Who Gets the House?

Dividing up what you own…and what you owe

Once you’ve agreed to divorce and you want to go your separate ways, the difficult chore of splitting up your joint assets begins.

Almost everything you and your spouse acquire during your marriage is marital property i.e.: the family home, as well as non-tangible things such as retirement benefits. Marriage affords you the right to share in each other’s gains and losses. Now that you are faced with divorce how is it all divvied up? That all depends on what state you live in.

In the United States there are two very different divorce standards, equitable distribution and community property. There are currently 10 “community property” states and 41 “equitable distribution” states. Minnesota is one of the 41 “equitable distribution” states, and Wisconsin is a “community property” state…we will concentrate on Minnesota.

“Almost everything you and your spouse acquire during your marriage is marital property, and needs to be valued and divided as part of the dissolution action.”
Exactly what does Equitable Distribution mean?

First you must understand that even though Minnesota is an “equitable distribution state”, that does not mean you will automatically receive half of everything. In Minnesota–an equitable distribution state, the court decides what is a fair, reasonable and an equitable division of assets. The court might decide to award either spouse 0-100%.

How does the Court decide what’s equitable?

It factors in things like how long the marriage lasted, what each person brought into the marriage, how much each can or does earn, responsibilities for children, retraining, tax consequences, and debt. If you have a marital agreement signed before or during marriage, you will have more control over how your assets are divided.

Essential things to remember about equitable distribution:

  • Everything you acquired during your marriage is subject to division
  • It doesn’t matter whose name or money was used to acquire the asset
  • You, not the judge, have to prove what assets exist
  • If you can prove your spouse did away with some assets with divorce in mind, the Court may award you a sum equal in value
  • If you have educated yourself on the state’s laws you can then create, with your attorney, a strategy that will lead you to what you really want
  • You, as a partner in the marriage, are also responsible for any debts acquired during the marriage

How to protect yourself in the Marital Termination Agreement

In Minnesota, the property and debt issues are typically settled between the parties by a signed Marital Termination Agreement or the property award is actually ordered and decreed by the District Court within the Decree of Dissolution of Marriage.

As we explained earlier, because Minnesota is an “equitable distribution” state, when the parties are unable to reach a settlement, the District Court will take the following approach to dividing the assets;

First, it will go through a discovery process to classify which property and debt is to be considered marital.

Next, it will assign a monetary value on the marital property and debt.

Last, it will distribute the marital assets between the two parties in an equitable fashion. Equitable does not mean equal, but rather what is deemed by the District Court to be fair.

Who gets the house and what about the retirement plans?

The two assets that receive the most attention in divorce are the house and the retirement plans. It’s also not unusual for divorcing couples to spend a lot of time and money arguing over a particular piece of furniture or a particular gift in the home because one or both have tremendous emotional energy tied up in them. But the house and retirement money get the most attention.

The House is usually the biggest asset in any divorce. Even if you purchased the house before the marriage, depending on your state’s laws, the house may still be considered marital property. The first question most couples ask is; should we sell the house? The first question should always be; “do you really want to sell the house—memories and all?”

If there are children, then that question becomes vitally important. Often times, parents will not sell the home, and one of them, usually the mother will stay in the house with the children. Of course making the decision is an important decision and many financial issues come into play, we advise that you speak with an attorney or an accountant before you make any decision regarding your home.

Retirement Plans are another issue that generates tension, because the spouse who owns the retirement plan typically doesn’t have any idea that the plan might be marital property and available for sharing with his or her spouse. If the plan benefit needs to be shared, your attorney will need to prepare a document called a Qualified Domestic Relations Order, abbreviated QDRO. People usually pronounce it “QUAD roe.”

The court bases its findings on:

  • length of the marriage
  • any prior marriage of a party
  • age
  • health
  • occupation
  • amount and sources of income
  • vocational skills
  • employability
  • estate
  • liabilities
  • needs
  • opportunity for future acquisition of capital assets
  • income of each party

The court shall also consider 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.

