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The Duration of Spousal Maintenance

Robert Gadtke — Tue, 23 Feb 2010 16:29:00 GMT

Once you get past the question of whether spousal maintenance should be paid, the focus shifts to how much and for how long. In this post, I deal with the question of how long a person should be required to pay spousal maintenance.

Determining the exact length of a maintenance obligation is difficult. While the law sets forth eight factors courts are supposed to consider when setting a maintenance award, often times, the analysis boils down to two things: the length of marriage and the ability of the recipient spouse to become self supporting at some point in the future.

Judges sometimes attempt to avoid the law’s detailed analysis by using another measurement as a proxy. I have known at least one judge who simply divided the length of the parties’ marriage by 2, and, presto, out popped the magic maintenance number. While this approach has absolutely no support in Minnesota law, it is frequently used by courts.

If it is difficult to determine exactly how long spousal maintenance will need to be paid, it is usually possible to group spousal maintenance awards into one of two categories: permanent spousal maintenance or temporary spousal maintenance. For some people, the labels themselves evoke an immediate emotional response. Spousal maintenance payors tend to be opposed to paying anything called “permanent maintenance.” Spousal maintenance recipients are usually worried that “temporary maintenance” will be insufficient to meet their needs long-term. Yet, as emotionally troubling as these labels may seem, it is important to understand that “permanent spousal maintenance” is not always permanent and “temporary spousal maintenance” is not always temporary.

Permanent spousal maintenance simply means that the payor spouse bears the burden of proving that the terms of the maintenance award should be changed at some point in the future. In order to do this, the payor spouse would need to show a substantial change in circumstances since the time the original order was entered, and that this change has caused the existing order to be unreasonable and unfair. Examples of legitimate changes include things like retirement and unemployment.

By contrast, a temporary spousal maintenance award is for a fixed period of time. If the person receiving spousal maintenance wants to extend the award beyond the fixed term, they would need to show a substantial change in circumstances since the time the original order was entered, and that this change has caused continued maintenance to be required. The purpose of temporary spousal maintenance is to give the recipient time to become self supporting.

Between the two extremes of permanent spousal maintenance and temporary spousal maintenance, exist the new, more flexible “hybrid” type awards. These awards combine elements from both the permanent and temporary categories. Currently, there are two types of hybrid awards being used in Minnesota. The first type is a form of permanent spousal maintenance where the court imposes some kind of rehabilitative obligation on the recipient spouse. Thereafter, the court periodically reviews the award to determine if and when the spouse becomes self-supporting. This is significantly different from the traditional form of permanent spousal maintenance where the recipient spouse has no obligation to ever become self-supporting.

The second type of hybrid award is a form of temporary spousal maintenance (for a term of years), which is reviewed de novo – as if the court were awarding spousal maintenance for the first time –at the end of the term. This type of award avoids imposing burdens of proof on either party and is not seen as precedent setting. It gives the recipient spouse time to become self supporting, without disadvantaging either party. It is used most frequently when the dispute is not “if” a spouse will become self-supporting, but “when” it will occur.

In December 2009, the Minnesota Court of Appeals had the opportunity to address the question of whether it was proper for a trial court to use the hybrid form of temporary spousal maintenance. The case involved two people who had been married for 19 years. At the time of their divorce, the spousal maintenance recipient was employed, but was not earning income at a level sufficient to be self supporting. After a trial, the court found that while it was impossible to determine exactly when the spousal maintenance recipient would become self supporting, it was certain that she would do so at some point in the future. Thus, the court ordered the hybrid form of temporary spousal maintenance described above.

On appeal, the Minnesota Court of Appeals affirmed the trial court’s decision, finding that it was acceptable to use the hybrid form of temporary spousal maintenance because it was certain that the recipient spouse would become self supporting at some point in the future.

The case is Maiers vs. Maiers, 775 N.W.2d 666 (Minn. Ct. App. 2009).

Nonmarital Property, the Supremacy Clause, and potentially Harsh Consequences

Robert Gadtke — Fri, 19 Feb 2010 15:01:00 GMT

If you are familiar with the concept of nonmarital property under Minnesota law, you know that nonmarital property is not typically divided between the parties at the time of a divorce. Instead, the property stays with the party who owned it before the marriage or who acquired it by gift or inheritance at some point during the marriage. The rule against dividing nonmarital property makes proving a client’s “nonmarital claim” an important part of any property division.

But, like many things in law, the rule against dividing nonmarital property is not absolute. The Court has the power, in cases where the parties have relatively few marital assets and one of the parties has significant nonmarital assets, to “invade” or apportion up to one half of that spouse’s nonmarital property. In order to do so, however, the Court must find that a “spouse’s resources or property are so inadequate that the division of only the marital property would work an unfair hardship” upon them. Minn. Stat. § 518.58, subd. 2 (2009).

