Why 50-50 Property Divisions Are Common, But Not Required

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Minnesota law requires that the division of a marital estate to be “fair and equitable.”  The law does not require the division to be EQUAL.  But often equal is fair, and anything other than equal is not fair.  Here is why: if the parties reach an out-of-court settlement, they will negotiate the terms.  Both spouses will have to assent to the agreement.  It would not be surprising for the wife to be unwilling to accept less than half.  It would not be surprising for the husband to be unwilling to accept less than half.  Consequently, many out-of-court settlements constitute a 50-50 division of the property, which a reviewing court judge would find is consistent with the “fair and equitable” requirement.

Similarly, if the case goes to trial, for the court to decide, it would not be surprising for the court to find no reason to award the wife more than half, and it would not be surprising for the court to find no reason to award the husband more than half.  Consequently, many court decisions reflect a 50-50 division of the property, which would pass muster by a reviewing appellate court as consistent with the “fair and equitable” requirement.

In neither instance is the 50-50 division REQUIRED.

Conversely, a division of property that is OTHER THAN fifty-fifty may be consistent with the “fair and equitable” requirement, but the basis for that conclusion will need to be spelled out in more detail, because on its face it may appear to favor one party over the other.  This need for more detailed provisions for the non-equal-but-fair-and-equitable division goes for both out-of-court settlements and court-ordered divisions.

Default Divorce

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If you start the divorce process, your spouse has thirty days to respond to the petition.  What happens if the responding spouse does nothing during the thirty-day period?  Technically, the responding spouse is in default.

That means that the responding spouse has forfeited the opportunity to participate in the divorce process. This situation may sound advantageous, since it means that the court can enter the decree without hearing the responding spouse’s “side” of the story.  But there are drawbacks.  Most family court judges prefer to have both spouses involved in the divorce process, because of the likelihood that a defaulting spouse will approach the court later for relief.  Many issues, such as the parenting schedule for minor children, or the comprehensive disclosure of all debts, cannot be fully addressed without both parties being involved.  With one party absent, those issues are unresolved, possibly reserved by the court for future determination, and both the petitioning spouse and the court are left in limbo. So, if the divorce is finalized as a default, the responding spouse may come forward later, wanting to reopen the case.  Even if the responding spouse has no valid excuse for failing to respond, that will not necessarily prevent the responding spouse from CLAIMING to have a valid excuse for failing to respond.  If the court “hears out” the responding spouse, the petitioning spouse is likely to be drawn into in an additional “chapter” of the family court process.

Since the family court would rather open the case and shut the case once, without reopening the matter, the family court would rather get it done “right” the first time.  That can be hard to do without one spouse’s participation.  It is harder to have all of the relevant information properly disclosed and considered in the file without both parties actively present in the case.

Ultimately, it is better to have the case done by default than not at all.  If extra effort is made to involve the responding spouse, to no avail, then both the court and the petitioning spouse can be satisfied that proceeding by default is the right way to conclude the case.

Child Custody – The Label, the Impact on Support and the Actual Schedule

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When child custody is disputed, it usually comes down to three things: (a) the label, (b) the impact on child support, and (c) the actual schedule.  If someone wants joint physical custody, it is because (a) they like the idea of telling other people they have “joint physical custody;” (b) they want to pay less child support, or (c) they actually want to have the children in their care about half the time.  If someone wants sole physical custody, it is because (a) they like the ideal of telling other people they have “sole physical custody;” (b) they want to receive maximum child support, or (c) they actually want to have the children in their care most of the time.  It can be surprising how often the dispute is NOT about the actual schedule.

Typically, the label matches the support calculation, which matches reality.  But not always.  If one parent is really hung up on the label, then there could be a “joint physical custody” arrangement in which the children spend most of the time with one parent, and the child support paid from one parent to the other is not reduced to reflect the “joint” arrangement.  It is not uncommon in a joint physical custody arrangement (both by label and by actual schedule) for the higher earning parent to pay “non-reduced” child support to the lower earning parent (oftentime to obviate the need for spousal maintenance).  It is important to note, though, that in almost all cases in which the label does not match the support calculation and/or the actual schedule, that discrepancy is a product of a negotiated agreement, and not a court decision.  The typical court decision will make the label, the support calculation and the actual schedule all correspond.  If one parent is hung up on the label or the support calculation, it is important to attempt to address that issue outside of court.

How Specific Should Your Parenting Plan Be?

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When devising a parenting plan that will govern the parents of minor children regarding custody and parenting, some parents desire specificity, and others desire flexibility.  All parenting plans have a degree of specificity, and a degree of flexibility, so the issue here is whether you prefer relatively greater specificity or relatively greater flexibility.

An example of a flexible parenting plan is one based largely on the varying work schedule of one or both parents.  Because the parenting time is scheduled around work, it is not possible to set forth very far in advance the specific dates and times the children will spend with each parent.  An example of a specific parenting schedule is one in which one knows right now where the child will be at 10:30am on Christmas morning of 2015.  There are pros and cons to both approaches.