It shall be conclusively presumed that each spouse made a substantial contribution to the acquisition of income and property while they were living together as husband and wife. If there is a substantial change in value of an asset between the date of valuation and the final distribution, the court may adjust the valuation of that asset as necessary to effect an equitable distribution.

Remember, equitable does not mean “equal!”

Since Minnesota is an “Equitable Distribution” state, all marital property will be divided in an equitable fashion according to the court unless agreed to otherwise by the divorcing spouses. What does “equitable” mean? Equitable can be defined as “what is fair, not necessarily equal.” To automatically believe the marital property would be divided 50-50 would be a wrong assumption in any equitable distribution state

9 WAYS TO PROTECT YOUR ASSETS IN DIVORCE

1. Identify your family heirlooms

It is important to know that heirlooms given to you alone (as opposed to things that were given to you and your spouse) by your family do rightfully belong to you, whether they were given to you prior to your marriage or after you and your spouse married. Also know that there are steps you can take to make sure there is no confusion when it comes time to divide property with your spouse.

2. List and photograph your heirlooms before you remove them from the family residence, then remove them from the family residence

As you separate, it will be helpful to list all of the items you received as a gift or inheritance. If your safety permits, it is a good idea to photograph the items in the marital residence before you remove them and then remove them to some place that your spouse will not be able to gain access too readily. Too many divorcing people erroneously believe that lawyers will have some cost effective method of getting back heirlooms that they left in the family residence.

3. Get proof that you were given the heirloom as a gift or inheritance

It’s important for you to have proof from a relative stating that your heirlooms were passed on to you along, and, if possible their best recollection regarding when the heirlooms were given to you.

4. Get a professional appraiser.

Your interest in some assets needs to be professionally appraised so that you can be sure that you get your fair share of the assets. If you or your spouse operated a business during the marriage, that business needs to be appraised. If you or your spouse worked for an employer that had a retirement plan during the marriage, that retirement plan needs to be appraised. Get your divorce attorneys’ advice on whom to use to appraise the assets.

5. Identify the community property and photograph them

Except for specific items of property such as a business that one of you managed, generally, both of you will have the same right to take the items of community property from wherever you were living last.

The person who takes the community property things (e.g., furniture, furnishings, appliances, pots, pans, linens, cars) takes them at their fair market value rather than their replacement value. Say you paid $6.00 for a paperback book: used, it’s probably not worth $1.00, but it would probably cost $6.00 to replace. Replacement value and fair market value is not the same thing. In negotiations and in court, discussions will focus on fair market value, and fair market value is the price that you could get for the items as a used item when you go to sell it.

6. Know your rights and your spouse’s rights to take things from the marital residence

If you have moved out of the marital residence voluntarily, you can still return to the marital residence to take what you want, unless there is a court order to the contrary. If your spouse has changed the locks, unless there is a court order granting your spouse exclusive possession of the marital residence, you can hire another locksmith and have a door opened or you can access the home by breaking a window. (but we do not recommend this course of action—replacing a window is more expensive than hiring a locksmith.)

7. If your spouse moved out, your spouse can take the items he or she wants from the marital residence.

If your spouse moved out of the marital residence voluntarily, keeping items you want in the marital residence is not protecting your property. Even if you have contacted a locksmith and changed all of the locks, unless there is a court order granting you exclusive possession of the marital residence, your spouse can hire another locksmith and have a door opened or access the home by breaking a window. Your spouse can take the items he or she wants from the marital residence.

8. Don’t stop keeping ordinary business records when you divorce.

If you are a professional, for example, and you stop keeping your usual records used to bill clients through a billing service and start relying on informally asking your clients to pay you from time to time, this does not increase the likelihood that you will be able to keep the funds that you earn after separation. The funds that you as a professional earn after separation will need to be carefully allocated. If you cannot show that the money you’re received from your client/patient after separation was for work that you did after separation, this is going to create difficulties and it is going to subject more of your records to review.

9. Learn what your spouse has been doing with the property

If your spouse has been driving the car that you will be receiving after the divorce, you need to obtain records to make sure that the parking tickets, liens and registration have been paid. You should learn whether your spouse has done anything to have any liens placed against the real estate and accounts where money has been deposited.

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