When thinking about a Dakota County divorce, people need to be aware of the law as a relates to the division of marital assets and debts.
What is a good example of a divisible marital asset?
In Dakota County Minnesota one good example of a divisible asset and the divorce is a retirement account. A husband may have retirement account and/or the wife we have a retirement account. If the husband’s retirement account is worth $100,000 in the wife’s retirement account and $50,000 that creates a $50,000 divisible asset in a divorce. If those were the only two assets in the divorce, a judge would likely split that money equally, or $25,00 apiece.
However, most marital estates in a divorce are not that simple. Minnesota is an equity property state. This means that the Minnesota District Court judges will divide property equitably but not necessarily equally. One problem with an equitable division is the problem of cash flow.
Cash flow means how a person is going to pay for debts such as mortgages gas, food etc. after divorce. Obviously, divorces are very difficult on finances for both husband and wife.
In the instance of division of marital debts and assets, the court will take into account cash flow. Often, the husband may earn more money and annual salary than the wife. This means that the husband will have a much higher ability to pay for a larger mortgage and the wife would.
The discussion on cash flow often comes up during spousal maintenance. Although spousal maintenance is outside the subject of this post, we bring it up because it has bearing on the discussion of division of marital assets and debts.
Let us go back to the example of the retirement account. In an “equal division”, we know that the husband and wife would split the $25,000 down the middle. However, in Minnesota, if the husband is making significantly more money, then the wife likely would have a good argument that she need more of the $50,000 because of her decreased earning capacity. We are not saying that this is a hard-and-fast rule. What we are saying is that “equitable” does not necessary mean “equal.” The courts will take into account the wife’s decreased earning capacity when dividing the marital estate. It is all a question of cash flow.
For more information on the division of marital assets and debts, contact a Dakota County divorce attorney at Flanders Law Firm LLC at 612-424-0398.