At first glance, this exception may seem to swallow the rule. I have certainly worked on cases where the only real asset is a party’s nonmarital property. It would seem, in those cases, that the Court should invade a spouse’s nonmarital property. But, in practice, it doesn’t usually work that way. Convincing a Court to invade a spouse’s nonmarital property is difficult. You need to show evidence of serious hardship. The mere fact that a spouse ends up with less (or even little) in the way of property is generally insufficient. The exception is used by Courts to prevent cases of serious injustice.

In December 2009, the Minnesota Court of Appeals confronted the question of whether federal law protects certain types of nonmarital property from invasion or division, even in cases of unfair hardship. The case involved life insurance and death gratuity benefits paid to the parents of a fallen U.S. service member. Prior to the service member’s death, he had designated his mother (and not his father) as his sole beneficiary for purposes of life insurance and military death benefits. Four years later, when his parents divorced, the mother argued that the life insurance and death benefits were her nonmarital property because she had received them from her son as either a gift or inheritance during the marriage. In deciding the issue, the divorce court found that the life insurance and death benefits were, in fact, the mother’s nonmarital property but divided them between the parties using an unfair hardship theory.

On appeal, the Minnesota Court of Appeals reversed. It held that federal law prohibits division of military life insurance and death gratuity benefits. The beneficiary named by the service member controls. All proceeds must be paid to that person. The divorce court lacks the power to divide the military benefits, even in cases where a failure to divide them would result in an unfair hardship.

To understand the real world consequences of this rule, consider the father’s circumstances in the case above: The father was 67 years old. He had no bank accounts, retirement savings, or pension. He had no vocational training and had never reached high school. He had not held full-time employment since 2002, and his only source of income was monthly Supplement Security Income payments of approximately $424. He had employment restricting health problems and lived with his elderly mother. His only assets were a 17 year old Ford and an entitlement to half of the proceeds from the sale of the parties’ modest home.

How much did the mother receive? More than $500,000.

Lesson: Carefully review any federal beneficiary designations to ensure that they accurately reflect the intent of the employee or service member. Don’t assume that the divorce court can protect your interests at a later date.

The case is Angell v. Angell, 777 N.W.2d 32 (Minn. Ct. App. 2009).

Minimizing the Effects of Divorce on Children

Robert Gadtke — Tue, 16 Feb 2010 14:52:00 GMT

If you are reading this posting, chances are pretty good that you are either involved in, or are considering getting, a divorce. If so, there are a few things you need to know. Ending a marriage can be a difficult process. It is one that can hurt everyone involved, especially children. Research has consistently shown that more children of divorced parents have behavioral problems than children from nondivorced families. Depending upon which study you believe, children from divorced families demonstrate more acting out, aggression, depression, difficulty with peers, and school problems than other children. Some research has found as many as 20 to 25 percent of children from divorced families have behavioral issues.

But, before you decide to stay in an unhappy marriage for the sake of your children, you need to know that staying in the relationship has consequences too. Research suggests that the worst problems for children result from situations involving high parental conflict – even when that conflict occurs within the context of a marriage. Children who live in high conflict families tend to have more severe behavioral problems than children from any other type of family structure, including children from divorced households. Children of these high conflict families tend to be more depressed, more impulsive, and more hyperactive, than even those at-risk children from divorced families.

Thinking of throwing in the towel? Before you do, it is important to understand that the damage caused to children in divorced and high-conflict families does not a result from a change in the family structure per se. In other words, it is not the parents’ separation that actually harms the children. It is other things that really do the damage. Children are damaged by instability and fighting, which often accompany a divorce, not the physical separation. Things like school changes, financial issues, relocation, and poverty have all been linked to decreased outcomes in children.

Because the damage is not a result of the divorce itself, there are things that you can do to help protect your children. Remember, if 25 percent of children from divorced families are in trouble, that means that 75 percent of them are not. Here are some of the things that you can do to give your kids the best chance for success:

Tips for Minimizing Damage to Children

1. Ensure Effective Custodial Parenting: As frustrating as it may seem for the soon-to-be-noncustodial parent, it is essential that you support the well-being of the custodial parent. For children to do well, custodial parents have to be functioning at a relatively high level. Single parenting is a difficult task. Depression, anger, or economic troubles can distract from effective parenting. Your kids depend on it.

