Minneapolis Divorce Attorney & Lawyer : Minnesota Family Law Firm : Brown Law Offices : St. Paul, Twin Cities MN

It was a privilege to spend some time with WCCO's Esme Murphy last Saturday evening. Esme and I discussed a number of family law issues unique to Minnesota, in the wake of the pending divorce between Arnold Schwarzenegger and Maria Shriver.

On a personal note, a real thrill to share the same air as Steve Cannon, Charlie Boone and Sid Hartman, among others - if only for a short time.

Topics addressed in the interview include custody, child support, spousal maintenance, property division, no-fault divorce, common misconceptions, and the subtle differences litigants will find from county to county.

Run Time: 13:54

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In recent years, Minnesota's child support statutes have shifted from a "label-based" model to a "parenting schedule" based model. It used to be that child support was calculated based upon the type of custody (whether joint physical or sole physical) arrangement the parties were awarded by the court.

New emphasis has been placed on the actual amount of parenting time that has been awarded, as opposed to mere labels. For that reason, the label, itself, has basically become meaningless. Some, including me, predict the end of the label in the next five to seven years.

The support guidelines now discount child support for an obligor (the one who pays) if they spend a certain amount of parenting time with their child, or children. Three broad categories exist: uninvolved (less than 10% of the available time with children), involved (between 10% and 45% of the available time with children), and equal (above 45% of the available time with children. The measuring tool is usually overnights.

Parents with less than 10% parenting time receive no credit against their basic child support payment. Parents who are "involved" receive a 12% credit. Parents who are "equal" receive a 50% credit.

We are frequently asked about what sort of parenting schedule might be awarded to a current, or potential, client. With that, we thought it would be helpful to outline the "typical" parenting time schedules that exist, along with the correlating discount percentage against basic child support.

Limited/High Risk Schedules: No child support credit available, as parenting time is less than 10% of available time.

• Supervised Visits: Visits limited to a supervised safety center a few hours per week. Typically reserved for cases of endangerment. No basic child support credit.
• As Agreed Upon: Visits are limited, but unsupervised. Scheduled ad hoc. No basic child support credit.

Typical Non-Custodial Schedules: A 12% child support credit is afforded, as time exceeds 10% of available time, but is less than 45% of available time.

• Every-Other Weekend (F-Su): Bare minimum schedule for involved non-custodial parents. Usually involves parents who live some distance apart, but close enough to facilitate rotating weekends. 12% basic child support credit. 
• Every-Other Weekend (F-Su) & One Evening Per Week: The old "standby," with children returning each weeknight to the primarily custodian's residence. 12% basic child support credit.
• Every-Other Weekend (F-Su) & One Overnights Per Week: Many judges afford overnight visits during the school week. 12% basic child support credit. 
• Every-Other Weekend (F-Su) & Two Evenings Per Week: Slight increase from the "old standby," but still no overnights during the school week. 12% basic child support credit
• Every-Other Weekend (F-Su) & Two Overnights Per Week: 6 of 14 overnights. Probably lands in the "joint physical" label about 50% of the time. 12% basic child support credit, with possibility of increase by judge, but not to 50%.
• Every-Other Weekend (F-M) : Minimal involved schedule includes time until Monday morning school drop off. 12% basic child support credit.
• Every-Other Weekend (F-M) & One Evening Per Week: One additional overnight e/o Sunday, but still a 12% basic child support credit.
• Every-Other Weekend (F-M) & One Overnight Per Week: 5/14 overnights. 12% basic child support credit.
• Every-Other Weekend (F-M) & Two Evenings Per Week: Argument could be made that this borders on 45% of the time, without actual overnights. 12% basic support credit.

Typical Joint Physical Schedules (Equal Time): A 50% basic child support credit is afforded against basic support, as time exceeds 45% of available time.

