Minnesota Divorce and Family Law

What it Takes to Win an Award of Attorney's Fees

Under Minnesota law, a family court can make one party pay another party's attorney's fees in two ways. The two forms of fee awards are need-based awards and conduct-based awards.

Need-based attorney fee awards are made in cases in which one party cannot afford to pay their fees. In order for the court to rule that Party A should pay Party B's fees, it is necessary for the court to find that Party B cannot afford the fees, but also that Party B has incurred fees in good faith, and that Party A has the means to pay the fees. That last requirement is often the problematic one. Frankly, for every case in which that is the situation (Party B can't afford fees, and Party A can), there are about twenty cases in which one party can't afford their fees, but neither can the other party.

Conduct-based attorney fee awards are not dependent on the parties' respective ability to pay fees. If a party is found by the family court to be acting in bad faith, and unreasonably contributing to the length and/or expense of the proceeding, the family court can make that party pay the fees of the other party. It should be noted, however, that family court judges do not frequently make this type of award. It can be frustrating, because there are many spouses who are convinced, beyond a doubt, that the other spouse is acting in bad faith, and unreasonably contributing to the length and expense of the proceeding. For the court to reach that conclusion is a very different, and less common, occurrence. Moreover, since the court need not expressly find that the unreasonable party can afford to pay the fee award, the prevailing party may have difficulty collecting on the award.

Another very important consideration is this: if you are seeking an award of attorney's fees, in most cases you will incur additional fees to attempt to get the award of fees. In most cases, the court will not award the fees, and you are left not only with no fee award, but with an attorney bill higher than it otherwise would have been.

Credit Card Companies Don't Care What the Divorce Decree Says

When a couple gets divorced, and the divorce decree makes one spouse responsible for credit card debt (or other debt), the other spouse should not have to worry about the credit card company contacting them for payment, right? Wrong. The divorce decree determines rights and responsibilities as between the spouses; but in most circumstances, the divorce decree does not affect the rights of third parties.

So, if the credit card company cannot collect from spouse A, the company may try to get payment from spouse B, even if the divorce decree gives spouse A sole responsibility for the debt. If the credit card company obtains payment from spouse B, spouse B's recourse is to get relief through the family court in the form of reimbursement from spouse A for the amount the credit card company got from spouse B.

The family court has the authority to grant that relief because, while the credit card company's collection from spouse B does not technically violate the terms of the decree, spouse A's default on the debt payment, in effect, does violate the terms of the decree, and the family court can remedy that defect.

Transfers Incident to Divorce - 401(k)'s and IRA's

When someone's 401(k) interest is divided in a divorce, neither party must suffer a tax consequence or an early withdrawal penalty. The funds from the 401(k) transferred from one spouse to the other may be rolled over, without consequence, provided that the rollover is completed within sixty days. For example, if spouse A receives $50,000 from spouse B's 401(k) account pursuant to the terms of the divorce, spouse A may park the funds in a generic bank account temporarily -- for instance, while spouse A sets up a new account -- but the funds must land in a proper, tax-qualified account within sixty days of the date the funds left spouse B's 401(k) account.

The receiving spouse may opt against rolling over the funds into a tax-qualified account without paying the early-withdrawal penalty. But the transfer does count as a taxable event during the tax year that the transfer occurs, so the receiving spouse needs to plan accordingly. That is, the receiving spouse would be wise to pay estimated taxes on the transfer.

When someone liquidates funds from an IRA (individual retirement account) before age 59 1/2, there is a ten percent penalty. However, when an IRA is divided between spouses in a divorce, the transfer of funds incident to the divorce are not subject to the early-withdrawal penalty. In order to avoid the penalty, the receiving spouse must roll over the funds into an IRA or other tax-qualified account within sixty days.

The manner in which the 401(k) interest is divided is a court order called a Qualified Domestic Relations Order (QDRO). The QDRO contains terms that direct the plan administrator in the proper division of the 401(k) account. A QDRO is NOT USED for an IRA transfer. The banks handling an IRA transfer may have specific requirements, such as specific account information for the destination of the transferred funds; but for the IRA transfer, a QDRO is unnecessary.

The House You Owned Before The Marriage

If a married couple gets divorced, and one of the spouses owned their home before the marriage, the house is part marital property and part nonmarital property.

