In Minnesota divorce law, “property” means everything owned by you and your spouse, including your house, bank accounts, retirement accounts, furniture, cars, and everything else you own.   Even the debts are considered a part of your property settlement since debts are often a subtraction to the value of your property.  Minnesota law divides all property into two categories: marital property and non-marital property.

Marital property. Marital property is property that you and your spouse purchased during the marriage from money that either of you earned during the marriage.  In general, it does not matter who purchased the item of property or even whose name the item of property may be in.  If the property was purchased from money either of you may have acquired during the during the marriage, it is considered marital property and you and your spouse both have an equitable interest in that property.

Nonmarital Property:  Non marital property is the legal term for property that either you or your spouse may have a special interest, including the following:

1. • Property that you inherited;
   • Property that was intended as a gift specifically to you;
   • Property that was purchased from some aspects of a legal settlement that you received that was intended to compensate you for pain and suffering or future economic loss.

Tracing Issues:  Non-marital property is subject to tracing rules, meaning that the person who is claiming the property must be able to trace the gift or inheritance to a specific asset that exists today.  Gifts or inheritances that were spent during the marriage, for example, may not be traceable to assets and therefore may not lead to a non-marital claim.

Mixed Property:  Some of your property might have both non-marital and marital portions.  For example, if you used an inheritance to make a down payment on your home, you will have some non-marital interest in your home.  At the same time, because you have owned the home during the marriage and you and our spouse have made payments on the home through marital earnings, you will likely have a marital interest as well.  Your attorney or financial neutral can help you calculate the marital and non-marital interests in these situations.

The third general area relates to “cash flow” between you and your spouse.  In order to reach a settlement most couples need to agree on how they will pay the bills in each of their homes and whether one spouse will be making payments to the other spouse.  If payments are made from one spouse to the other, the payments are generally characterized as child support or spousal maintenance.

Child Support:  If there are children, an agreement needs to be reached regarding the payment of expenses relating to the care of the children, including whether one parent will pay child support to the other parent.   Minnesota has child support guidelines to help determine how much child support will be paid  The state provides a website that allows individuals to calculate how much child support would be suggested under the guidelines.  To access the Minnesota child support guidelines website, click here.

The Minnesota Child Support guidelines are not mandatory and many couples choose to deviate from the guidelines in order to reach an agreement that meets their specific situation.  However, the law does require that couples that choose to deviate from the child support  guidelines, explain their reasons for the change so that the court can be sure that the needs of the children are being met.

The child support guidelines include a determination of how daycare will be paid and a determination of how the cost of medical and dental insurance will be shared.   However, the division of other expenses, (such as activity fees for the children) are left to be determined by the couple. Some expenses, such as the medical expenses that are not covered by insurance, can be prorated based on the comparative incomes of the parties.

Alimony or Spousal Maintenance — Financial Support for the Spouse: Financial support for a spouse was once called alimony and is now referred to as spousal maintenance.  Under Minnesota law the two terms mean the same thing.  Alimony or spousal maintenance is awarded to either spouse in an effort to maintain the standard of living that both parties were accustomed to during the marriage.  Spousal maintenance awarded prior to the divorce is called pendente lite alimony.  It is taxable income to the recipient and tax deductible to the payer. For more information on spousal maintenance, click here.

In addition to the various other issues, the parties need to agree regarding tax exemptions, deductions on taxes during the year of the divorce, and taxes in relation to certain transfer payments including spousal maintenance.

Only one of the parties may claim a minor child as an exemption during any given year. Therefore the parties need to decide which party has the exemption or whether the exemptions will be alternated in some fashion. In order to claim head of household the minor child must spend at least half of their time with that individual parent.

Child support payments are not deducted by the person who makes the payments and are not reported as income by the one who receives the payments. Spousal maintenance or alimony on the other hand is deductible on the tax returns of the person who pays the maintenance and is included in income by the person who receives the income. Therefore, in determining how much spousal maintenance and child support should be ordered, the parties should consider the various tax ramifications so that they can try to reach an arrangement that is suitable for tax purposes as well as other concerns.

If the parties are still married by the end of the calendar year (the divorce was not completed) they can still claim a joint tax return. In those situations, there must be an agreement as to how the tax payments and/or refund will be handled. In addition, if the parties choose to file married filing separately, they must reach an agreement as to which deductions each parent will take.

It is important to consider issues regarding insurance, especially health, dental, optical, and life insurance.

If there are minor children it must be determined which parent will provide health insurance for them. If one spouse does not have insurance available through his or her employment, insurance can be made available for that spouse, from the other’s employer through the COBRA laws.  COBRA is an acronym for the federal laws that allows certain individuals to continue to receive the insurance that was previously provided by their employer or spouse.  In divorce cases, the COBRA laws allow a former spouse to continue to purchase insurance coverage through their former spouse’s insurance for up to three years.  In most divorce cases, the parties will need to determine what the cost of the COBRA insurance will be following the dissolution, and whether purchasing the COBRA insurance is the best option for the other spouse. In addition, Minnesota has its own version of the COBRA laws, often labled “62A”, that often provides more protection than the COBRA laws. If an employer is covered by 62A the former spouse can continue to receive the coverage at the same cost that was being charged during the marriage.  In addition, under 62A, the spouse’s coverage is not limited to three years.  Therefore it is always importan to determine whether 62A applies to the employed spouse’s insurance.

When determining issues of medical, dental and eye insurance, it must be clearly stated who is responsible for insurance deductions, co-payments and un-insured health care expenses. For example, parents may agree to split these health care expenses equally. Non-insured expenses may include such things as contact lenses, solutions, over-the-counter drugs, sports medicine such as ankle tape, safety equipment, orthodontic treatment, etc. Insurance deductibles should be defined in the final agreement, as well as how this expense will be handled between the parties.

Normally one or both of the parents are required to keep life insurance in place and to name either the other party, the children, or a trust in favor of the children, as a beneficiary, so that child support and/or spousal maintenance can be secured. In cases where child support is ordered, it is typical to require the parent paying the child support, to provide at least enough insurance to cover the support payments if he or she were to die prior to the end of the support being paid. Similarly, if a parent is paying spousal maintenance to the other parent, it is sometimes agreed that the parent will provide life insurance that would allow the maintenance to continue upon their death.  If this is not agreeable, the receiving spouse may be wise to purchase their own policy on the paying spouse to protect them in the event of the spouse’s death.