Family Law Updates

Minnesota recognizes two categories of property: martial and non-marital. The categories are relevant in determining which spouse is awarded what property in a dissolution proceeding.

Marital property can include real or personal property that was acquired by either spouse or both during the existence of their marriage. The cutoff date for the marriage as it relates to property interests is the valuation date in the dissolution proceedings, which is usually the date of the first pretrial settlement conference or the initial case management conference. Minnesota law presumes that each spouse has made a substantial contribution to the acquisition of property during the marriage, and thus most marital property is distributed equitably—not equally—between the parties.

Five categories of Non-Marital Property

There are five broad categories of non-marital property. They include property: (1) acquired as a gift or inheritance from a third party to one but not the other spouse; (2) acquired before the marriage; (3) acquired in exchange for or the increase in value of non-marital property which is described in (1), (2), (4), and (5); (4) acquired after the valuation date; and (5) excluded by a valid antenuptial agreement.

There is a presumption that all property acquired during the marriage is marital property, regardless of who is listed on the title or other purchase agreement. To overcome this presumption, the spouse making the non-marital claim bears the burden of proof and must prove by a preponderance of the evidence that the property is non-marital. Zander v. Zander, 720 N.W.2d 360 (Minn. Ct. App. 1991). That being said, credible testimony can be used to prove a non-marital claim in the absence of complete documentation. Doering v. Doering, 385 N.W.2d 387 (Minn. Ct. App. 1986).

If property is determined to be non-marital, it is awarded to the spouse to whom it belongs and is not split with the other spouse. However, in some circumstances, non-marital property may be awarded to the other spouse if it would cause an “unfair hardship” not to do so. Minn. Stat. 518.58, subd. 2.

Tracing of Non-marital Property

Often, non-marital property has been co-mingled with marital property. When this happens, unless the non-marital property can be readily traced, the non-marital assets lose their non-marital character. Baker v. Baker, 753 N.W.2d 644 (Minn. 2008).

The courts also distinguish between income and appreciation for non-marital property. Income derived from non-marital property is regarded as marital property. As such, any property or assets acquired with income from a non-marital asset are also considered marital property. Interest earned on a non-marital asset is considered to be income, and thus marital.

Passive Appreciation of Non-Marital Property

In contrast, appreciation is “intrinsic to the asset itself” and only realized with sale or distribution. Gottsacker v. Gottsacker, 664 N.W.2d 848, 855 (Minn. 2003) (citing Swick v. Swick, 467 N.W.2d at 331). Passive appreciation of non-marital property remains non-marital property. However, increases in value to a non-marital asset due to active appreciation, which includes the efforts of one or both spouses toward an increase in value of a property, are marital property. White v. White, 521 N.W.2d 874 (Minn. Ct. App. 1994).

Consequently, it can be hard to detangle non-marital assets that produce an income and appreciate passively to demonstrate the traceability of the non-marital asset to the court. While laborious, the court is not unreasonably stringent as to the requirements for tracing dollars. See Nash v. Nash, 388 N.W.2d 777, 781 (Minn. Ct. App. 1986). Nevertheless, it may be in the best interest of the spouse claiming non-marital property to consider hiring an expert.

Expert Family Law Representation

At Lake Harriet Law, we work diligently for our clients, to help them receive the best financial terms in their divorce, including a fair and equitable financial settlement. If you are considering a divorce, contact our team to begin designing a legal strategy to protect your future.

Randall A. Smith – Managing Attorney             612-750-4843

Brianna Attamante – Student Attorney             612-223-8925

Brooke Meister – Student Attorney                    612-223-8925

Abi Rud – Student Attorney                                 612-223-8925