The value of the house at the time of the divorce can be divided into several categories:

(1) the equity the owning spouse had in the home at the time of the marriage (nonmarital);

(2) the amount the couple paid off on mortgage principal while living together as husband and wife (marital);

(3) the appreciation in the value of the house over the course of the marriage that can be attributed to the owning spouse's premarital equity (nonmarital);

(4) the appreciation in the value of the house over the course of the marriage that CANNOT be attributed to the owning spouse's premarital equity (marital); and

(5) the increase in value of the house that can be attributed to home improvements that the parties made during the marriage (marital).

Most of the time, the components of the house's value cannot be objectively determined or fixed without either the reasonable compromise of the spouses or the expertise of a neutral appraiser.

New Divorce Study

A new study on children of divorce has been mentioned in recent news headlines. Allen Li, of the Rand Corporation, evaluated children before and after their parents divorced, between 1979 and 2002. The more common methodology of past research had compared children of divorce to children in intact families.

Li's study drew upon a national sample of more than 6,000 children between ages 4 and 15, whose mothers were surveyed during the term of the study.

The fact that Li interviewed the mothers, but not the fathers, of the children is puzzling. The study is being described as something that could reframe the debate on divorce. There is nothing to suggest that the research lacks validity just because the responses came from mothers only. But the exclusion of fathers from the study is a striking gap.

If this study is considered an improved methodology over past research, it would appear that future research could improve upon this current research by gathering data from both fathers and mothers.

Changing Your Mind About Divorce

If someone starts a divorce action and then changes their mind about it, then the consequences depend on the intentions of the other spouse. If the other spouse wants the divorce to proceed, then the divorce will proceed. But if the other spouse does NOT want the divorce, then the divorce action is dismissed, and the parties remain married.

As an example, if the husband commences the divorce action by serving a Petition, the wife has the option of serving an Answer and Counter-Petition, or just an Answer. By including the Counter-Petition, the wife is asserting that she wants the divorce to proceed whether the husband changes his mind or not. If the husband withdraws the Petition, then the divorce will proceed on the Counter-Petition. If the wife does not include a Counter-Petition, she is asserting that she does not want the divorce to proceed if the husband changes his mind and withdraws the Petition. In that instance, if the husband withdraws the Petition, there is no action on which to proceed.

If the parties decide to reconcile after the divorce begins, the parties must work together to withdraw the action. And of course, if they decide to reconcile after the divorce is final, then their options are to remarry, or to live happily ever after, together and unmarried.

Getting a Divorce By Mail

In Minnesota, the family court will grant a divorce in certain cases without the parties coming to court to appear in person. If there are no minor children involved, the court will sign off on a stipulated decree (agreement signed by both parties) submitted by mail if the reviewing judge is satisfied that the stipulated decree appears to be fair to both parties. If there are minor children involved, the court may still sign off on a mailed stipulation if both parents are represented by counsel, and if the court is satisfied that the stipulation appears to be consistent with the child's best interests and fair to both parties.

If there are minor children involved and one or both parties has no attorney, the court will require one of the parties to appear in person. Similarly, if the court receives a stipulated decree in the mail and is not satisfied that it is fair to both parties, or is concerned that it is not consistent with the best interests of a minor child, the court will require one or both parties to personally appear.

In most cases, the family court will find that the parties' agreed-upon terms are, in fact, fair to both parties and (if a minor child is involved) consistent with the child's best interests.

Emergency Court Orders and Expedited Relief

If you want the court grant you relief, or order your spouse / ex-spouse / child's other parent to do something, the typical process takes several weeks. You must obtain a hearing date, file with the family court certain documents, send copies of the documents to the other party, and then wait for the family court to issue the order. Often, the court cannot offer a hearing date that is less than four to six weeks off. Add to that the amount of time the court requires to issue its order after the hearing, which can vary from several days to three months.

In emergency situations, the court will grant relief without that delay. Of course, the court must be moved with the compelling nature of the request to issue an expedited order. Domestic abuse orders for protection are granted in such circumstances. Emergency custody orders may result from abusive situations, or cases in which one parent is depriving the other parent of all contact with a child. Dire financial needs may also be addressed with an expedited order.

It is important to consider the fact that the family court is unwilling to grant expedited relief in all but the most compelling circumstances. The family court sees dozens of cases each week, and unfortunately, most people in need of expedited relief must nevertheless wait several weeks for the court to issue an order.

