property state.

Community Property vs. Separate Property

It’s a common misconception that all property becomes community property when two people marry. In fact, the law determining who’s entitled to what varies between states.

Community property laws view all property between spouses as shared property. Therefore, in the event of a divorce in a community property state, all property is divided equally between the spouses. The only exception is if you and your spouse signed a prenuptial agreement.

Separate property states, such as Minnesota, don’t adhere to a 50/50 division of assets during a divorce. According to Minnesota statute § 518.58, the courts must make “a just and equitable division of marital property.” 

So, whereas some states will simply divide all assets in half, Minnesota focuses on dividing marital assets fairly. Marital assets are any assets acquired during the marriage.

The courts will consider several factors when deciding how to divide assets. A few of those factors are:

  • The length of the marriage
  • Disruption in career advancement
  • Sources of income
  • Skills and occupations
  • Health status
  • Contributions to assets and debts
  • Potential future assets, including investments

What Is the Equitable Distribution Method?

Equitable Distribution Method

Although “equitably” might indicate “equal,” that’s not quite the case under Minnesota statutes. For that reason, it’s important to discuss all assets and property with an attorney before agreeing to any divisions.

If you and your spouse acquired assets during your marriage, the judge would look at the factors listed above. Then, they’ll make a judgment as to how much you and your spouse are each entitled.

For example, a stay-at-home parent might receive preference if career advancement stalled due to stay-at-home duties. Or, if you invested in stocks during your marriage, a judge might consider future investments as marital assets.

What Property Is Divisible Under Minnesota Law?

Minnesota recognizes real and personal property. A judge will look at both when deciding on the distribution of assets.

Real Property

Real property includes lands, buildings, and specific improvements. Improvements include fixtures that cannot be removed and were intended to permanently benefit the property. Any structures on your land must be permanent to be considered real property.

According to statute § 297A.61, any equipment you or your spouse installed inside those structures may not be regarded as real property. In addition, anything you purchased for business ventures may not be considered “real” under Minnesota law.

Personal Property

Personal property is, essentially, everything that’s not nailed down. This includes bank accounts, cars, art, pensions, specific investment accounts, and furniture. A significant cause of frustration is proving your personal property is not, in fact, marital property.

When it comes to investment accounts and finances, you’ll have to prove that the account originated before you married. If you opened accounts or acquired funds during your marriage, the law views that as marital property. Therefore, that property is subject to the division of assets during divorce proceedings.

Are Debts Marital or Personal Property?

Debts are a tricky area when it comes to divorce. Any debt acquired during a marriage is considered marital debt, and that debt will be split during divorce proceedings. However, like property, the debts will be divided equitably. The judge will look at who acquired the debt and how much you each contributed to paying it off.

A mortgage is a typical example of shared debt. If your income covered the mortgage payments, the judge would factor that amount in when dividing debt. On the other hand, the judge might not hold your spouse financially responsible for your personal auto loan.

settlement agreement

What If I Want a Settlement Agreement?

Although Minnesota statutes allow judges to determine the division of assets, mediation is also an option. If you and your spouse can come up with a fair plan to divide assets, you can avoid going to court.

Mediation is typically a better option than court proceedings. You’ll avoid court costs and be spared the frustration of a third party taking charge of your assets. A settlement agreement is also much quicker and more straightforward than court proceedings.

If one spouse moves to another state during a divorce, it’s essential to know the marital property laws of that state to avoid complications with the settlement.

Wrapping Up

A divorce can be an emotionally and financially draining experience. When divvying up assets, spouses often struggle to come to common ground. An experienced divorce attorney can help you navigate the waters of equitable property distribution. They’ll ensure you get any assets you’re entitled to and ensure your divorce proceedings go smoothly. If you’re ready to speak with one of our talented attorneys about marital and separate property division, contact CJB Law today.