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North Dakota Property Division
Property Distribution Laws in North Dakota

In North Dakota the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the property is divided by the District Court within the Judgment of Divorce.

An equitable distribution state, North Dakota is a “kitchen sink” jurisdiction, which means that separate as well as marital property is subject to distribution. The appreciation of separate property is marital. When the parties are unable to reach a settlement, the District Court distributes the marital assets between the two parties in an equitable fashion. Equitable does not mean equal, or even half, but rather what the District Court considers fair. All marital property will be divided in an equitable fashion according to the court unless agreed to otherwise by the divorcing spouses.

According to the North Dakota Century Code - Volume 3A - Chapters: 14-05-24, the court may award property in a post-judgment proceeding if a party fails to disclose property and debts or the party fails to comply with the terms of a court order distributing property and debts.

Factors in Equitable Distribution

In dividing property, the court looks at the unique circumstances of the marriage and awards property based on the contributions of both spouses and the needs of each after divorce. Ultimately, the court divides all of the assets and debts fairly, even if that leaves the spouses with unbalanced shares.

In dividing property, the court needs to know which property belongs to the marriage, which belongs to the spouses separately, and how much there is of each. Generally, marital property is all property acquired or earned during the marriage. Separate property is property owned by a spouse before marriage. It could also be a gift received during marriage, an inheritance, or among other things, property or money in exchange for non-marital assets and kept separate during the marriage.

Marital Property vs. Separate Property

Even though North Dakota includes both types of property division, the distinction between marital and separate property remains important. For example, although the court might give a spouse an equal portion of the land that has been in his wife’s family for generations, that division may not be necessary if he has other sufficient resources. It also depends on whether a spouse worked or lived on that land during the marriage or raised children on it. The court would also consider the value of the land and whether it is encumbered by debt.

Real property like the family home, personal property like jewelry, and intangible property like income, dividends, Social Security benefits, and government pensions - all must be divided at divorce.

At divorce, debts are treated the same as any other property. Before dividing a debt, the court classifies it as marital or separate based on when it was acquired, which spouse acquired it, and how it was used. Then the court assigns responsibility for it equitably.

In North Dakota, the court presumes that all property must be divided equally. Without additional information from the spouses, the result will be an equal division. If one spouse has a good reason why the property should be divided another way, the court tries to understand what each person owned before and during marriage, and what their individual needs will be after divorce.

From there, the court has wide discretion in how to distribute all of the property, although there is a specific rule on how to distribute Social Security benefits and government pensions. In addition to assets and debts, the court considers the education, ages, and health of the spouses, as well as their earning capacities and employable skills. The court may also look at any other reasonable factor to make a just and proper division.

While the result may be unequal, the distribution must be fair.

Valuing and Dividing Property

First, the court classifies assets and liabilities, property and debt, as marital or separate. Then it assigns a monetary value to the marital property and debt. Finally, it distributes the marital assets between the two parties in an equitable manner.

The Marital Home

A couple may decide to sell the house and split the proceeds, or give up an interest in a spouse’s retirement benefits in return for the savings account. Usually, the court will accept this type of agreement without further involvement.

In North Dakota, as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) are deducted from the market value to arrive at the equity to be divided. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.

From there, couples choose one of three options to divide the equity:

  • The spouses sell the home and divide the proceeds.
  • One of the parties may refinance the home and “buy out” the other party.
  • One spouse (usually the custodial parent) remains in the home with the exclusive use and possession for a certain period of time (for example, until the youngest child graduates from high school), then either buys out the other spouse or sells the home and divides the proceeds.

Pensions and Retirement Accounts

In North Dakota vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension.

Several different methods of valuation are used in determining how much a marital asset is worth, depending upon the asset to be valued and the level of agreement between the parties. Courts generally accept the value when the spouses mutually agree on a value of a particular asset. Experts may be retained by the parties or by the courts to determine the value of marital assets if the parties cannot agree. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.

In North Dakota the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Retirement benefits vary greatly but can generally be divided into two groups:

  • Defined Contribution Plans: A defined amount of money belonging to the employee. The employee and/or the employer make defined contributions. The balance of the plan is constantly changing, but its value is definable at any given point. 401(k)’s, 403(b)’s and profit sharing plans fall into this category.
  • Defined Benefit Plans: A retirement benefit where an employer promises to pay a benefit to an employee sometime in the future, based upon some type of formula. Normally, this formula is based on the employee’s salary near the end of his or her career and the number of years he or she worked for the employer before retirement. Defined benefit plans are much more complicated to value and often require the professional evaluation of an actuary to determine exact values.

If spouses share in each other’s retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution - how much of the benefits are to be paid to each party, when such benefits can be paid, and how such benefits should be paid.

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