Will Student Loans Be Divided in Divorce
July 27, 2020
The Court has wide discretion when dividing property and debts das part of a divorce. Any property that is acquired by a married person during the marriage is subject to a rebuttable presumption that the property is marital property. Minn. Stat. § 518.003, subd. 3b (2012); Baker v. Baker, 753 N.W.2d 644, 649 (Minn. 2008). In other words, the Court assumes that any property acquired during the marriage is marital By the same token, any debt incurred during the marriage is presumed marital.
Property that was "acquired before the marriage," however, is presumed to be non-marital property. Minn. Stat. § 518.003, subd. 3b. Upon the dissolution of marriage, non-marital property generally is awarded to the party to whom it belongs, and marital property is divided equitably between the parties. Minn. Stat. § 518.58, subd. 1 (2012).
An equitable division of assets and liabilities “is not necessarily an equal division." Crosby v. Crosby, 587, N.W.2d 292, 297 (Minn. App. 1998), review denied (Minn. Feb. 18, 1999). " The courts in Minnesota have stated that each case is to be considered in light of its particular facts." Lenzmeier v. Lenzmeier, 304 Minn. 568. 571, 231 N.W.2d 71, 74 (1975). Perhaps most compelling is that a court in its analysis must also “consider the contribution of each [party] in the acquisition, preservation, depreciation or appreciation in the amount or value of marital property." Minn. Stat. § 518.58, subd. 1 (2018). Id.
Student loans are one the most common and durable debts that a person may incur. That student loan debt is often a source of dispute when it comes to dividing assets and liabilities. Given the cases and established legal doctrines mentioned above, any student loan debts that one spouse took on before the marriage would be considered that spouse's separate liability except in exceptional cases.
Any student loan incurred during the marriage would be marital and would require greater examination. Since Minnesota divides marital assets and liabilities equitably, and equitably does not necessarily mean mathematically equally, but, instead, fairly, it is likely that student loans incurred during the marriage by one or both parties may be. divided in a manner the court deems fair under the circumstances. That often requires looking at the income and earning capacities of the parties as well as the award of other marital assets to each party.