Minnesota Nonmarital Property: What's Mine Is Mine Till Death Do Us Part

Article provided by Kathleen M. Newman & Associates, P.A.
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Gone are the traditional days when getting married meant automatically commingling all money in a common bank account and putting both names jointly on every property title. Many societal changes influence why spouses may want to retain control of their own money and other assets after marriage:

• People are older when they marry and live longer on average, and are used to making their own spending, saving and investment decisions guided by their own values.
• Women may earn as much as men and sometimes more.
• Divorce is much more common.
• People may enter second and third marriages with assets and children from previous marriages.
• Childless couples with dual incomes may want to support their families of origin or contribute to charitable causes when they die, rather than pass their money only to their spouses who may have little need for it.

Minnesota Law

The Minnesota legislature has clearly defined property ownership in marriage by creating a marital and nonmarital property system.

• Marital property is that which is acquired by spouses, alone or together, during the marriage. Whether marital property is owned singly or jointly, each spouse is deemed to have an interest in the property. In a divorce, the court divides marital property equitably, taking into account all relevant circumstances.
• Nonmarital property is that which is acquired by either spouse before marriage; during or after the marriage by "gift, bequest, devise or inheritance made by a third party to one but not to the other spouse"; or after the date the court values the property for divorce purposes. Property received in exchange for these types of property or the passive increase in value of these types of property is also considered nonmarital in nature. Finally, property maybe classified as nonmarital pursuant to an antenuptial agreement, also known as a prenuptial agreement, where the parties agree on how property will be classified, owned, valued or disposed in the future.

Marital Property Presumption

Significantly, Minnesota law presumes that all property acquired during marriage is marital in nature, and a spouse challenging this presumption has the burden of proving by a "preponderance of the evidence" that it is instead nonmarital. Property proven to be nonmarital will go to the spouse that owns it. However, the court may give up to one-half of the nonmarital property to the other spouse if the court finds that not to do so would cause an "unfair hardship" to the spouse who is not the owner of the nonmarital property.

If a nonmarital asset has changed its nature during the course of the marriage, the spouse making the nonmarital claim must trace the original nonmarital asset to an asset existing at the time of the divorce. For example, a nonmarital gift of money to one spouse alone may have been used to purchase stocks, so the link between the money and the investment is easily traceable and the investment takes on the nonmarital nature of the original gift of money.  

Commingling marital property with nonmarital property can make it hard to determine the true nature of the property. A spouse trying to show that part of commingled property is nonmarital may need to hire an accountant to try to reconstruct the history of transactions that created the mixed assets. If a husband or wife wants to keep nonmarital property designated as such, it is a good idea to keep it in a separate account during the marriage.

Legal Counsel Important

Before entering into a marriage, and whenever ownership or inheritance questions arise during marriage, a spouse should seek the input of an experienced, knowledgeable family law attorney. Get legal advice before you commingle money and assets in a marriage. The possibility of a prenuptial agreement that would control property ownership and distribution should also be explored.