Equitable Distribution and Offsets

There are many steps to take when trying to settle a divorce.  The issues range from spousal maintenance to child custody to division of marital assets.  In Minnesota, marital assets and marital debts are subject to an “equitable distribution” by the judge.  The judge will examine a specific list of factors that are set out in the Minnesota statute to decide which spouse will get what portion of which marital asset and which marital debt.  Equitable does not always mean the property will be equally distributed, but it does often result in an approximate equal division of the marital assets.  One way to make sure that each spouse receives their share is to require that each asset be actually divided.  This tactic makes sense for liquid assets, such as a savings account.  In that situation, the account can be liquidated and each spouse just take his or her share.  However, equally dividing the assets by a simple physical division is not always practical.  In some situations, an offset may be a better approach. gavel and house image

In an offset, the assets are shuffled or traded such that each asset does not have to be physically divided.  Offsets are often used when the parties have large, non-liquid assets that they do not wish to divide or that they will be penalized or taxed for cashing out in order to divide.  For example, one common reason to use offsets is when the parties have a marital residence with a large amount of equity.  Where one party wants to remain in the home and does not have the liquid assets available to pay the other spouse his or her equitable share of the equity, an offset may be appropriate.  In that case, the person not receiving the home may end up being awarded all or most of the parties’ retirement accounts or vehicles in order to make up for the amount that he or she is not receiving out of the equity in the marital residence.  The primary advantage of offsetting the assets is avoiding the process of having to actually sell or cash out assets to divide the proceeds.  Before agreeing to an offset, however, the parties need to be certain of the value of the assets they are agreeing to use for this purpose.

We have extensive experience helping our clients with issues relating to marital property and division of assets.  Call us today at (651) 371-9117 to talk about your property and what we can do to help you with your goals.

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