Dividing property is an important element of any divorce. Minnesota is an “equitable distribution” state, which means that marital property is divided equitably between the spouses. An equitable distribution does not always mean an equal distribution, and the courts will examine a list of factors in determining which spouse receives which property. A key to this division is that only marital property will be subject to division in the divorce. Non-marital, or separate property will continue to belong solely to the owning spouse. For the most part, property owned before marriage is separate property. In addition, property received during the marriage through personal injury award, inheritance, or as a gift from someone outside the marriage will also likely be separate property. Separate property can transform into marital property, however, depending on a variety of factors. It is important to understand how to keep this from happening to protect your separate property.
One key to make sure that your separate property remains yours alone is to avoid commingling. Commingling means making sure that your separate property stays in its own account and is not mixed with marital property. For example, if you inherit cash from a relative, make sure those funds are deposited into their own account, solely in your name, and that marital funds are never deposited into that same account.
Another key is to make sure that your non-marital property remains solely in your name. Adding your spouse’s name to your separate accounts or assets can change the property from separate to marital. The family farm that is solely in your name and that you have owned for many years before marriage can end up being considered marital property if you decide to add your spouse’s name to the deed.
Finally, how you financially treat the property can also change the property from separate to marital. If you use your marital funds to improve or contribute to the separate property, your spouse could have a claim to at least a portion of the property’s value. For example, using marital funds to pay down the mortgage on your real estate that is your separate property could result in muddying the waters between separate and marital property.