Tuesday, June 27th, 2017
Often marital assets division in a divorce is straightforward. Acquisition of assets during a marriage, unless acquired through gift or inheritance, is treated as marital property, regardless of who worked or who didn’t. In divorce, gifts and inheritance may be separated and given to only one spouse who initially received the asset. These are known as being non-marital, even though they may have been acquired during the marriage. But there are some things that must be first established. The Court must be able to clearly identify the non-marital assets from the marital assets. This can be difficult where the assets were commingled with other marital assets, making them no longer distinctively separate.
Here’s a real clear example of how commingling can cost an individual the loss of non-marital property. Spouse “X” receives an inheritance from a deceased parent of $50,000. Spouse “X” places this $50,000 in a joint marital account (Spouse “X” and “Y”) where there was $3,000. Three years later a divorce proceeding starts. At that time, there remains in the joint account $9,000. During the three years, the parties buy a $30,000 truck and a $10,000 boat. One might guess that Spouse “X” could claim the truck and boat as theirs because it was ‘obviously’ purchased with their inheritance. This isn’t necessarily a given. That’s because during the three years “Y” earned over $200,000 in wages and “X” earned nearly $150,000, both placing their earnings in the joint account.
The inheritance was commingled with marital assets making it pretty near impossible for the court to trace the purchased assets to the inheritance. Now, if the purchases happened very shortly after the inheritance deposit to the joint account, and there had been only $3,000, then, perhaps, the argument may easier to win that the purchases are non-marital. Still, you’ll want zealous legal counsel to assert your rights.
Another exception to marital assets can be where one party used pre-marital money to purchase the family home. Perhaps one spouse solely made the deposit on the home. In these cases, Minnesota uses a specific formula, based on an actual case– Schmitz v. Schmitz, 309 N.W.2d 748, Minn. Ct. App. 1981. The Schmitz formula calculates non-marital property based on the percentage one party contributed toward the purchase and then proportionally using the percentage on any home price appreciation, or depreciation, to arrive at a non-marital amount. Importantly, the appreciation of a home does not count in for the calculation home improvements.
If you have questions on non-marital claims in a pending divorce, call our office today at (218) 722-5809 or contact us through our website.
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