2. Minimize Conflict between the Parents: This is the single most important factor in promoting positive outcomes for children. Studies have shown that children of high conflict families are two to four times more likely to have behavioral issues than children more generally. Sometimes, not fighting is the best decision you can make. Understand, though, that this won’t be easy. It will take time to figure out. Divorce causes a lot of hurt feelings. In the five years following a divorce, only 25 to 50 percent of parents manage to effectively engage in cooperative co-parenting. As many as 40 percent of divorced parents end up parallel parenting, not in conflict but not cooperating either. Try hard to put your children’s interests above your own. It is possible for people to manage their anger, even if they don’t like their ex-spouse.

3. Don’t Badmouth the Other Parent: Contrary to popular belief, badmouthing your ex-spouse does not make your child like you more. If anything, the opposite is true. Children hate it when parents badmouth each other. No matter how much you dislike your ex-spouse, your child does not (and will not) feel the same way. You only hurt your child’s feelings when you badmouth the other parent. Do not explain the other parent’s short-comings. Do not ask them to take sides. And do not ask them to keep secrets.

Raising children is hard work. Raising them in the context of a divorce can be even more challenging. Don’t give up.

For more information, or to speak to one of our attorneys, please visit our website at www.gadtke.com.

The Importance of Legal Counsel

Robert Gadtke — Thu, 11 Feb 2010 18:30:00 GMT

If you are anything like most of my clients, the past few years have probably been difficult for you, both emotionally and financially. The downturn in the U.S. economy has contributed to a desire, amongst many people, to try to conserve their limited financial resources. In family law, this has manifested itself by people trying to get divorced without using a lawyer.

Deciding not to hire a lawyer, at least statistically, is not unusual. Recent data from Hennepin County Family Court shows that more than seventy-five percent (75%) of all divorce cases involve at least one pro se party. In other words, most cases in Minneapolis have at least one person, who, for whatever reason, has decided not to hire a lawyer. This surge in unrepresented people has forced the court system to take drastic steps – everything from expanding self-help centers to mandating additional ADR to making the process more consumer-friendly –in an effort to squeeze the masses through the complicated web of legal rules and procedures.

The fact that people survive a divorce without legal counsel, however, does not mean that others should follow their lead. Most unrepresented parties I encounter are unrepresented by necessity, not by choice. They simply can’t afford to hire a lawyer. If they could, they would. It is rare that I encounter someone who actively does not want the help of an attorney.

But, you respond, “You’re a lawyer. Obviously you are going to recommend that I hire one. It’s how you make your money.” That’s right. I am. And I do. That doesn’t mean I’m wrong, though. Surgeons make money by operating on people; yet we don’t think we could do the job as well ourselves. That’s why we hire a professional. The same is true in law.

Unlike health issues, however, you don’t begin to feel sick when you’ve made a bad legal decision. Most bad legal decisions don’t manifest themselves until it is too late to correct them. When your case is finished (or a temporary order is issued), it’s done. A lawyer can’t ride in to save the day at that point. You don’t get a “do over” because you didn’t hire a lawyer. It doesn’t work that way.

One instance where this is becoming more of a problem is in the context of court-ordered mediation. If you agree to a mediated settlement agreement, you will likely be bound by its terms, even if you later change your mind after talking to a lawyer. Understand that the role of a mediator is to reach agreement, not to advocate for your best interests. Be careful what you agree to. Sometimes the desire to simply have the process “over” can lead to bad long-term decision making.

Our job is to guide you through the process. We give you options. We discuss strategy. We make recommendations. Then we take direction from you.

Out of State Child Support Orders

Robert Gadtke — Tue, 09 Feb 2010 15:30:00 GMT

Sometimes, following a divorce or paternity adjudication, one or both of the parties may decide to move to a different state. While out-of-state moves present a number of important challenges – in many cases, it can become nearly impossible for the noncustodial parent to remain actively involved in the child’s life – people often ask about potential child support implications. Can the existing child support order be changed or enforced in the new state? How will child support be calculated in the future?

In Minnesota, these types of issues are governed by the Uniform Interstate Family Support Act (“UIFSA”). See Minn. Stat. § 518C. And, in most cases, the answers are extremely fact specific. What is true in one case may not be true in another case. It is difficult to generalize. It is important for you to consult an attorney about the facts of your case.

Recently, however, the Minnesota Court of Appeals attempted to define the outer edges of the out-of-state modification doctrine. In Hennepin County v. Hill, the Court confronted the question of whether a Minnesota court could modify the duration of a child support order originating from Mississippi, once the order had been registered in Minnesota for purposes of enforcement and modification. In rejecting the father’s request that his child support obligation be shortened, the Court explained that the law treats the duration of a person’s child support obligation as a “nonmodifiable” term. Because the term is “nonmodifiable,” and because the term originated from a Mississippi order, the father was required to continue paying child support until his obligated ended, as determined by Mississippi law.

