In a Minnesota divorce, property acquired by either spouse during marriage is presumed marital (joint property) that a court awards equitably to each spouse. The burden of proving that property is not marital, and therefore not equitably divided, is on the spouse claiming the property is not marital, or ‘non-marital’. Van de Loo v Van de Loo, 346 N.W.2d 173, 177 Minn. Ct. App. 1984).
In Minnesota ‘non-marital’ property is property that a spouse acquired outside of the marriage relationship. Some examples of ‘non-marital property’ are:
- an inheritance;
- a gift to one, but not the other spouse; or
- something the spouse owned before marriage.
Minn. Stat. §518.003 subd. 3b.
Sometimes, an asset be both marital (joint) and non-marital (solely the property of one spouse). Married couples commonly combine resources and efforts to make changes and improvements to their assets, to enjoy a higher standard of living. Spouses who contribute to improving a non-marital asset can be compensated for those contributions in the event of divorce.
Take, for example, a house that Wife owned before marriage. The house was worth $50,000.00 at the time of marriage. After 10 years, Husband and Wife get divorced. The house is now worth $100,000.00. During the marriage, Husband and Wife put an addition to the house, added a patio and a garage.
Even though the house is Wife’s non-marital property, does Husband get any credit for the value of the improvements? How does the court determine how much these improvements are worth, so that Husband can get something for his efforts?
According to the Minnesota Court of Appeals in its 1987 decision Dorweiler v. Dorweiler, 413 N.W.2d 572 (Minn. Ct. App. 1987) Husband does get credit for the improvements, and, proper calculation Husband’s and Wife’s share of the home is as follows:
- Subtract the cost of the improvements (garage, patio, addition) from the home’s present value (assume the cost of the improvements was $10,000.00); therefore the home’s value ($100,000.00), minus the cost of improvements ($10,000.00), is $90,000.00.
- Determine the increase in property value due solely to appreciation: $40,000.00 ($90,000.00 home’s value minus improvements) – ($50,000.00 Wife’s equity in the home at the time of marriage);
- Multiply the increase in property value due to appreciation ($40,000.00) by the ratio of Husband and Wife’s contribution to the home’s value ($10,000.00) to Wife’s non-marital contribution ($50,000.00 value at time of marriage): 1:5 or .8;
- $40,000.00 (net appreciation) x .8 (ratio of Wife’s non-marital equity to the cost of improvements purchased during marriage) = $32,000.00.
- Wife’s total non-marital interest in the house is $32,000.00 (appreciation on Wife’s non-marital contribution) plus $50,000.00 (value of Wife’s non-marital contribution), or $82,000.00;
The remaining $18,000.00 ($100,000.00 present value – $82,000.00 non-marital equity) of the house’s value is marital, Husband’s contributions to the value of the house are properly considered and the spouse’s marital share can be determined, allowing the court to award Wife’s non-marital interest, and allow both spouses to be awarded a share of the marital interest.
Protecting non-marital interest and properly determining marital interest is an important part of a protecting property rights in a divorce. Always consider getting legal advice if you have questions about your rights in a divorce involving non-marital property.
Contact Beyer & Simonson
If you are facing divorce and any of the divorce-related issues such as spousal maintenance, child support, child custody, property division, or domestic abuse matters, you need our experienced Minneapolis divorce attorneys to help you. Contact Beyer & Simonson in Edina, Minnesota today at (952) 303-6007.