Non-Marital Property in Minnesota
"I sold my former house to buy our marital house, so I have a non-marital interest."
Under Minnesota law, “non-marital property” is property received before the marriage or, in the case of a gift or inheritance, received by just one spouse after the marriage.
Sounds simple enough, right?
Unfortunately, there are other factors that the court takes into account when determining whether an asset is marital or non-marital. Property received by either spouse during a marriage is presumed to be marital. A spouse can refute this presumption by showing that the down payment for the purchase of a property was through non-marital assets. So if a house is purchased during the marriage, it is presumed to be a marital asset unless a down payment can be specifically traced to one spouse’s non-marital assets.
Minnesota courts have developed a formula for apportioning marital and non-marital interests that depends on three variables: 1) the non-marital contribution, 2) the value of the property at the time of the marriage, and 3) the present value of the property.
According to this formula, the increase of equity of non-marital property from normal market forces remains non-marital. However, it becomes much more complicated if the increase in equity is due to improvements made during marriage. Typically, money expended for improvements to the home that comes from the parties' joint efforts will result in a portion of the equity in the property being declared marital.
Likewise, a non-marital interest in a property can be completely extinguished by refinancing a property during the marriage if the funds from the refinancing do not go towards payment of the loan and are used jointly during the marriage.