• Week On/Week Off: Easiest equal access schedule to follow, but some don't appreciate a full week without seeing children. 50% credit.
• Six & One (Overnight): Basically week on/week off, with a day in the middle to see the children. 50% credit. 
• Six & One (Evening) : Same as above, except no overnight during the other parent's week. 50% credit. 
• Two-Two-Three-Three: Schedule rotates M/T then W/TH, the F, S, S, then starts over, but parent who didn't have on weekend has M/T. 50% credit. 
• Two-Two-Five-Five: Concrete every M/T with one parent, every W/TH with the other, then rotate F/S/S. Each parent has two days, followed by five days, with the children. 50% credit.

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Many divorces involve alimony, child support and the division of assets - all of which involve taxation issues. Litigants tend to overlook the impact that these provisions will have on their taxes. As lawyers, however, we consistently take the tax consequences into account in determining what is fair and equitable under the circumstances.

Alimony payments are considered income for the person to whom the payments are made, and are deductible to the person who's making the payments. If the parties are in different tax brackets, the government may wind up subsidizing part of the alimony payment.

In contrast to alimony, child support payments are not considered as income to the person receiving the payments, nor are payments deductible to the person making the payment. As a result, child support payments do not have any tax consequences at all. Important, however, if alimony is also an issue, to run the child support numbers and compare available cash - as opposed to gross income - in determining need versus ability to pay.

The sale of the marital homestead does not typically involve a taxable event. Capital gains up to $500,000 from the sale of the homestead will be not subject to taxation, if you have lived there for two of the last five years.

If you choose to transfer title to the residence, allowing your spouse to retain the equity, no taxable event occurs. Many clients will opt to use the home equity as an offset against alimony payments, avoiding tax issues altogether.  

However, if you want to adjust the property division in a way that allows both partners to retain equal equity in assets, there may be sizable tax consequence to consider. For example, if one spouse retains the marital homestead and offers the other a retirement account in exchange for his/her share of equity in the house, the resulting settlement may not be fair to the one who takes the retirement account. That's because if this spouse wants to access his retirement account funds, they cannot do so without incurring a tax liability. As a result, when you factor in the tax liability, the person who received the retirement account could actually end up with a lower settlement.

Simply put, a dollar of equity in a home is worth a dollar on the street. A dollar in a 401(k) plan is worth, perhaps, 70 cents on the street. For that reason, we always consider the net value of a particular asset in creating an equal property settlement.

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The Family Law Show is back with an easy-to-understand summary of Minnesota's child support laws.

Of the issues involved in a divorce, child support is the most black and white. That is not to say, however, that there are no shades of gray.

Topics addressed in this podcast include the basic child support, medical support and childcare support, the modification of child support, the relationship between parenting time and child support offsets and how to calculate the appropriate level of income in child support situtations.

Run Time: 10:18

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In January of 2007 the Minnesota child support guidelines underwent significant changes. Prior to the enactment of the present legislation found in Minnesota Statutes Section 518A, child support was based soley on the income of the obligor (the paying parent). Today, child support is based upon the relative income of both the obligor and obligee (the receiving parent), taking into account the nature of the physical custody of the minor children of the parties. The intent of the legislature was to enact guidelines that strike a balance in the income of each parent, the time each parent spends with the children and expenses non-custodial parents incur during their parenting time.

Child support involves three types of financial contribution: (1) basic support; (2) medical expenses; and (3) child care costs. Basic support is a monthly cash payment made from one parent to another for the support of the children. Medical support involves the payment of insurance premiums and uninsured expenses. Child care costs involve all work or education-related child care expenses incurred by the parents of a child.

The PICS (percentage of income for child support) of each parent is critical to determining how much support will change hands. The guidelines call for the Court to combine the gross (pre-tax) income of each parent and assign a relative percentage of the combined income to each. Once determined, this percentage (or PICS) is multiplied against the total support figure listed in the guidelines to determine how much basic support must change hands. A non-custodial parent receives a credit against the amount of support to be paid based upon the amount of parenting time they exercise. That same PICS is applied to the actual cost of health premiums, uninsured expenses and daycare to appropriately allocate the obligations of each parent.

