Nardini v. Nardini

Why This Case Matters

When a couple divorces in Minnesota, the court must divide their marital property equitably. But not everything a spouse owns is marital property. Property owned before the marriage, or received as a gift or inheritance, is generally nonmarital. The hard question is: what happens when nonmarital property increases in value during the marriage? Nardini v. Nardini answered that question. The increase in value attributable to the efforts of either spouse is marital property subject to division, while increases caused by inflation or market forces stay nonmarital.

The Facts

The Nardinis divorced after a marriage in which one spouse had brought significant assets into the marriage – property that was nonmarital in character. During the marriage, the value of that property increased. The dispute centered on whether the increase in value should be treated as marital property (divided between both spouses) or nonmarital property (kept by the spouse who originally owned it). The case reached the Minnesota Supreme Court on this question.

What the Court Decided

The Supreme Court held that when nonmarital property increases in value during a marriage, the characterization of the increase depends on what caused it. If the increase resulted from the efforts of one or both spouses – such as actively managing, improving, or applying marital funds to the property – then the increase is marital property subject to equitable division. If the increase resulted from passive factors like inflation or general market appreciation, the increase retains its nonmarital character and belongs to the spouse who originally owned the property. This distinction requires courts to trace the source of the value increase, which can become a significant factual inquiry in divorce proceedings.

What This Means for You

• Not all property is divided in a divorce: Minnesota distinguishes between marital and nonmarital property. Generally, property acquired during the marriage is marital, while property owned before the marriage or received as a gift or inheritance is nonmarital.
• Your efforts can change the character of property: If you or your spouse put work, time, or marital money into improving or growing a nonmarital asset during the marriage, the resulting increase in value may be marital property subject to division.
• Document what you brought into the marriage: If you own property before getting married, keep records of its value at the time of the marriage. If you go through a divorce, this documentation will be critical for determining what is marital property and what is not.