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Minnesota Property Division
Property Distribution Laws in Minnesota
In Minnesota the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the Minnesota court divides the property within the Judgment of Divorce.
Minnesota is an "equitable distribution" state. Equitable does not mean equal, or even half, but rather what the District Court considers fair.
When the parties are unable to reach a settlement, the District Court considers all relevant factors including:
The court considers the contribution each spouse made in the acquisition, preservation, depreciation or appreciation in the amount or value of the marital property, as well as the contribution of a spouse as a homemaker. The court presumes that each spouse made a substantial contribution to the acquisition of income and property while they were living together as husband and wife.
Moreover, Minnesota is one of eight jurisdictions that include separate property in the marital estate providing the court finds a special showing of need by the non-titled spouse.
According to the Minnesota Statutes - Chapters: 518.58, if there is a substantial change in value of an asset between the date of valuation and the final distribution, the court may adjust the valuation of that asset as necessary to effect an equitable distribution.
Since Minnesota is an equitable distribution state, the court divides all marital property in an equitable fashion according to the court unless agreed to otherwise by the divorcing spouses.
Marital Property vs. Separate Property
The marital estate includes any assets or debts that were acquired during the marriage. Each spouse has an equal interest in marital assets or debts, no matter how property is titled or held and no matter who paid for the asset or who incurred the debt. That means the marital estate could include a credit card debt that is in the name of one spouse.
Marital property includes 401K plans, stock plans, stock options, real estate, frequent flier entitlements, bank account proceeds, furniture, utility debts, credit card debts and any other form of asset or liability.
Separate property includes any asset acquired before the marriage, an asset excluded by a valid prenuptial agreement, personal injury proceeds, inheritance and its appreciation, and gifts to one spouse but not to both.
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 equitably.
The Marital Home
There are no special rules for the marital home. However, many people are under the mistaken impression that a parent with custody stays in the marital home without dividing the marital equity until the last minor child reaches the age of 18. In most cases, the marital equity is divided unless it creates an extreme hardship and endangers the children.
In Minnesota 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:
Pensions and Retirement Accounts
Retirement plans, like any other asset, may be divided. Any retirement benefits accrued during the marriage would be considered part of the marital estate and divided between divorcing parties.
In Minnesota 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 Minnesota 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:
In Minnesota, if spouses share in each others 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, how such benefits should be paid, etc.
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