Labeling the duration of a child support order as “nonmodifiable” is important because states have different rules regarding how long a person is obligated to pay support. In Minnesota, for example, a child support obligation typically ends when the child turns age 18, or age 20 if they are still in secondary school, whichever is later. Minn. Stat. § 518A.26, subd. 5 (2009). Parents do not pay child support while a child is in college. But, in Mississippi, the law obligates a parent to pay child support until the child turns age 21, with certain limited exceptions. The difference, which is three (3) years of after tax child support payments, can be substantial.

The case is Hennepin County v. Hill, 2010 WL 274651 (Minn. Ct. App. 2010).

For more information, visit our website at www.gadtke.com.

Potential Revisions to the Minnesota Child Support Law

Robert Gadtke — Mon, 02 Nov 2009 15:22:00 GMT

In what seems to be an almost yearly occurrence, members of the Minnesota State Legislature have introduced legislation, which, if adopted, would substantially change the way child support is calculated in Minnesota.

Under existing law, non-custodial parents who have parenting time with their minor children between ten percent and forty-five percent of the year receive a standard twelve percent (12%) reduction to their child support payments to reflect monies spent on the children while in their care. This reduction is referred to as the Parenting Expense Adjustment.

The newly proposed legislation would seek to alter the way Courts apply the Parenting Expense Adjustment by creating an extra category of child support reduction for those non-custodial parents who have parenting time between thirty percent and forty-five percent of the year. Those parents would receive a thirty percent (30%) reduction to their child support obligation, instead of the standard twelve percent (12%) that they receive now.

The legislation would also expand the presumed amount of parenting time Courts would be required to award to non-custodial parents. Currently, in the absence of other evidence, it is presumed that non-custodial parents should receive at least twenty-five percent (25%) of the parenting time with the minor children. The proposed legislation would expand this presumption to forty percent (40%). The law would also require Courts to make detailed written findings specifically identifying the reasons for failing to adhere to the legal presumption.

According to information on the Minnesota State House and Senate websites, the bill has been laid over in committee. It is unclear whether any action will be taken on the bill before the end of the legislative session. If, however, the bill were to become law, it would dramatically change the way parenting time is handled in Minnesota. Effectively, it would create a presumption of nearly equal parenting time, shifting the burden of proof to the custodial parent to show why an award of forty percent parenting time is not in the best interests of the child. The legislation is contained in Minnesota State House File No. 1003 and Minnesota State Senate File No. 1223.

New Research Suggests Growing up Without a Father Changes Brain Development

Robert Gadtke — Wed, 28 Oct 2009 20:44:00 GMT

According to an article published Tuesday in the Wall Street Journal, German scientists have discovered that growing up without a father actually changes the way brains develop in a small guinea pig-like rodent known as the Degus. Researchers studying Degu brain development found that Degu raised in single parent families have shorter nerve branches than those raised in two parent households. The pups raised by single parents also exhibited more aggressive and impulsive behavior than those raised by two parents. They lacked impulse control, and “when they played with their siblings, they engaged in more play-fighting and or aggressive behavior.”

The researchers noted that while the pups raised in single parent families received about the same amount of attention from their single caregiver as they did in two parent families, overall attention was significantly less for the single parent pups. The researchers urged caution, however, in extrapolating these findings to human children, as human thinking and decision making is more complex.

Going forward, researchers intend to focus their energies on determining whether the pups brains can be “rewired” by introducing substitute caregivers to help repair the damage. The research was published in the Journal of Neuroscience. The article is titled, “This Is Your Brain Without Dad.” It was written by Shirley S. Wang.

The end of Summer

Robert Gadtke — Wed, 09 Sep 2009 14:57:00 GMT

Summer is over. The kids have gone back to school. And it is time for the attorneys and staff at Gadtke & Beyer to resume their blogging duties. New posts are coming. They should be up in the next few days. Get excited. Get really excited . . .

Dealing with Unrepresented Parties

Marcus Beyer — Tue, 14 Apr 2009 15:55:00 GMT

Many of my clients believe that they will be able to run all over their spouse and make things go faster in their divorce case if their spouse is not represented by an attorney. While my client certainly has the benefit of experience and legal knowledge on their side, the lack of an attorney on the other side does not necessarily mean that everything will go my client's way. For example, my experience has been that many unrepresented parties (also called pro se parties) are unwilling to negotiate in good faith. Often times, this is because they do not understand the law or the merits of the position they have taken in the litigation. Because I do not represent them, there is also a built-in mistrust and reluctance to accept any settlement offer I propose. Furthermore, I am ethically barred from providing legal advice to the other side. More than once I have been told by an unrepresented party that they are not interested in negotiating and prefer to simply have the Judge make a decision. This can be frustrating for my client, because it increases their attorney's fees, while their spouse does not "feel the pain" associated with ongoing litigation.

