When going through a divorce, one of the most important—and often most complex—steps is determining how to value and divide marital property. Whether the dispute involves real estate, retirement accounts, or personal property, understanding how assets and debts are valued under Minnesota law is critical to achieving a fair settlement.
In this post, we’ll walk through the key components of Minnesota divorce property division, including how the valuation date is determined and how specific types of assets—like real estate and financial accounts—are typically valued.
Step 1: Determining the Valuation Date in a Minnesota Divorce
Under Minnesota Statute § 518.58, the valuation date is the date used to determine the value of assets and debts. Under the statute, this is the day of the initially scheduled prehearing settlement conference. Yet, many counties have standing orders clarifying the date as the Initial Case Management Conference (ICMC). However, the parties may agree to use another date, or the court may choose a different date if it would lead to a more equitable distribution of property.
In cases where the parties do not file for divorce right away or prefer to resolve matters outside of court, they must agree on an alternate valuation date. This is often close to the date of physical separation, but not always.
The valuation date is especially important when it comes to financial assets like bank accounts, investment portfolios, and retirement funds, which can fluctuate over time. Minnesota law allows for post-valuation adjustments if the value of an asset changes significantly before the divorce is finalized.
Step 2: Creating a Marital Balance Sheet
Once the valuation date is established, each party discloses their assets and debts. This information is used to create a marital balance sheet, which lists:
· Each asset and its value as of the valuation date
· Each debt and its outstanding balance
· Whether the item is considered marital or non-marital property
This balance sheet becomes the foundation for negotiating or litigating the division of property.
How Is Real Estate Valued?
The marital home is often the most valuable asset in a divorce. For that reason, obtaining an accurate valuation is essential to ensure equitable distribution.
1. County Property Tax Assessment
Some parties use the home’s county tax-assessed value as a starting point. This method is free and readily available, but it’s often outdated or inaccurate—especially in a shifting housing market.
2. Neutral Real Estate Appraisal
Hiring a neutral certified residential appraiser provides a more accurate assessment. A formal appraisal considers factors such as:
· Recent sales of comparable homes
· Condition and upgrades
· Current market trends
· Required repairs
Courts and attorneys often rely on this method when property division is contested.
3. Actual Sale Price
If the home is sold during the divorce process, the sale price can be used as the definitive value. Even if a sale is anticipated but not completed, an appraisal still helps the parties set expectations and resolve disputes about listing prices and sale proceeds.
How are pensions valued?
There are two primary methods for valuing pensions in a divorce:
1. Present Value Method
This approach assigns a lump-sum present value to the pension based on actuarial assumptions, such as life expectancy, retirement age, and expected payout. It allows the pension to be offset against other marital assets (e.g., home equity, retirement accounts), so that one spouse keeps the pension and the other receives different assets of equivalent value.
2. Deferred Distribution Method (or “If, As, and When”)
In this approach, the pension is divided at the time of distribution, usually upon the employee-spouse’s retirement. The non-employee spouse receives a share of the monthly benefits as they are paid out, based on a court order known as a Qualified Domestic Relations Order (QDRO) or similar division order for public plans. This is a common approach in Minnesota divorces, particularly when the present value is uncertain or the parties do not wish to hire a valuation expert.
Use of Pension Valuation Experts
In cases involving defined benefit plans (such as PERA, MSRS, federal pensions, union pensions, or private employer pensions), a pension actuary or valuation expert may be needed to calculate the present value or estimate future payouts. This is especially important when pensions represent a significant portion of the marital estate or when one party seeks to “buy out” the other’s interest.
QDROs and Plan-Specific Rules
Dividing a pension usually requires a court-approved QDRO or similar order. These orders must be carefully drafted to comply with the plan administrator’s rules, which can vary significantly depending on whether the plan is private, public, or federal. Mistakes in drafting can delay payment or unintentionally waive benefits.
Valuing Other Marital Assets and Debts
In general, marital assets are valued at their fair market value as of the valuation date. Common approaches include:
· Vehicles: Use resources like Kelley Blue Book or Edmunds to estimate value
· Bank and Investment Accounts: Use the statement closest to the valuation date
· Retirement Accounts: Obtain current plan statements; some accounts may require actuarial valuations
· Business Interests: This will depend on the type and complexity of the business venture and may require a formal business valuation expert, particularly in high-asset cases
Marital debts—such as mortgages, credit cards, and personal loans—are also included and valued based on their outstanding balances as of the valuation date.
Why Accurate Valuation Matters in Divorce
Accurate asset and debt valuation is critical because it directly affects:
· Equitable division of marital property
· Whether an equalizer payment is owed from one spouse to another
· Spousal maintenance (alimony) calculations in some cases
Incorrect or estimated values can lead to unfair outcomes and post-decree disputes. When necessary, engaging qualified experts—like appraisers, accountants, or financial advisors—can ensure a reliable and defensible outcome.
Get Trusted Legal Guidance on Property Division
At Lommen Abdo, P.A., we help clients throughout Minnesota and Wisconsin navigate complex property division in divorce with clarity and confidence. Whether your divorce involves real estate, retirement accounts, business interests, or debt, we have the experience to help you protect your financial future.
Contact us today to schedule a consultation and start building a legal strategy tailored to your goals.