The terms of the parenting plan are there to be enforced, if needed.  So the plan may provide many specifics that the parents do not mutually enforce, such as a firm hour for exchanges, or a specific numbers of days for each parent’s vacations with the children.  The parents may vary from the written plan because both parties find such variances to be mutually acceptable.  It may or may not be necessary for the parents to formally modify the plan to incorporate the changes, depending on (a) whether the change will be ongoing; and (b) whether at some point a dispute will arise about whether the variance is a “done deal” or not.

If the variance is ongoing and/or there is some likelihood of dispute in the future, the plan should be modified in writing, to memorialize the new arrangements. For some parents, to memorialize every variance would be a constant, never-ending task.  So a balance must be struck between the specific aspects and the flexible aspects of the parenting plan.

Good Guys Finish First

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One of the most difficult things to encounter in family court is an opposing party who is willing to lie. When my client is reeling about the other party’s dishonesty in court, and expressing the sincere desire to “fight fire with fire,” I often sound like my mother did when I was a kid: “Two wrongs don’t make a right.”  The fact is, as important as a family court case is in your life, it is not worth perjuring yourself.  While I have never been a first-hand witness to someone getting busted for perjury, the real issue is that you want to be able to sleep at night, and to be able to look at yourself in the mirror. If you lie in court, you will never be able to change history, and it could (should?) gnaw at you for years to come.

I estimate that family courts do the right thing about eighty percent (80%) of the time. This is purely anecdotal, without a hint of scientific research.  When courts get it wrong, sometimes it is because the court is misled by an incompetent family court professional (such as a custody neutral or accounting expert), or because the judge or referee is not thinking straight.  But most of the time, the cause of an unjust court ruling is the dishonesty or lack of forthrightness of one of the parties or their attorney. It is a terrible shame when it happens because the family court system works best when good things happen to someone who is genuine and operating the best of faith.

Tax Effect on Assets in Divorce

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When two spouses divide assets in a divorce, it is important to pay with attention to the tax consequences connected with certain assets.  The clearest example is retirement assets.  Usually, when someone receives a payment or distribution from a retirement account, it is a taxable event.  So, someone in a twenty-eight percent tax bracket, who receives a $3,000 payment from a retirement account will pay tax of $840 on that payment.  Essentially, instead of receiving $3,000, the person will receive net value of $2,160.

If in a divorce, one spouse receives a bank account with $3,000 and the other spouse receives a retirement account with $3,000, it may appear to be an equal award of property.  But since the bank account funds do not involve tax consequences, and the retirement funds do involve tax consequences, the division of assets is not really equal.

On a larger scale, this can have a substantial impact on the fairness of a property division.  If one spouse is awarded the marital homestead, with estimated value of $300,000, and a $200,000 mortgage, that spouse is essentially receiving a $100,000 asset.  If the other spouse accepts a $100,000 retirement account in exchange for the equity in the house, he or she will not be able to make use of the retirement funds without dealing with the tax liability connected with the retirement funds.  Assuming thirty percent tax liability, the spouse awarded the retirement account ends up with essentially $70,000, instead of $100,000.

It is common for the property division to be adjusted to provide for a fair division of assets that accounts for taxes.  For instance, in the above example, each spouse could be awarded $50,000 from the retirement account (and each consequently paying their own respective share of the taxes); and the spouse not awarded the house could be given a $50,000 lien on the house (or the house could be sold, and the proceeds divided equally).

In other cases, the property division might not be adjusted because other aspects of the property settlement are favorable in some way to the spouse receiving the taxable retirement asset.  What is important is for both spouses (and/or the family court judge) to be aware of the tax effect, and to make a purposeful decision about how to devise a fair property settlement in light of those consequences.

Contested Child Custody and Mental Illness

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In a contested child custody dispute, if one of the parents suffers from mental illness, it is a factor to be considered in the court’s custody decision. Many parents going through a custody battle suffer from conditions such as clinical depression, bipolar disorder, obsessive compulsive disorder or a personality disorder.

The statutory provision of Minn. Stat. Section 518.17 regarding mental illness provides for the court to consider “the mental and physical health of all individuals involved; except that a disability, as defined in section 363A.03, of a proposed custodian or the child shall not be determinative of the custody of the child, unless the proposed custodial arrangement is not in the best interest of the child.”

(Note: the aforementioned definition of “disability” is “any condition or characteristic that renders a person a disabled person. A disabled person is any person who (1) has a physical, sensory, or mental impairment which materially limits one or more major life activities; (2) has a record of such an impairment; or (3) is regarded as having such an impairment.”)

If one parent (Parent A) suffers from mental illness, the question is whether the other parent (Parent B) holds a “trump card” as a result of first parent’s mental disorder. A case of untreated or unmanaged mental illness may place the parent (Parent A) at a disadvantage. It is important to note the difference, however, if a parent is managing their mental disorder. The issue is the child’s best interests, so if the mentally ill parent is managing their illness (with proper medication, following a caregiver’s recommendations, etc.) then it does not compromise the child’s best interests to be in the care of that parent, and may not provide the other parent (Parent B) with a “trump card.”