For these reasons, in most cases, I prefer to have the opposing party represented by an attorney. It is helpful for the other side to hear from their own advocate the reasonableness of my client's proposal. When a party has the benefit of having their own lawyer explain the law to them, the chances of reaching a settlement increase greatly. An unrepresented party will almost never believe me when I tell them that the proposal I am making on behalf of my client is fair. If, however, they hear it from their own lawyer, they are much more likely to believe it.

The Woes of Court-Mandated Appellate Mediation: Will the Real Family Law Appellate Mediation Program Please Stand Up?

Robert Gadtke — Thu, 09 Apr 2009 21:45:00 GMT

I was at a continuing legal education luncheon this week when I was approached by a colleague who was exhorting the unbelievable success of the Minnesota Court of Appeals Family Law Appellate Mediation Pilot Program. She explained how some of the “well-known” and “best respected” family law attorneys in town were claiming that the program had a ninety percent success rate. She said that even some of the “good family law appellate lawyers” were resolving cases with the help of a court-appointed mediator. Appeals, it would seem, at least in the family law context, will soon be a thing of the past, or so the program’s proponents would have us believe.

For the program’s advocates, any success is a tremendous success. How could a program that encourages settlement and decreases the cost of litigation be bad? Well, it could be bad if it promotes settlement over the interests of justice. It could be bad if it represents yet another barrier to entry to the legal system for middle class families, and it could be bad if it increases the cost of litigation, while conferring only marginal benefits on employees of the judicial branch – by decreasing their caseload.

Make no mistake, I am strongly in favor of voluntary settlement programs that increase settlement rates and decrease the cancerous nature of family law proceedings. As a trial attorney, I know all too well the real world damage done to families engaged in prolonged legal battles. But, the purpose of alternative dispute resolution is to prevent trial. Its benefit is in providing litigants with a measure of control over what is an otherwise uncontrollable situation. It increases litigant satisfaction by having the parties “buy-in” to the terms of the settlement agreement. All of these goals are legitimate. And all of them are prejudgment in scope. The landscape looks very, very different after the Court issues its ruling.

Why? Well, for one thing, the case has been decided. We have an answer. We know the outcome. In many counties, getting a case decided on the merits is not an easy thing to do. Judges often resist setting family law cases for trial. Some Judges set, reset, and reset again Pretrial Conferences in an effort to avoid contested litigation. Other times, Judges order additional ADR even after the Pretrial Conferences in order to avoid trial. Getting a decision can cost litigants lots of money.

What’s more, once we have a decision, what incentive does the prevailing party have to settle the case, apart from the opposing party’s blackmail-like threat of additional attorney fees? The trial judge, who heard all the evidence and weighed the creditability of all the witnesses, has decided the case in their favor. Are we to simply dismiss the trial judge’s ruling as unfounded or untrustworthy? If so, this undercuts the very essence of our system of appellate review – deference to decisions of the trial court. Or, alternatively, are we to conclude that the court-appointed mediator, who has just been assigned to the file, has a better grasp on the facts and the law than the trial judge? How does this promote a just and equitable outcome?

These concerns notwithstanding, the program’s proponents continue to beat the mediation drum. It continues to beat despite the fact that the “success” rate touted by the program’s advocates is much too high – during a recent on-line CLE webcast one of the program’s creators noted that recent data actually shows an approximately fifty percent (50%) success rate for the thirty cases completed. The mediation drum continues to beat despite the fact that abandoning appeals does not necessarily mean that the program is working, at least not in terms of increasing litigant satisfaction.

What would be really interesting to know, and what I hope the study’s authors will tell us, is the percentage of “resolved” cases that involved pro se appellants. How many of the alleged “success stories” weren’t really settled as much as they were dismissed? A sizeable number of family court appeals are dismissed or otherwise summarily disposed of. How many of the “success stories” involved pro se appellants just giving-up? Does that level of “success” justify the financial burden placed on all other litigants by forcing them into the program?

Maybe the Program’s creators will answer some these questions for us. Then again, maybe they won’t.

Cost-Benefit Analysis

Marcus Beyer — Tue, 07 Apr 2009 15:46:00 GMT

It is the rare case, if not the non-existent one, where divorcing couples agree on absolutely every issue. Whether it is a disagreement about a parenting time schedule or a division of personal property, there is almost always some level of disagreement between the parties. For purposes of completing the divorce, though, the real question is whether the disagreement is worth fighting over. I recently had a case in which the parties could not agree on parenting time for their son over the Thanksgiving holiday. The parties seemed to lose sight of the fact that their son was already 15 years old, and that there was only three more Thanksgivings to divide. When viewed in this context, it hardly seemed worthwhile to pay lawyers to argue over three days.

