Property division at divorce

1
Property division at divorce

• 9 states are community property states AZ, CA,
  ID, LA. NV, NM, TX, WA and maybe Wisconsin
• 41 states are common law property states
  (including Minnesota)-

2
UMDA

• Alternative A common law states
• equitable apportion all property and assets
  belonging to either or both however and whenever
  acquired
• Alternate B Separate property to the spouse it
  belongs to community property in just
  proportions.

3
M.S. 518.58, subd. 1

• , the court shall make a just and equitable
  division of the marital property of the parties
  without regard to marital misconduct, after
  making findings regarding the division of the
  property.

4
M.S. 518.58, subd. 1

• It shall be conclusively presumed that each
  spouse made a substantial contribution to the
  acquisition of income and property while they
  were living together as husband and wife.

5
Minn. Stat. 518.54, subd. 5 Marital
Property

• All property acquired by either spouse
  subsequent to the marriage and before the
  valuation date is presumed to be marital property
  regardless of whether title is held individually
  or by spouses in a form of coownership.

6
Nonmarital property

• Nonmarital property means property real or
  personal, acquired by either spouse before,
  during, or after the existence of their marriage,
  which
• (a) is acquired as a gift, bequest, devise or
  inheritance made by a third party to one but not
  to the other spouse
• (b) is acquired before the marriage
• (c) is acquired in exchange for or is the
  increase in value of property which is described
  in clauses a,b,d,e
• (d) is acquired by a spouse after the valuation
  date or
• (e) is excluded by a valid antenuptial contract.

7
Minn. Stat. 518.54

• Subd. 1a. Transfer, encumbrance, concealment, or
  disposition of marital assets. During the
  pendency of a marriage dissolution, separation,
  or annulment proceeding, or in contemplation of
  commencing a marriage dissolution, separation, or
  annulment proceeding, each party owes a fiduciary
  duty to the other for any profit or loss derived
  by the party, without the consent of the other,
  from a transaction or from any use by the party
  of the marital assets.

8

• Subd. 2. Award of nonmarital property. If the
  court finds that either spouse's resources or
  property, including the spouse's portion of the
  marital property as defined in section 518.54,
  subdivision 5, are so inadequate as to work an
  unfair hardship, considering all relevant
  circumstances, the court may, in addition to the
  marital property, apportion up to one-half of the
  property otherwise excluded under section 518.54,
  subdivision 5, clauses (a) to (d), to prevent the
  unfair hardship.

9
Problem p. 402

• Hamilton and Wilma marry at age 21-
• No assets into the marriage.
• He works as stockbroker, she is a homemaker.
• At divorce they have
• 1) house titled jointly
• 2) stocks and bonds titled in just his name.

10
Pierson assets

• 1) Family home- 90,000
• 2) Kathy Street House 23,310
• 3) Condo 2,500
• 4) Farm 131,000-181,000

11
Problem 1, p. 411

• Theresa and Nandor
• Both employed throughout their married life,
  Theresa did all the housekeeping.
• Does she get more?
• Theresa did all of the saving.
• Does she get more?

12
Problem 2

• Betty and Walt, a married couple
• Six months before the divorce (at a time they are
  experiencing marital difficulties) Walt gives his
  son by a prior marriage a large amount of money
  (lets say 50,000).
• In MN?
• In Wisconsin?

13
Problem 3

• Mary and Victor, a married couple.
• She is an heiress, he is an unemployed therapist.
  Marital estate in the millions
• Statute Marital property to be divided equally
  without reference to fault.
• Victor negotiated unsuccessfully for her murder

14
Problem 4

• Harry sues Wilma in tort for fraud. The fraud
  She never loved him.
• Divorce all assets to be divided equally.
• Can Harry go after her half in this tort action?

15
Problem 5

• Cherry and David married for five years. She
  gets a restraining order against him and he loses
  his job (hes a police officer)
• Equal division not followed judge gives him
  15,000 more because he is unemployed.

16

• Property as Separate or Marital
• 1) Is it property?-the Identification issue
• 2) Is it marital or nonmarital (or some portion
  thereof?) The Characterization Issue
• 3) How much is it worth? (The Valuation issue)
• 4) How should it be distributed? (Distribution)

17
OBrien

• Trial court ruling
• Investment account is wifes separate property.
• Marital property (140,000) to each.

18
Community property states

• American rule appreciation and income from
  separate property remains separate property
  (California, Arizona, NM, Nevada, Washington)
• Spanish rule appreciation is separate, income
  is community. (Idaho, TX, La, Wisconsin)

19
California Pereira/Van Camp

• Hypo
• Wife brings to the marriage a separate property
  investment account, worth 100,000.
• Husband during the five year marriage manages the
  account. (assume nothing gets added)
• At the time of the divorce the account is worth
  150,000.

20
Pereira/Van Camp

• Under Pereira-the reasonable rate of return on
  any 100,000 investment account over those five
  years would have increased it to 130,000. So
  there is 20,000 in community property.
• Van Camp-Value of the time the husband spent on
  the account is 10,000. He was paid nothing.
  The community is due 10,000.

21
Common law states

• General rule Income from separate property is
  separate
• MN is not one of those states. Income is
  marital, appreciation is marital if active,
  nonmarital if not.
• UMDA language-increase in value is nonmarital

22
Cummings v. Cummings,376 N.W. 2d 726 (Minn. App.
1985)

• Property acquired during premarital cohabitation
  is not marital property.

23
Problem 1, page 423

• Howard is a waiter and a substantial portion of
  his income is tips.
• Gift or income?

24
Problem 2

• Edwin and Julie
• On their wedding day Julies dad give them
  10,000. Separate or marital?
• On their wedding day Edwin gives Julie a 5,000
  necklace. Separate or marital?
• On their fifth anniversary Julie gives Edwin a
  valuable painting purchased with marital funds.
  Separate or marital?

25
Problem 3

• 1983 Wanda purchases a house, title in her own
  name. She makes DP and mortgage payments.
• 1985 Wanda marries Henry (equity in house now
  20,000). She changes title to both names.
• Current Equity in house is 60,000.
• 20,000 attributable to appreciation 20,000 to
  payments toward the mortgage.

26
Problem 4

• Herb marries Winnie in year 1.
• Herb wins the lottery in year 3. (takes the
  payments over 20 years)
• Herb divorces Winnie in year 6.
• Assume they separated one day prior to his
  winning the lottery, what then?

27
Problem 5

• W part owner of a closely held business.
• W marries H. Both work in the business.
• Each gets a salary. Business pays W dividends.
• Are assets purchased with Ws dividends, marital
  or separate?
• Are assets purchased with Ws wages, marital or
  separate?

28
Problem 5

• Yr 1John inherits resort, titled in his name
  alone. (worth 150,000 but with a 50,000
  mortgage)
• Marries Kathleen.
• John pays off mortgage on the resort with income
  from the resort.
• Kathleen works at the resort, assisting with
  guests, cleaning cabins, etc.
• John works at the resort, doing capital
  improvements
• Year 20 Resort worth 400,000.

29
MN law

• Resort equity due to the following
• Paying off of the mortgage
• General inflation of lake property
• Johns hard work improving the property.

30
Problem, page 429

• John and Lois divorcing.
• John makes 40,000/year
• Lois makes 7,200/year.
• 8,950 in marital assets to her 8,800 in
  marital assets to her.