A cabin may hold family memories while also representing a financial investment. During a Chisago County divorce, you may worry about whether you can keep it and how its value will affect your settlement.
Minnesota law requires a just and equitable division of marital property, which does not always mean an equal split. A key question is whether any part of the cabin qualifies as nonmarital property.
Is the cabin marital or nonmarital property?
Property acquired during the marriage is generally presumed marital. A cabin you owned before marriage, received as an inheritance or bought with traceable premarital or inherited funds may be partly or fully nonmarital.
When a cabin has both marital and nonmarital interests, Minnesota courts may use the Schmitz formula to apportion its value between those interests.
Marital contributions can also affect the calculation. If you used marital income to pay down the mortgage or you and your spouse made improvements that increased the cabin’s value, part of the equity or increase in value may be marital. Any increase in the nonmarital portion caused solely by inflation or market conditions generally remains nonmarital.
Records can help trace that claim. Deeds, closing documents, inheritance records and bank statements may show when you acquired the property and where the money came from.
What can happen to a cabin in divorce?
Depending on the circumstances, several outcomes may be possible for the cabin:
- One spouse keeps the cabin and buys out the other spouse’s interest.
- You and your spouse sell the property and divide the net proceeds.
- The court may order the cabin sold as part of the property division.
- One spouse receives the cabin while the other receives different marital assets.
Each option can carry different financial consequences beyond the division itself. A buyout, for example, may depend on the other spouse’s share of the equity and whether you can afford the property afterward.
What should you consider before keeping the cabin?
If you hope to keep the cabin, market value is only part of the picture. An appraisal can help estimate its value, while the mortgage, taxes, insurance and maintenance can show what it may cost to keep the property. A joint mortgage may also create refinancing challenges.
Johnson Brothers Law helps Chisago County clients address cabins and other valuable property in a high-asset divorce. Call today to discuss how your lake property may fit into the division of marital assets.