The same type of analysis can present itself when dealing with financial issues. Many times clients cannot agree on how to divide an income tax refund, for example. If neither side is willing to give in, they will have to pay their lawyers to draft letters and perhaps even a court motion to resolve the issue. By the time this happens, the clients could have paid more to their attorneys than the refund was even worth! For this reason, I often counsel clients to engage in a cost-benefit analysis to determine how much it will cost to pursue an issue that remains disputed, and whether that cost is worth the potential benefit if successful. When both parties understand the cost-benefit type of analysis, the chances of reaching a compromised settlement in a divorce increase greatly.

Service of the Summons and Petition

Marcus Beyer — Tue, 31 Mar 2009 19:07:00 GMT

By law, a divorce case commences with service of the Summons and Petition upon the Respondent. Service is to be personally made. That is, by physically handing the documents to the Respondent. It is not sufficient to mail the Summons and Petition to the Respondent. Service must be made by a third party. (In limited circumstances, and with court approval, the law allows service by publication in a newspaper or by alternate means, i.e., mailing).

There are, of course, some other exceptions to these general rules. Often times, the party initiating the divorce (the Petitioner) may not want to put the Respondent through the embarressment and trauma associated with personal service. Instead, they prefer to "soften the blow" by personally delivering the documents to the Respondent themselves. This is permitted, provided that the Respondent is willing to sign an Admission of Service. In this document, the Respondent admits to receiving the documents in lieu of personal service. This option also saves the Petitioner the cost of paying a process server.

The Admission of Service route requires some cooperation of the part of the Respondent, as he/she must have the Admission of Service notarized. If the Respondent is unwilling to do this, then the Petitioner will have to have the Respondent personally served.

As lawyers, we explain these options to our clients, and let them decide how they want to proceed. Our advice usually depends upon how comfortable the Petitioner feels with asking the Respondent to sign an Admission of Service. Sometimes, the Petitioner cannot safely approach the Respondent and sometimes the Petitioner does not feel that the Respondent would return an Admission of Service if mailed, in which case we recommend personal service.

Contact a Gadtke & Beyer attorney at www.gadtke.com if you have questions.

Uncontested Divorces

Marcus Beyer — Tue, 24 Mar 2009 14:12:00 GMT

Dear Family Law Attorney: My husband and I have amicably agreed to get a divorce. We have discussed all of the potential issues, and we agree on everything. Do we both have to get attorneys? Does either of us have to get an attorney? Debra from Minneapolis.

Family Law Attorney: There is no legal requirement that either or both of you get attorneys. There are resources available that can provide you with forms to fill out and file with the court. This is what I refer to as a "fill-in-the-blank" divorce. Chances are, though, that you will not understand or appreciate all of the implications of how you fill out the forms. If you have children, the law is very particular about the necessary "findings" with respect to child support. Unless you understand the ins-and-outs of the child support law (keep in mind that many attorneys do not), there is a good chance that the forms will not be completed properly. Parties also often do not understand the implications of waiving or not waiving spousal maintenance. This often frustrates judges, because they cannot provide legal advice.

We recognize that legal fees can be expensive, and that you should not have to spend your kids' college tuition money on your divorce, particularly when you agree on everything. So, we have created what we refer to as the Low-Cost-Divorce program. You simply fill out a questionnaire and tell us all the terms of the agreement, and we put all the paperwork together, at an affordable, flat fee price. The program is not for everyone, though, because it requires absolute agreement on all issues, and no negotiation or contested court appearances.

Check out www.low-cost-divorce.com for more information.

New Hope for Non-custodial Parents

Robert Gadtke — Thu, 19 Mar 2009 16:22:00 GMT

On March 10, 2009, the Minnesota Court of Appeals gave new hope to non-custodial parents seeking to prohibit former spouses from changing the residence of a minor child to a new location within the State of Minnesota. It had previously been believed that as long as the custodial parent moved the child’s residence to a new location within the State, courts were largely without power to restrict the move. A sharp distinction had been drawn between interstate moves (i.e., moves from Minnesota to another state) which were often prohibited on account of the negative consequences to the child, and intrastate moves (i.e., moves from one location in Minnesota to another location in Minnesota), which often were not. A common fear amongst many non-custodial parents was that the custodial parent would decide, unilaterally, to move the child’s residence to a distant and far-away corner of the State of Minnesota, making the current parenting time schedule unworkable.

