There are many misconceptions when it comes to marital property division in divorce. These misconceptions can lead to unfair divorce agreements and lopsided divisions of marital assets and debt. Instead, steer clear of these five common myths to attain a more equitable marital property division.
In addition, this article answers the following questions:
- How is marital property divided in a divorce?
- What happens when spouses can’t or don’t agree on who gets what in a divorce?
- What influences the division of debt and marital assets in a divorce? (In particular, what factors are important to a judge?)
- Can Non-Marital property be awarded to the other spouse in a divorce?
- What are the rules regarding the use of marital assets during the divorce process?
MYTH #1: It’s not marital property if only one spouse is listed on the account or title.
False. Any and all property acquired by either spouse after the date of marriage and before the valuation date (typically, the date of the Initial Case Management Conference) is Marital Property. This is regardless of whether the title is held individually or by both spouses in the form of co-ownership. (Minnesota Statutes, Chapter 518.003, Subdivision 3b). In fact, all property is presumed to be marital property in a divorce. Therefore, Minnesota law dictates that you have to prove that an asset is not marital property, in order for it to be considered Non-Marital Property.
Learn what you’re entitled to in a divorce and what’s considered marital property by checking out our article on Marital Assets.
MYTH #2: Each marital asset is always divided in half during a divorce.
False. In Minnesota, the court makes a property division that is “fair and equitable.” (Minnesota Statutes, Chapter 518.58, Subdivision 1). However, a “fair and equitable” marital property division doesn’t necessarily mean that each asset is split in half. Instead, the court takes a more comprehensive approach dividing marital property in a divorce.
Dividing Marital Assets in a Divorce
Marital property division in a divorce typically happens in stages. First, an inventory is taken of all the marital property. Once all marital property has been identified, each asset gets valued. (For example, with real estate, this may mean hiring a third party to appraise the value of a home.) After each martial asset has been assigned a monetary value (agreed on by both parties), the parties divide the marital property so that each ends up with a similar total value.
For instance, if there is only one vehicle in the marriage, the party that needs the vehicle the most may be awarded the vehicle. However, the other party is compensated by being awarded some other marital asset that is equal to the value of his/her share of the vehicle. Although when it comes to marital property such as, a retirement account, the couple may decide to split the value of the retirement account. In this case, your divorce or family law attorney can draft a QDRO (Qualified Domestic Relations Order) with the divorce decree.
Lastly, the division of marital property during a divorce often looks different from case to case. It’s important to avoid any hard and fast rules, such as, “Always sell your house in a divorce.” Instead, it’s important that you take into account the specifics of your situation. After all, what was in the best interests for your friend during his/her divorce, isn’t necessarily going to be in your best interests in your divorce.
MYTH #3: When parties can’t disagree, whoever is currently in possession of the marital property is awarded the marital property.
False. If the divorcing parties can’t or don’t agree on marital property division, they have several different options. They can try ADR (Alternative Dispute Resolution) methods, such as mediation, early neutral evaluation, arbitration, etc… If such methods aren’t successful, the couple can go to trial to ask a judge to decide. As mentioned earlier, judges in Minnesota are tasked with the responsibility of a ‘fair and equitable” division of marital property during a divorce. Judges look at and use specific factors to evaluate and help them make this decision.
Factors Used to Determine Marital Property Division in Divorce
In Minnesota, when deciding marital property division during a divorce, the judge bases his/her decision on all relevant factors including, but not limited to:
- the length of marriage;
- any prior marriage of a party;
- the age;
- amount and sources of income;
- vocational skills;
- opportunity for future acquisition of capital assets;
- income of each party; and
- the contribution of each 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.
(Minnesota Statutes, Chapter 518.58, Subdivision 1).
In addition, the court believes that each spouse made a substantial contribution to the acquisition of income and property during the marriage, and marital misconduct is not to influence the distribution of marital property. (Minnesota Statutes, Chapter 518.58, Subdivision 1).
Lastly, it can be reassuring to know that if there is a substantial difference in the value of a marital asset between the date of valuation and the final distribution, the court may adjust the valuation of an asset to promote a fair and equitable distribution. (Minnesota Statutes, Chapter 518.58, Subdivision 1).
MYTH #4: All non-marital property is off-limits in a divorce, and thus, can never be divided.
False. If either spouse is still in an unfair position after the division of marital property, in order to prevent undue hardship, the court may award up to one-half of the property excluded as non-marital property (with the exception of property excluded by a valid prenuptial contract) to a spouse. (Minnesota Statutes, Chapter 518.58, Subdivision 2).
The court will use all relevant factors, including, but not limited to the same factors used to decide marital property division in non-marital property division. In addition, the court may award household goods and furniture not acquired during the marriage to either spouse. (Minnesota Statutes, Chapter 518.58, Subdivision 1).
MYTH # 5: A spouse can avoid sharing marital property by quickly using or hiding the marital asset(s) for him/herself.
False. Neither party can dispose of any marital asset(s) during the divorce except for:
- the necessities of life,
- the necessary generation of income, or
- the preservation of assets.
(Minnesota Statutes, Chapter 518.091, Subdivision 1).
If a spouse during or shortly before the divorce transfers, encumbers, conceals or disposes of marital assets the court can compensate the other party. The court can place both parties in the same position they would have been had the transfer, encumbrance, concealment, or disposal not occurred.
It’s also flagrantly dishonest. If a judge weighs a spouse’s credibility later, a track record of dishonesty can be held against him/her.
If you’re not sure of all your finances, or you think your spouse is hiding (or may try to hide) marital property from you during your divorce, protect yourself by reading: Is Your spouse hiding assets from You?