Joint Physical Custody Presumption Subjected to Study

Today there was a committee hearing at the Minnesota Legislature on a proposed bill to enact a presumption in favor of joint physical custody. The bill would establish a rebuttable presumption that joint physical custody is in the best interests of a minor child. (Minnesota law already has a presumption that joint legal custody is in the best interests of the child, if one or both parties requests it, except in cases of domestic abuse.)

The committee heard testimony from supporters of the measure, who are pushing for family law reform due to their claims that noncustodial parents are not treated fairly in Minnesota family courts. The committee also heard testimony from opponents who expressed concern that a presumption of joint physical custody would have an adverse impact on domestic abuse victims, place children in the middle of conflict, and would be based upon a misunderstanding of the current state of the law, which does not contain a presumption AGAINST joint physical custody nor a presumption in favor of sole physical custody.

As a practicing divorce attorney for many years, my clients include both mothers and fathers; custodial parents and noncustodial parents; victims, perpetrators, and falsely accused perpetrators, of domestic abuse. The fact is, currently, many family court orders award joint physical custody, many orders grant sole custody to dad, and many orders grant sole custody to mom. There is a growing trend to avoid the label of physical custody altogether, and use parenting plans and/or alternate terminology. A presumption of joint physical custody will not help the family court system.

Joint physical custody should not be confused with co-parenting. It is not necessary for a child's parents to have joint physical custody in order for the child to have a healthy relationship with BOTH parents. It IS necessary for the child's parents to properly CO-PARENT (or to have the active involvement of parenting neutrals). But joint physical custody is not indispensable, and for many families, would actually INCREASE the conflict that the child experiences, instead of lessening the conflict.

The bill, which makes exceptions to the proposed joint physical custody presumption in cases of domestic abuse, would require a court to make detailed findings to overcome the presumption and order something other than joint physical custody. So the proponents of this bill are seeking to have the family court forum be a place where courts decide whether someone should NOT have joint physical custody and make detailed findings about why NOT. The family courts - with which many individual committee members recounted their own personal, bad experiences - are already a forum that seems rife with negative energy. Yet what is proposed is for the presumption to be joint physical custody, and for all the focus of contested custody proceedings to be what these parents are NOT doing right in order NOT to be awarded joint physical custody. It adds more misfortune to what is, for many, the most unfortunate experience of their lives.

Moreover, either parent may be willing to allow the other parent to have sole physical custody, but not when faced with a presumption in favor of joint physical custody. They may be unwilling to "opt out" of the joint physical custody presumption (even though they would otherwise not fight for joint physical custody) figuring that they would appear to be turning their back on their child. Again, for many families in transition, the focus needs to be on REDUCING THE CONFLICT, not landing a coveted label of "joint physical custody". In many instances, temporary or permanent custody arrangements other than joint physical custody are in the child's best interests.

One other concern is the domestic abuse exception that is written into the bill. The domestic abuse laws of Minnesota are good laws, with a very bad downside: false accusations. Domestic abuse proceedings are the classic, quintessential "he said, she said", and many litigants use the laws, in bad faith, as a tactic for undue advantage. This unfortunate practice would become only more common in the instance of a joint physical custody presumption with a domestic abuse exception.

Ultimately, this afternoon, the bill proposal was amended (i.e., compromised) to refer the issue of a joint physical custody presumption to a study group, to explore the family court processes, and determine what steps need to be made to improve the system. Many of the committee members expressed disappointment that such an action was, in fact, a failure to act. In my humble opinion, the bigger failure would have been enacting a joint physical custody presumption.

Pension Money: Property or Income, not Both

When someone getting divorced has a retirement benefit or retirement income, their spouse may want to receive part of it as alimony. However, at the time of the divorce, the value of the pension interest is typically divided between the parties as part of the property settlement in the divorce. So an issue may arise as to whether to characterize the pension value as property or as income.

Take, for instance, a case where the husband gets the pension and, in consideration of that, the wife get the house. In that instance, the pension is part of the PROPERTY settlement, and is not considered income. If the wife seeks alimony from the husband, his money from the pension should not be factored into the determination of alimony. It would not be fair for him to pay alimony from his share of the property settlement when he will not, in turn, receive any of the equity in the home.

On the other hand, if the pension is NOT divided between the parties, for instance, because the husband is already receiving his pension payments at the time of the divorce, then the pension is INCOME, rather than property. Since the value of the pension is not part of the property settlement, the money received from the pension plan MAY be considered in the determination of alimony (also known as spousal maintenance).