Minnesota is an equitable division state for purposes of divorce, which means that, absent an agreement between the estranged spouses, marital assets can be divided in such a manner that a judge will deem to be fair. This may mean that you’ll cede control of your home, rental properties or other items in your real estate portfolio. There are several factors that are typically evaluated when deciding what happens to real estate in a divorce settlement.
Real estate may be separate property
Any items that are deemed to be separate property are generally exempt from a property division settlement. An item may be deemed to be outside of the marital estate if it is held in a trust, was acquired before the marriage or was declared to be a separate asset as part of a prenuptial or postnuptial agreement. It’s worth noting that any appreciation in a separate asset during the marriage may be considered part of the marital estate.
Family homes are typically sold
You generally have the right to seek sole ownership of a family home in a divorce settlement. However, this may not be practical from a financial standpoint as there is no guarantee that you would be able to assume the mortgage or pay maintenance costs. Furthermore, taxes, insurance and other fees may eat away at the overall value of the house. Therefore, it may make more sense to sell it and split the proceeds after accounting for closing costs and possible capital gains taxes.
Consider the income potential of investment properties
If rental properties are part of the marital estate, you may be entitled to a portion of any income those properties generate in the future. You may also be entitled to a portion of any equity accrued in the property as it appreciates in price after the divorce is settled.
Keeping records of all real estate transactions may help you negotiate a favorable divorce settlement. Ideally, you will collect any records that you need before filing for divorce as it may be easier to obtain them before a potentially adversarial proceeding begins.