A parent suffering from mental illness is well-served to be candid about their condition.  In most cases, the parent’s openness will cause the family court to consider the mental health issue in a light most favorable to the candid parent.

Children and Passports

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Children under the age of sixteen are not issued passports without the consent of both parents. The Two-Parent Consent Law was revised in February 2008 to include all children 16 and under, and not just children 14 and under.

Both parents must be personally present for the passport application submission, to provide identification and original birth certificates. If one parent can provide the other parents’ notarized consent form, then the passport can be obtained with the presence of only one parent, who must still present identification and an original birth certificate for the child applicant.

The Department of State provides for exceptions to the requirement of either both parents’ presence, or the notarized consent of a non-presenting parent as follows:

*Child’s birth certificate lists only one parent
*Child born abroad
*Custody order granting sole legal custody (and not restricting the child’s international travel)
*Adopted child with only one adoptive parent
*Court order specifically authorizing the child’s travel
*Judicially declared incompetence of the non-applying parent
*Non-applying parent is deceased.

If the applying parent or guardian cannot obtain the written consent of the non-applying parent, the applying parent may make a statement under oath explaining the special circumstances that would warrant issuing the passport.

False statements made knowingly and willfully on passport applications, including affidavits or other supporting documents submitted with the application are punishable by fine and/or imprisonment under Federal law.

Orthodontia Costs and Child Support

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If a parent is ordered to pay child support, it is likely that the child support obligation will include a “basic” support obligation, coupled with child care support and medical support. Orthodontia costs are included as part of medical support. Basic support is based upon the income of both parents, based upon a statutory table (similar to income tax tables). But the child care support and medical support are allocated between the parents based upon each parent’s percentage of income.

For instance, a parent whose income comprises sixty percent (60%) of the combined income of the parents (after payment of spousal maintenance, if any) will be responsible for sixty percent (60%) of the child care expenses and medical expenses.

The rationale for the special treatment of child care support and medical expenses is (a) for some children, parents incur child care expenses and for some, they do not; therefore, it would not work out for the same statutory table to be used for both families that do, and those that do not, incur child care costs; and (b) medical expenses (and the insurance coverage thereof) are unpredictable, and variable across families; therefore, it also would not work out for the same table to apply to all families regardless of their medical costs.

Since orthodontic expenses are sometimes elective and/or optional, there is the potential for disputes between parents about whether or not to incur orthodontic expenses. Parents who share joint legal custody share the authority to decide on orthodontia for their children. That is not to say that either parent has veto power over the expenditure of funds on orthodontic care. A family court or parenting neutral charged with the authority to decide the dispute will issue a decision based upon all facts and circumstances, with a focus on what is in the child’s best interests.

Custody Neutrals

Posted by & filed under Custody, Guardian ad litem, Parenting time expeditor.

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Custody evaluations, guardians ad litem, early neutral evaluators, parenting consultants and parenting time expeditors.  They are all objective and impartial. Here are the distinctions:

Custody evaluators are appointed by the court or contracted with privately by the parties. The evaluator will meet with the parents, meet with or observe the child (depending on how old the child is) with each parent, and speak with collateral contacts to arrive at recommendations for what is in the child’s best interests. The custody evaluator issues a written report that can be entered as evidence in a contested custody hearing, or used as a basis for negotiated a stipulated parenting plan. The evaluation typically takes 90 to 150 days to complete.

Guardians ad litem are appointed by the court to assess the child’s best interests in a manner similar to custody evaluations, but in many counties they are limited to children in particularly troubling circumstances, such as abuse or neglect. The guardian ad litem’s process can be shorter than a custody evaluation, particularly if the court requests interim recommendations from the guardian. The family court judge may enlist the services of the guardian ad litem to assist in determining both temporary and permanent custody arrangements. The guardian’s recommendations may be the basis for the court’s decision, or a custody stipulation.

Early neutral evaluations have the potential to be shorter terms than other processes. The evaluators (one male, one female) meet with the parents, and typically do not meet the child. Rather than communicating with collateral contacts, the evaluators attempt to facilitate an agreement based upon what the parents themselves raise as concerns about the child and the other parent. The evaluation process transpires early in the proceedings, and is not shared with the family court; so if the parties are unable to reach an agreement, the case will typically proceed to a full-blown custody evaluation.

Parenting consultants are appointed by the parties, and approved by the court, but are not appointed by the court. Typically, they make decisions
(rather than recommendations) which are binding on the parties unless reversed by the family court. As long as a party is satisfied with the parenting consultant’s decision, the process can streamline the resolution of a dispute.

Parenting time expeditors are appointed by the court, and have decision-making authority, but the scope of that authority is narrower than the other neutrals mentioned above. Issues other than parenting time fall outside the scope of a parenting time expeditor. The PTE’s decision is binding on the parties, unless one of the parties seeks review by the family court.