In Schisel v. Schisel, the Court of Appeals confronted the question of whether a trial court has the authority to restrict the location of a parent’s in-state residence when the parties are awarded joint physical custody of the minor children. In rejecting the mother’s arguments that it did not, the Court of Appeals explained that Minnesota Statutes Section 518.17 (the “best interests standard”) requires trial courts to make orders that are just and proper concerning the minor children’s “physical custody and residence.” Because the term “residence” is commonly understood to mean “place” or “geography” (not just the person “with whom” a child resides), the Court held that trial courts have authority to restrict a parent’s in-state residence as long as the restriction is necessary to serve the child’s best interests.

What does this mean for you? It means that the best interests of the child continue to serve as the guiding light for all court decisions involving children. It means that courts can prevent parents from moving from Edina to Ely if the move harms the children. And, it means that the decision-making authority is back in the trial courts, where judges can examine the parties and assess their motives.

Division of Stock Options

Marcus Beyer — Tue, 17 Mar 2009 20:26:00 GMT

Dear Family Law Attorney: I am in the middle of a divorce. My husband was granted stock options by his employer three (3) years ago, but they will not vest until two (2) years after the divorce is final. Am I entitled to anything from the eventual exercise of these stock options? Elizabeth from Golden Valley, MN

Family Law Attorney: Yes. The general rule is that any property acquired during the marriage, and up to the valuation date, is deemed marital property. Any property acquired by your husband post-valuation date would be deemed his nonmarital property. In your case, a portion of the stock options were earned during the marriage, and a portion will be earned after the marriage. Your husband’s stock options therefore will have both marital and nonmarital components.

When your husband exercises his stock options, he will in effect receive extra compensation for five years of working for his employer. You and your husband were married for three of the years which entitled your husband to the stock option proceeds. In total, your husband worked (or will work) for five years. The court applies a formula for determining your respective interests in the stock option proceeds. The marital interest is a fraction of the total payment. The numerator in the fraction represents the number of years of marriage during which benefits accumulated, and the denominator represents the total number of years during which benefits were accumulated. So, in your case, the marital interest in the stock option proceeds is 60% (3/5’s). The remaining amount is your husband’s nonmarital property. Generally speaking, you would be entitled to 50% of the marital portion of the proceeds.

In establishing this formula, the court recognizes that even though the proceeds are not paid until well after the divorce is final, marital effort was largely responsible for the husband’s right to receive the payment. See our website at www.gadtke.com or contact a Gadtke & Beyer attorney if you have questions.

Home Foreclosure and Debt Cancellation

Robert Gadtke — Thu, 12 Mar 2009 16:22:00 GMT

Dear Family Law Lawyer: My wife and I are getting divorced. Late last year, I was laid-off from my job as a construction contractor. It was our only source of income. Once I was laid-off, we couldn’t afford to make our mortgage payment. Our house is now in foreclosure. It is also “underwater” – we owe more on it than it is actually worth. Someone told me that if we don’t pay the difference between the amount of the loan and the fair market value of the home, we could end up owing taxes on the difference. Is that right? We can’t afford to owe money to the IRS. Tom in St. Michael, Minnesota.

Dear Tom: You need to talk to an accountant. It may be possible to avoid potential tax liability, depending upon your circumstances. While I am not an accountant or a tax lawyer, I can give you some basic information about the law.

Generally, if a creditor discharges or agrees not to collect money from someone who owes it to them, the money that has been discharged or written-off is considered income to the person who benefits from the transaction. For example, if you owe a credit card company $30,000 and the company agrees to take $20,000 in full satisfaction of the debt, you are deemed to have income (and thereby potential tax liability) on the $10,000 that was forgiven. There are, of course, exceptions to this rule, the most common being debt discharged in connection with a bankruptcy. See 26 U.S.C. § 108.

Until recently, a similar analysis was applied in the home foreclosure context. If you had debt forgiven through a foreclosure – which usually occurred when a lender decided not to pursue a deficiency judgment against a borrower who owed more than their house was worth – you might have added income for tax purposes. But, effective December 11, 2008, Congress changed the law. In the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers are now allowed to exclude income from the discharge of debt on their principal residence, subject to certain qualifications. It can be a completed issue. Please be sure to check with your accountant.

Residency Requirement for Divorce

Marcus Beyer — Tue, 10 Mar 2009 13:57:00 GMT

Dear Family Law Attorney: About two months ago, I moved to Minnesota from Wisconsin. Can I file for divorce in Minnesota? Laura from Woodbury, MN

Family Law Attorney: No. The law requires that you reside within the State of Minnesota for at least 180 days (approximately 6 months) before you may file for divorce here. The principal reason for this is to avoid what lawyers refer to as "forum shopping." That is, non-residents who are merely "passing through" the state deciding to get divorced here in order to invoke the court system. Only those people who have lived in Minnesota continuously for 180 days immediately prior to filing may do so. There is some case law with respect to temporary absences from the state, but the general rule is that you must live here for 180 days. See our website at www.gadtke.com or contact one of our attorneys for more information.

