If you used non-marital funds to purchase real property, you may need to apply the Schmitz formula to determine what your total non-marital claim in the home actually is at the time of divorce. This formula accounts for any increase/decrease in the home’s value since it was purchased.

The first step is to determine if you have a non-marital claim in the home. You can find more information about non-marital claims here. For example, if you purchased the home prior to marriage or used inheritance funds (not awarded to both you and your spouse) for the down payment, you probably have a non-marital claim in the home.

Once you have established that non-marital funds were used to purchase the home, the Schmitz formula accounts for any increase or decrease in the home’s value. Importantly, the Schmitz formula does not apply to capital improvements made on the home.

The Schmitz formula calculates what percentage of the purchase price came from non-marital funds. Once that percentage is determined, it is applied to the present value of the home. For that reason, any increase in value in the home will also increase the amount of non-marital funds you will be awarded in the home. Conversely, if the value of the home has decreased, the formula will reduce the amount of non-marital funds you will be awarded based on the percentage.

If you have any questions about how non-marital claims to real property work in Minnesota, please call me today at 952-800-2025 or reach out via our online contact form to set up your free consultation.

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