In a divorce, the Minnesota courts cannot impose on a parent the obligation to pay for college. This is because Minnesota family law does not govern children who have reached majority.  The family court will not interfere with the application of existing college funds to tuition expenses, and cannot interfere with the provisions of an UTMA (Uniform Transfers to Minors Act) account or 529 Plan.  The family court will also enforce an agreement between parents to contribute to college expenses, but only an agreement that both parties enter into voluntarily.  The family court cannot order a parent to do so against his or her will.

The result of this situation is that many young adults of college age receive less help for college as a result of their parents’ divorce compared to their peers.  In some cases, the conflict between the parents results in a bitter parent’s withdrawal (or both parents’ withdrawal) of support for a child’s higher education.  More commonly, the economic realities (and struggles) of the parents’ divorce renders both parents much less able to contribute to college expenses.

There are times when the spouse with the greater income owes the duty of paying alimony or spousal maintenance to the other spouse, but would – if given the right – make a higher priority of a child’s college expenses than the other spouse’s living expenses.  The family court cannot allow the needs of a child who is no longer a minor to come before the needs of a spouse unless the child is disabled or otherwise in special need.

For families with college-age children, or children nearing college age, the need for a strong financial plan and the consequences of a high-conflict divorce are important considerations when the parents’ marriage is dissolved.

Six to ten years ago, nearly every divorce in which the couple owned a house provided the couple some equity value to divide.  The house was an asset, and the spouses could sell the house, and divide the proceeds; or one of the spouses would buy out the other spouse’s interest in the house.  In the latter case, one spouse would be given a financial settlement for the asset he or she would be leaving behind.

Then there was a housing bust that caused scores of foreclosures and short sales.  Many economists believe that we may be climbing out of that hole, and the housing market is improving.  But that does not change the reality for many divorcing couples that their house has value at or below the balance owed on their mortgage.

In the case of a house with negative equity, if one spouse leaves the house behind, the other spouse is left, not with an asset, but with a liability.  The spouse left with the liability may believe that the departing spouse should pay something towards the debt on the house.  The problem with that idea is that the house may end up in foreclosure, or a short sale, or the spouse who stays in the house may be able to negotiate with the bank on the mortgage.  In other words, the spouse who stays may not end up realizing the entire “negative value,” so to receive from the departing spouse a “full accounting” of the negative value may result in something of a windfall to the spouse who stays.

Moreover, if the couple has children, one spouse may stay in the house to avoid, or delay, the children’s move to another house.  In so doing, that spouse derives intangible benefit, essentially an unquantifiable value, from remaining in the house – particularly if that spouse is able to negotiate with the bank, and is able ultimately to remain in the house, with the children, indefinitely.

The most common practice is to treat the “underwater” house as a “zero asset.”  The departing spouse is incurring the expense of renting, which offsets the expense to the remaining spouse to continue to make payments on the mortgage.  In the case of a home with a larger mortgage payment, the remaining spouse may leave the house after the expiration of the mortgage redemption period, without putting any additional money into the home.  Either way, assigning a zero value to the house is often found to be the fairest resolution.

A bill has been introduced in the Minnesota Senate for a two-year waiting period in contested marriage dissolutions that involve children.  The concept of a waiting period is misguided if its purpose is to encourage (force?) parents to stay together “for the kids.”

The current law provides that if one spouse (not both) asserts that the marriage is irretrievably broken, the family court will grant a marriage dissolution.  This means that one spouse may want to save the marriage, and the court will still dissolve it.  Not ideal, for sure.  But what is the alternative?  Forcing someone who does not want to be married to stay married?

Under the current law, a marriage requires both spouses either to be fully committed to the marriage or to be subscribing to the belief that the marriage can be saved.  One could describe marriage the same way without referencing the law at all.  A marriage cannot survive if one spouse has one foot “in” and one foot “out.”  There are occasions when the spouse who has “checked out” can be brought back into the marriage through counseling.  But those occasions are far outnumbered by situations in which the marriage truly cannot be saved.

When children are involved, there is more reason to allow the marriage dissolution to proceed quickly, not less. Studies show that children living with parents who experience high marital conflict suffer more than children whose parents live separately.  Certainly, children are best off living with parents who live together and experience low conflict, and are worst off in high-conflict situations whether their parents live together or not.  But the dissolution of their parents’ marriage can be the triggering event to transform a child’s living environment from a high-conflict situation to a low-conflict situation.

Family courts would struggle with management of divorce cases if there were a two-year waiting period. During the waiting period, the conflict between spouses over parenting plans, child support, valuation of marital property, and the extended transition from living as a couple to living apart would be very destructive.

If the bill progresses into anything given serious consideration – here’s hoping that never happens – it would be interesting to see what empirical basis could possibly be presented to support the notion that a waiting period is a widespread solution to a widespread problem.

Under Minnesota law, the statutory basis for dissolving a marriage is one spouse’s (or both spouses’) assertion that there has been an irretrievable breakdown of the marriage.  It is important to note that it is not required that both spouses assert that the marriage cannot be saved.

In many cases, one spouse wants to end the marriage, but the other spouse would like to save the marriage.  In one sense, the Minnesota statute reflects a certain reality: if both spouses are not firmly invested in the preservation of the marriage, the marriage cannot survive.  In other words, the marriage cannot be sustained if either spouse has one foot in, and one foot out of, the marriage.  If one spouse makes the assertion of irretrievable breakdown, the other spouse can refrain from admitting it, but cannot keep the divorce from happening.

What the statute actually reflects is the no-fault grounds for divorce that accompanied the abolition years ago of fault-based grounds for divorce, such as adultery, abandonment or cruelty.

It is important to consider some distinctions in retirement interests and the way they are divided in a divorce.  A Qualified Domestic Relations Order (QDRO) is commonly needed so that both spouses can have separate interests in a retirement account without problems associated with tax penalties and early withdrawals.

The QDRO process involves the two spouses, their attorneys, the court and the plan administrator. Sometimes, an additional person is involved, if the attorneys outsource the drafting of the QDRO to a third party.  Each party and their attorney must approve a QDRO draft, the court must sign it, and the plan administrator must pre-approve (early in the process) and implement (late in the process) the QDRO.

Oftentimes, the asset that is divided by the QDRO is a 401(k) account or pension that neither party plans to tap into for many years.  In that case, the time involved in processing a QDRO is of minimal concern. However, when one or both parties needs to liquidate some retirement funds to pay debts or purchase a house, it is a problem that the process takes so long.  The benefit of the long process, though, is the ability for the spouse receiving a share of the other spouse’s account to cash out their share without tax penalty.

When the parties are dividing an IRA (individual retirement account), a QDRO is not necessary.  The bank should implement the division as set forth in a court-signed decree.  If one or both parties cashes all or part of the account, most of the time, there is an early withdrawal penalty.

Consequently, the division of an IRA provides a time advantage, but a tax disadvantage; and the division of a 401(k) or pension provides a tax advantage, but a time disadvantage.