Alternating the Income Tax Exemption.

Robert Gadtke — Thu, 05 Mar 2009 20:26:00 GMT

Dear Family Law Lawyer: My ex-girlfriend and I have one child together. For the most part, we get along fairly well. Last month, however, she told me that her parents are pressuring her to go to Court to formalize our custody arrangement so that she can get more child support. I don’t have an objection to paying her whatever amount the law requires, but I would like to claim our son as a dependent for tax purposes. Her lawyer tells me that we can’t negotiate that provision because the IRS Rules award the income tax exemption to the parent with primary custody. Is that right? I have friends who claim their children on their tax returns. How can that be possible? Jason in Mora, Minnesota.

Dear Jason: You are right to be skeptical. I too know many people (most of them are former clients) who have the right to claim their child as a dependent for income tax purposes. What your ex-girlfriend’s lawyer is actually saying is, “We won’t negotiate the income tax provision.” It is a subtle but important difference.

Technically, the lawyer is right when she says that the IRS Rules award the income tax exemption to the parent with primary physical custody. See I.R.S. Publication 504. The federal government takes the position that the exemption should be awarded to the parent with whom the child has resided for more than one-half of the year. There is an exception for cases where the Court orders (or the parties otherwise agree) to alternate the exemption. In those cases, the Court order or parties’ agreement effectively overrides the IRS presumption in favor of the custodial parent.

Beginning with divorce decrees or separation agreements made after 2008, there has been an important change in the law. A non-custodial parent may only claim the exemption if the custodial parent executes IRS Form 8332. Simply providing a copy of the Judgment and Decree is insufficient.

For more information, please contact one of our attorneys.

Attorneys' Fees and the Marital Estate

Marcus Beyer — Tue, 03 Mar 2009 14:55:00 GMT

Assuming both parties in contested divorce litigation hire attorneys, both will of course incur fees. The amount of their respective fees can vary, however. What happens if one spouse liquidates an asset to fund attorneys' fees? Is the asset valued before it was depleted for attorneys' fees, or is the other spouse just out that money?

A recent case from the Minnesota Supreme Court provides that a spouse who dissipates an asset for purposes of paying their own attorneys' fees must account for that action to their spouse. So, if during the proceedings (or even before) the husband withdraws $20,000 from an account to pay his attorneys' fees, he must "put the money back" for purposes of valuing that asset and the marital estate. Stated another way, the value of the asset is determined before it was liquidated to pay attorneys' fees. A spouse cannot deplete the marital estate on attorneys' fees, and then successfully argue that their spouse is entitled to a lesser property settlement because the estate was spent on attorneys' fees. Visit our website at www.gadtke.com for more information.

Calculating Income

Robert Gadtke — Thu, 26 Feb 2009 22:21:00 GMT

In many of our cases, we are confronted with the question of how to accurately calculate an individual’s gross monthly income for purposes of child support or spousal maintenance. How this question is answered can have some of the most far-reaching implications of any question in family law, both for whether a person qualifies for assistance and for the amount to be paid.

However you arrive at that figure – and I really mean "arrive at" because there are a number of decisions made along the way, which, if resolved differently, could result in a different figure – a few things are clear. An individual’s gross monthly income for child support or spousal maintenance is not the same as an individual’s gross income for tax purposes. By law, in the family court context, income is defined as any form of “periodic payment to an individual, including, but not limited to, salaries, wages, commissions, self-employment income, workers’ compensation, unemployment benefits, annuity payments, military and naval retirement, pension and disability payments, spousal maintenance from prior proceedings, social security or veterans benefits.” Minn. Stat. § 518A.29 (2009). You are not allowed to deduct things like your mortgage interest or charitable gifts. A recent change in the law also prohibits you from deducting contributions to pensions or retirement plans. While the IRS may allow you to take that deduction, the family court will not. I recommend my clients think about the issue in this way: If you get the money on a regular basis, it’s income, with a few important exceptions.

Like most things in life, you can’t understand the rule if you don’t know the exceptions. There are four important exceptions you need to be aware of to the “everything’s included rule.” First, gross income generally does not include income received for employment in excess of 40-hours per week. In other words, if you decide to get a second job to pay your child support or spousal maintenance, the court doesn’t increase your income because of it. Second, it does not include money received for child support. Third, it does not include income from a person’s spouse. And finally, it does not include public assistance benefits.

Calculating income is a skill. If you do it wrong, you’ll end up paying/receiving too much or too little. For more information on child support or spousal maintenance, please visit our website at www.gadtke.com.