Going through a divorce can be an extremely difficult and emotional time. When you’ve built a life with someone, dividing up your assets and debts can feel overwhelming.
You’ve worked hard for what you have, so naturally, you want to protect your financial interests. While the division of assets might seem daunting, there are things you can do to safeguard your money and property during the divorce process.
Gaining an understanding of property laws and getting professional guidance from a divorce attorney will be key.
How Assets Are Divided in Minnesota Divorces
When a marriage ends, all marital property must be divided equitably between spouses. This includes assets acquired during the marriage as well as debts incurred. But what exactly constitutes marital property?
Separate vs Marital Property
Separate property refers to:
- Assets acquired before the marriage
- Inheritances and gifts acquired during the marriage (as long as they were gifted to one spouse only)
- Damages or compensation from personal injury lawsuits during the marriage (except for loss of marital earnings)
Marital property includes:
- Income earned from jobs during the marriage
- Assets purchased together during the marriage
- Appreciation of premarital assets during the marriage
- Retirement benefits accrued during marriage
Commingling separate and marital property can make divisions complicated. That’s why keeping good records is so important.
How Property Division Laws Work
Minnesota is an “equitable distribution” state when it comes to divorce. This means marital property will be divided equitably, but not necessarily 50/50.
The court looks at factors like length of marriage, earning potential, age, and health issues when determining an equitable split. The goal is a just division based on circumstances.
Community property states like California handle things differently. There, all assets acquired during marriage are considered joint property and split down the middle.
Strategies to Protect Assets Before You File
If you’re contemplating divorce, there are steps to take now to protect non-marital assets. However, it’s illegal to hide assets from your spouse intentionally.
Consult an experienced Minnesota divorce attorney before moving assets around.
Here are some do’s and don’ts:
- Do: Monitor Joint Accounts
- Review records frequently for unauthorized withdrawals by your spouse.
- Remove your spouse’s name once the divorce is filed. Get court approval if needed.
- Do: Consider a Prenup: For those planning marriage, a prenup could protect separate property and avoid commingling assets.
- Don’t: Commingle More Assets
- Keep inheritances, gifts, and personal injury awards in separate accounts.
- Don’t use separate property to pay down marital debt.
- Don’t: Add Joint Liabilities
- Don’t open new joint credit cards or take out joint loans.
- Don’t co-sign for your spouse’s debt.
- Don’t: Hide Marital Assets
- Don’t withdraw funds from joint accounts or cash out investments.
- Don’t transfer property or businesses to other people.
How to Divide Assets Fairly During Your Divorce
The asset division portion of divorce involves identifying, valuing, and splitting all marital property and debts equitably.
Here are some assets that often come into play:
Retirement Accounts
Retirement accounts like 401(k)s and pensions earned during marriage are marital assets. The court can award each spouse a percentage based on factors like age and income.
A QDRO, or qualified domestic relations order, executes the transfer of retirement funds from one spouse to the other without penalty.
Real Estate and Property
The marital home is divided according to what makes sense based on income, need, custody arrangements, and other factors. One spouse may keep the house and buy the other’s share. Or the property can be sold and proceeds split.
Cars, jewelry, furnishings, and other personal property also get divided up. The court looks at who needs what, who brought what into the marriage, and other details.
Debts
Joint debts like mortgages and credit cards must also be divided, usually equitably. The court looks at who incurred the debt and the ability to pay it back when allocating responsibility.
Student loans are typically considered individual debt unless used for family expenses.
The Tax Implications of Property Division
Taxes are often overlooked when negotiating a divorce settlement. The division of assets should aim to balance tax burdens between spouses.
Getting the house while your spouse takes retirement accounts may seem fair. However, retirement funds are pre-tax assets that will be taxed on withdrawal. The house is post-tax, so you may end up with a larger tax burden down the road.
Getting Professional Help With Asset Division
Dividing property equitably takes thorough financial analysis. Relying on professionals can help protect your interests.
A neutral mediator could help you and your spouse negotiate a fair settlement. They won’t provide legal advice but will guide you to an agreement.
This is where an experienced divorce lawyer could be of great assistance. An attorney ensures your rights are protected and always has your best interests in mind.
They’ll evaluate all marital property and who should get what. An attorney can draft the legal documents needed to execute the division properly. They can also negotiate firmly on your behalf and won’t be swayed by emotions.
Protecting Yourself Means Planning Ahead
Going through a divorce is never easy, especially when assets are involved. The best way to protect your financial interests is to plan ahead and work with professionals like a property division lawyer.
Taking the time to understand property laws in Minnesota, document what you have, and make careful decisions can help ensure the division process goes as smoothly as possible. With some guidance and perseverance, you’ll get through this difficult time and come out the other side.
If you’re facing divorce in the Twin Cities area and need experienced attorneys to help protect your assets, reach out to the team at Martine Law. Call them today to schedule a free consultation.
