Going through a divorce is never simple, especially when asset and debt division is involved. The COVID-19 pandemic has placed many restrictions on how divorces are pursued, including the challenge of property division. There are many actionable steps ex-spouses can take to effectively manage property division during COVID-19, from communicating openly and developing asset and liability plans to pursuing a temporary restraining order and postponing finalization. Regardless, divorcing couples are encouraged to seek guidance from an experienced family law attorney so an outcome that benefits each party can be achieved.
What Is Property Division?
Throughout the country, states vary between two methods when dividing property: community property standard and equitable distribution. The state of Minnesota follows the equitable distribution method, which means that the court attempts to divide marital property between each spouse in an equitable or fair manner. (MN Stat § 518.58) However, this property division method doesn’t guarantee a 50/50 split. Judges assigned to divorce cases in Minnesota consider many factors when determining how to divide marital property, such as:
- Length of the marriage
- Age, health, and occupation of each spouse
- Contributions to of each spouse to the acquisition, preservation, depreciation or appreciation of marital property
- Contribution as homemaker
However, it doesn’t stop there. Minnesota is also a “no-fault” divorce state, meaning the judge does not evaluate or consider which party might be responsible for a failed marriage when determining how marital property is divided.
Valuation of Property
A judge can not complete the property division process until each asset’s value is determined. This critical stage is referred to as the “valuation of property.” A common method for determining an asset’s value is to use its fair market value. Calculating the fair market value is generally straightforward under normal conditions. Each party gathers the opinions of supporting experts like accountants, brokers, and property appraisers that provide individual perspectives on an asset’s worth. From there, the court will determine the value of an asset based on the most credible expert testimony. However, due to the COVID-19 pandemic and economic uncertainty, establishing realistic values for assets can be challenging and unpredictable. It’s recommended to consider consulting an expert to evaluate the parties’ assets. Parties may also want to consider agreeing to retain a neutral evaluator for the valuation of property process. These individuals are neutral third parties that help divorcing couples reach an agreement regarding asset values. Usually agreeing to a neutral evaluator can save the parties money, so long as both parties are cooperative in the evaluation process. Parties should consult their attorneys to determine whether a neutral evaluation is right for them.
Divorce During COVID-19
If a divorcing couple is seeking to quickly reach a final divorce settlement, assets can be divided by percentage rather than the dollar value. Many couples choose this alternative to reduce property division uncertainty and distribute the risk associated with each asset evenly. Below are a few suggestions for ex-spouses to consider when navigating a divorce during COVID-19:
- Active and Open Engagement. It’s essential to engage in transparent conversations with an ex-spouse regarding property division. Couples are encouraged to try and reach an agreement regarding the disposition of the property. If an agreement can be achieved, both parties must have it in writing.
- Develop an Asset Plan. During a divorce, a concern that one spouse may try to liquidate assets can arise. Developing an asset plan that lists all marital property can be beneficial so financial status can be maintained – especially during this difficult time.
- Create a Liability Plan. Marital liabilities should also be considered and tracked similarly. Couples should verify that all assets and liabilities are paired with source documents such as credit card or bank statements and purchase receipts.
- Consider a Temporary Restraining Order and Injunction. If there is a suspicion of a spouse using marital assets or racking up debt, filing a temporary motion can help curtail any asset liquidation until the court reaches a decision or the transaction is agreed upon by both parties.
Should a divorcing couple choose to move through with a divorce during the COVID-19 pandemic, alimony or spousal support should also be determined. If spouses have agreed upon a certain amount, it’s not unusual for the court to deny an increase. However, if a considerable change in circumstances occurs, such as job loss or an injury, an adjustment may be considered.
Postponing a Divorce
Divorce is already an emotional and stressful time, and adding COVID-19 limitations can make it that much more daunting. Because of this, many divorcing couples have decided to postpone any finalization until the COVID-19 pandemic subsides. If the spouses choose to take this route, an effective and organized system must be developed so both spouses know how shared assets are managed. Spouses are encouraged to identify income sources, shared assets, and debts. Once all items are identified, a financial plan must be developed that outlines how and who will manage income and cumulative debt.
Persevere During a Time of Change
As the world and economy continue to evolve, many are experiencing added stressors and obstacles. Navigating through and mentally dealing with a divorce is never easy, and the COVID-19 pandemic has added a whole new component. Whether currently going through a divorce or considering starting a conversation, it’s recommended that divorcing couples seek guidance and assistance from a knowledgeable family law attorney so proper steps can be taken. The COVID-19 pandemic has introduced a new approach to the management of property division. Still, perseverance in this time of change will help spouses ensure all assets, liabilities, and debts are accounted for and distributed correctly.
This article contains general legal information and does not provide legal advice. For legal advice, please contact M. Sue Wilson Law Offices directly.