You owned a house before the marriage. You paid $15,000 cash, and took out a mortgage for $110,000. You made mortgage payments of $800 a month for 2 years before the marriage. Before getting married, you made substantial improvements to the house, increasing the value. After 5 years of marriage, you are getting divorced and you want to keep the house. The real estate market has been good for sellers, and the value of your house has risen to $180,000. Your spouse agrees you can keep the house but wants $90,000 (half the value.) What is your response and how do you support your position under Minnesota law?
This is an example of an asset that is part “marital” and part “non-marital”. “Marital” assets are divided in a fair and equitable way (usually 50/50). Generally, non-marital assets are not divided – they are awarded to the spouse who owns the non-marital asset.
With this house, you need to figure out what part of the $180,000 is marital and what part is non-marital. The $15,000 downpayment, the mortage payments for 2 years before the marriage, the improvements you made before the marriage, and part of the increase in value of the house are “non-marital.”
On the other hand, the mortgage principle spend down and increase in market value applied to that spend down is “marital.” The process of running these calculations is know under Minnesota law as the Schmitz formula – named after a Minnesota Supreme Court decision that established the applicable standard. These determinations can become quite complicated, especially when, as in recent times, multiple refinances of a particular piece of property have occurred since marriage.