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Judge Halbrooks has been busy at the Minnesota Court of Appeals. She recently issued three dissolution decisions, none of which were published. Two cases involved property allocation issues, one involved a joint physical custody award and two involved child support calculations:

• Popel v. Popel: Minnesota Court of Appeals (Unpublished). Judge Halbrooks held that the district court did not abuse its discretion in awarding joint physical custody to the parties but remanded for a recalculation of child support and reallocation of non-marital interests.
• Blaeser v. Fiscus: Minnesota Court of Appeals (Unpublished). Judge Halbrooks opined that the district court did not abuse its discretion by failing to modify child support following the emancipation of appellant's oldest child. 
• Murphy v. Murphy: Minnesota Court of Appeals (Unpublished)  Judge Halbrooks found no error in the district court's unequal allocation of marital property.

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The Minnesota Court of Appeals recently rendered three family law decisions, none of which warranted publication. One case involved child support issues, another custody and child support and the third property valuation and division:

• Donovan v. Donovan: Minnesota Court of Appeals (Unpublished). Judge Shumaker held that a child support bonus provision was unambiguous and that the doctrine of laches is inapplicable to child support cases.
• Adler v. Espinosa: Minnesota Court of Appeals (Unpublished). Judge Lansing opined that the district court appropriately determined physical custody and child support obligation.
• McCormick v. McCormick: Minnesota Court of Appeals (Unpublished)  Judge Halbrooks found no error in district court's valuation of real estate and denial of fee award, but reversed district court's award of 100% of the marital equity in the homestead to wife.

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Three family law appellate decisions for review this week: one adoption opinion from the Minnesota Supreme Court, one published interstate child support opinion from the Court of Appeals and one unpublished divorce opinion from the Minnesota Court of Appeals.

• C.O. v. Doe: Minnesota Supreme Court. Justice Page held that due process required an evidentiary hearing to take place before termination of adoption contract.
• In re the Welfare of S.R.S.: Minnesota Court of Appeals (Published). Judge Klaphake opined that Minnesota courts lacked subject matter jurisdiction to modify father's child support obligation.
• Baumgartner v. Baumgartner: Minnesota Court of Appeals (Unpublished). Chief Judge Toussaint found no abuse of discretion in disproportionate award of marital property and no error in valuation of marital property.

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The Minneapolis Star Tribune recently published an article about the Minnesota child support guidelines that were amended as of January 1, 2007. Seems no one is happy with what was sold as a more equitable approach to calculating child support, despite the legislature's goal of reducing acrimony among split parents.

Reporter Jean Hopfensperger provides examples of mothers who are upset about the reduction in support received and writes that that "Fathers' rights groups say orders still are set too high and the formula is based on unrealistic child-rearing expenses."  

Unlike the old child support guidelines that looked only at the net income of the paying parent, the new guidelines examine the gross income of both parents and divides support based upon their relative incomes - like most other states. Hopfensperger says that with the sagging economy, more parents are seeking to re-open the issue and see if they can increase the amount received or decrease the amount paid. Many are shocked to learn that the opposite will result. 

If you are interested, you can access the Minnesota Child Support Calculator found at the Minnesota Department of Human Services web site to determine updated support amounts in your situation. Keep in mind that a "substantial" change in circumstance must present itself - meaning that under the new guidelines the difference paid or received per month must be at least 20% of the prior obligation and total more than $75.00.

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Today we wrapped up a complex case involving property division and spousal support. The litigants thought they were miles apart from each other, only to find a new best friend in Uncle Sam. With the assistance of a terrific tax accountant, we were able to craft a settlement that took full advantage of the Internal Revenue Code.

Here are eight tax tips to keep in mind as you move forward with your divorce:

