What is Marital Property (and How Can a Prenup Change That)?

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Property division is a part of most typical divorces in North Dakota.  But what exactly gets divided? And how? The answer is simple - “marital property” gets divided “equitably”. The answer as to how “marital property” and “equitable” is defined, however, is often not as simple.  

When courts refer to “equitable” distribution of property in a divorce, often times it means exactly equal or on a 50/50 basis. Sometimes, however, it means that marital property is divided “fairly” under all the circumstances and that may not mean exactly equally. What is “marital property?” And how might a prenuptial agreement change that? 

Marital property is any property acquired by either spouse or both spouses before the marriage if it is not excluded by a valid, enforceable prenuptial agreement.  Marital property is also acquired by either spouse during the marriage, or property acquired as a result of their work or investments. In other words, even if an asset was earned by one spouse (like a paycheck), if it was acquired during the marriage, it is generally considered marital property and needs to be accounted for and divided during the divorce process.

Marital and Non-Marital Property

North Dakota does not require that a spouse receiving a gift or inheritance during the marriage always or under every circumstance be granted that asset gifted or inherited in the divorce. Under the Ruff-Fischer guidelines, the source of the property can be one factor weighing on the court’s decision on which spouse is awarded that  particular item of property. Whether the total amount of other property acquired during the marriage will be enough to offset the non-marital property awarded to the other spouse is another consideration. 

The Ruff-Fischer Guidelines also take into account the parties’ respective ages; their earning abilities; the length of the marriage; the spouses’ conduct during the marriage; their station in life; their needs; their health and financial situation; the property they own (whether acquired before or after marriage) and that property’s capacity for producing income; and any other relevant considerations in determining an “equitable” way to divide the net marital estate.  

Property owned by one spouse or the other before the marriage is not irrevocably set aside for the spouse who possessed it pre-marriage.  All property (and debt), regardless of whether it was acquired before or after the marriage, must be accounted for and valued in determining the total marital estate.  Valuing the total marital estate is required before the Court can determine how the total estate (value of the property minus the total debt) is to be divided.  

For example, if  spouse A brought a retirement account worth $20,000.00 into the marriage and, after 10 years of marriage, spouse A and spouse B are divorcing and the retirement account is now worth $100,000.00. Is all 100,000.00 of divisible? Or is spouse A’s original $20,000.00 excluded all together? In what cases will the original $20,000.00 be awarded to spouse A exclusively and under what circumstances would the original $20,000.00 be awarded to spouse B or divided between spouse A and spouse B? The answers to these questions is dependent upon the facts and circumstances of each case. 

How Does a Prenup Affect Property? 

One way in which parties planning to get married in North Dakota can deal with some of these issues in anticipation of a planned marriage is through a prenuptial agreement. 

You might come from a wealthy family, and expect to come into an inheritance at some point during your marriage. Or you already have inherited a notable amount of property prior to your marriage and you wish to protect that inheritance in the event of divorce or separation.   

Perhaps the betrothed parties have a significant difference in your earning capacities. If spouse A is a surgeon, and spouse B is or will be a stay-at-home parent, it is likely spouse A will earn significantly more during the marriage. Spouse A might think it is fair that if he/she is going to contribute more financially to the marriage, he/she should get a greater proportion of assets if the marriage ends. On the flip side, if spouse B might believe that if he/she puts his/her career on hold to care for family or to allow spouse A to pursue their career, you might want to make sure that you will be adequately compensated for your sacrifice with a larger share of marital assets. 

The parties can execute a prenuptial agreement that spells out a division of property that both think is fair while that division is still a hypothetical one. While there are guidelines the parties must follow for drafting and executing a prenuptial agreement in order for the agreement to be found to be valid and enforceable in the event of a divorce, a prenuptial agreement can significantly reduce the number of complicated valuation and property division issues.  

For more information on these issues  in North Dakota divorce cases, Fremstad Law invites you to contact family law attorney Lesley Foss at (701) 478-7620 or complete our online form.

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