What are Non-Marital Assets?

Dividing assets and property is often one of the most difficult issues couples face in divorce. Although only property acquired during the course of the marriage is subject to an equitable division, non-marital assets can present another challenge, particularly if they were mixed with marital assets or you made joint decisions about how to use a non-marital asset during the marriage. Minnesota applies the doctrine of equitable distribution when it comes to property division in divorce. However, the law doesn’t always render an outcome that spouses might deem to be fair. While equitable tends to mean equal, equitable can also take factors into consideration that result in something other than equal division. Collaborative divorce can allow a couple to reach a decision about how their non-marital assets should be addressed — and their property should be divided in a way they feel is equitable to both people.

What is a Non-Marital Asset?

Under Minnesota law, a judge will presume all property is marital unless a spouse can establish a non-marital property claim. Non-marital assets are defined as those that are acquired before the marriage by either spouse. These assets are typically not divided in divorce and can be kept by the spouse who originally owned them. In addition, there are certain types of property that may be acquired by a spouse during the course of the marriage that would also be considered non-marital assets, and not be subject to division in divorce.

Specifically, non-marital property in a Minnesota divorce can include the following:

• Property acquired at any time before the marriage
• A gift or inheritance given to one spouse (before or during the marriage)
• Property defined as a non-marital asset in a prenuptial or postnuptial agreement
• A personal injury settlement that compensates one spouse
• The passive increase in value of property acquired before the marriage

In order for a spouse to prove a claim that property is non-marital, it must be kept separate from marital property through the marriage, or if it was commingled with marital assets, it must be traceable. However, when it comes to tracing non-marital assets, the legal analysis in Minnesota does not always feel equitable to spouses, based on how a judge would recognize a non-marital interest.

If you can trace the separate property to show that it still exists, the spouse who brought the asset into the marriage might still have a claim to it. But if the funds were spent and no longer exist, Minnesota law would determine there is no viable claim to the separate property. Even though paying off debts, purchasing a vehicle that has been traded or sold, or taking a trip all confer a benefit to the couple, a Minnesota judge would likely not consider that in their analysis.

In contrast, separate assets that are used as a down payment on the marital home, or to make improvements to it, would be recognized. For many divorcing couples, the court’s treatment of non-marital property might not seem fair. With the collaborative process, spouses can talk about their sense of fairness and find solutions that they both feel comfortable with.

What Happens When Non-Marital Property is Commingled with Marital Property?

Sometimes, non-marital property can be converted into marital property through “commingling.” This occurs when assets start out as separate property and are mixed with marital funds at some point during the marriage. A common scenario where this arises is when inheritances are used to make renovations or repairs to the marital home — which increases its overall value. If a spouse is asserting a claim to the non-marital portion of the property, they must trace it to prove that the funds were separate property. If it can be determined that the spouse’s use of non-marital funds in making improvements increased the value of the property, a judge may award them the amount of the increased share attributed to that non-marital source.

How Can Collaborative Divorce Help Couples Divide Non-Marital Assets?

Property division in a Minnesota divorce is complex. Notably, the law is only one factor when it comes to making decisions about how non-marital assets should be divided. Values, facts, and how something feels to a person are other norms that couples might consider when they are thinking about property division. A couple might also think about the impact dividing certain property could potentially have on their children.

If a divorce is litigated, a judge would rule on how marital assets should be distributed between the parties. This may not only set an adversarial tone, but spouses give up any control they would otherwise have to make decisions that could have a long-term impact on them and their family. The collaborative divorce process gives spouses the responsibility to create a settlement agreement regarding their non-marital and marital assets that is acceptable to both of them. Importantly, it allows for the opportunity to have an open and honest discussion about how they feel they should divide their property — and decide the outcome for themselves. The collaborative process can also ensure the marital relationship is ended with both spouses feeling positive about the results.

Contact an Experienced Minnesota Collaborative Divorce Attorney

Going through a divorce and resolving the issues that need to be decided is never easy. By using the collaborative process to settle property division and other matters, spouses can reduce stress, eliminate conflict, and feel satisfied that they were in control of the outcome. Divorce and family law attorney Louise Livesay has been committed to helping clients in the Twin Cities area resolve their divorce cases respectfully and peacefully for over two decades. We welcome you to contact us online for a consultation or by calling 651-294-2338.