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Keeping personal property separate from marital property

What is common law property?

Minnesota law follows common law property guidelines which essentially states that any property that is acquired by either member during their marriage will be considered their personal property unless the item is put into both of their names. While this practice is not unusual especially when it comes to the purchase of items such as cars, it can be an important factor in the event a divorce occurs.

Minnesota also operates under the premise that all property in a marriage is marital so the burden of proof will lie with the party who is claiming personal property to provide the evidence that the property is non-marital.

Marital property

When divorcing in Minnesota any property that is classified as marital property, will be subject to equitable division between both of the spouses. It is important to remember that equitable division is not the same as equal division and you should not expect to automatically get a 50-50 split in regards to marital property. The equitable division will take other factors into account such as each spouse's current and future earnings as well as other property they may have. Though, if there is no significant difference between what each spouse earns, a 50-50 split may be what the court orders. 

Non-marital property

While most property is considered marital property during a divorce in Minnesota, there are types of property that can be classified as non-marital property and not subject to distribution. If you have non-marital property you will have to prove that you own the property and that it is not a marital asset. Some types of property that may be deemed non-marital property include:

  • Property that was inherited by you either before or during the marriage.
  • Property that was owned by you before your current marriage.
  • Property that was given as a gift to you as long as the gift was not from your spouse.

If the property is deemed non-marital, you will remain the sole owner of the property, and it will not be subject to division. Proving that your property is non-marital can be relatively easy with property that is considered tangible property such as cars or homes that would have your name on the title and the date of sale, but with the non-tangible property such as retirement and investment accounts, it can prove a little more difficult.

Additionally, if your funds from before the marriage end up being combined in martial accounts your previous funds will then be classified as marital assets. If you feel like you will need to protect this money in the future, it is always best to keep them in separate accounts. While no one wants to plan for the worst, it can save you a significant amount of money you had personally earned before your marriage. 

What is the difference between active and passive appreciation?

During the asset division of your divorce, the court will also take into consideration the increase or decrease in the value of the non-marital assets that occurred during the marriage, which may make that portion subject to marital division as well. There are two types of appreciation value that a court will consider when assessing the value the asset has increased. 

  • Active appreciation - Active appreciation occurs due to an improvement of the property, business, etc. that increase the value. If these improvements occur during the marriage, the increase in the value may be subject to martial asset equitable division. 
  • Passive appreciation - Passive appreciation is the value that property will increase during the marriage which is due to such factors as a rise in market value. For example, if you go into the marriage with an undeveloped piece of land that remains in the same state through to your divorce but increases in value due to a rise in the market value of property in the area, that would be deemed as passive appreciation and would not be subject to marital division.

Determining marital property can be complicated so finding a qualified Minnesota divorce attorney can help you determine if you have property that could qualify as non-marital and what it will take to create your burden of proof.

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