1. Child Support. Child support is not income to the recipient and is not deductible for the payer. Keep this in mind if your spouse is seeking alimony. Child support payments that they receive are not taxable and, as a result, increase their net income each month dollar for dollar. As a result, the "need" of your spouse will be diminished and you may be able to argue that their imputed gross income exceeds their gross pay coupled with untaxed child support.
2. Alimony. Alimony is income to the recipient and is deductible for the payer. High income earners can reduce their taxable income by paying alimony. If your spouse's tax bracket is low, the government winds up picking up the tab for a good share of the alimony obligation.
3. Sale of Homestead. The sale of the marital homestead usually does not involve a taxable event. Capital gains (up to $500,000) from the sale of your marital homestead are not taxable if you've lived there for two of the last five years. Nor is a transfer of title to the residence, allowing your spouse to keep some or all of the equity. Many couples opt to forego alimony payments in, instead, pay a disproportionate property settlement to their spouse. In other words, they "buy off" alimony by giving a larger share of home sale proceeds, or equity, to their spouse. The result? No tax implications for either. Ideal for alimony recipients in a high tax bracket.
4. Filing Status. The status of your marriage on December 31 of the relevant year determines whether you file as single or married. If you are divorced by that date, you file as single for the entire year. If your case appears to be coming to a close near the end of the year, best to speak with a tax preparer about the consequence of holding up at bit or expediting matters. We find that courts are usually willing to facilitate bringing matters to a close by the end of the year if tax implications in doing so are substantial.
5. Dependents. While the law provides that the custodial parent is entitled to claim the relevant dependency exemptions, most couples agree to share them. Offering a non-custodial parent the right to claim the dependency exemption under the condition that their child support is current at the end of the relevant tax year provides them with incentive to keep current with payments.
6. Child Care Credit. Custodial parents who incur work-related child care costs can deduct up to 30% of the cost. It is for that reason that the child support guidelines usually require a custodial parent to assume responsibility for a greater share of daycare expense.
7. Liabilities and Refunds. Taxes owed, or refunds received, are usually treated as "marital" and are, therefore, split equally among the parties. In the heat of the moment, some spouses will intercept a tax refund and cash it without the other's knowledge. All funds must be accounted for and it is likely that if they do so their share of the final property settlement will be reduced proportionately. Because income is "marital," a tax liability is a shared responsibility.
8. Attorney Fees. Any fees paid to a lawyer for tax advice are deductible. Ask your attorney for to break out all billable time devoted to tax issues and you can save big.

Keep in mind, the Internal Revenue Code is constantly changing and you shouldn't rely on this post as the final word in your divorce tax planning.

If you involve a CPA in the team of professionals working on your case, they are sure to attack your situation from a unique perspective and offer creative ways to reduce your tax burden - leaving more money on the table for you and your spouse. Those extra funds may just be enough buffer to get your case settled.

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Many couples question whether they can deviate from the Minnesota child support guidelines by agreement. While the court ultimately has discretion to do so, it does not happen very often. In fact, we've had orders kicked back because our stipulated support calculation was off by as little as $5.00 per month. Courts consider child support the "child's money," and, as a result, rarely afford parents the ability to unilaterally negotiate a different figure.

At the same time, however, we have successfully persuaded the courts to deviate. In considering a deviation from the child support guidelines, the court will examine factors such as:

• Earnings, income and resources of the parties;
• Financial needs and resources of the child;
• Physical and emotional needs of the child;
• Educational needs of the child;
• Standard of living the child would enjoy in the absence of divorce;
• Tax implications associated with the child's dependency exemption;
• Debts of the parties; and
• Receipt of public assistance.

If the court deems appropriate, it may order or permit a child support obligation greater than, or less than, the Minnesota child support support guidelines. Still, the odds are against.

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The court will "impute" income if your spouse is voluntarily underemployed. Rest assured, you have nothing to fear.

Let's suppose your spouse is trained as a physician and decides, for the time being, to work as a waiter at a local restaurant. The court can take an individual's education, work history, job opportunities in the local market and earnings associated with those jobs into account in calculating appropriate child or spousal support. Assuming your spouse is reasonably assured of obtaining a position as a doctor with a six-figure salary, a doctor's salary will be attributed to them.

One of the more common discussions we have with new clients involves a spouse's claim (with laughter) that they will quit their job and our client will receive nothing. "I'll quit my job" they say. Wrong strategy. Your spouse is free to work in whatever capacity they wish. At the end of the day, however, the amount of support they pay is based on what they actually earn or have the potential to earn, whichever is greater. 

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Following the entry of a child support order, the recipient of support has the option of receiving payment directly from the payor or through collection by the county child support office. Most recipients find the services offered by their local child support collection agency very beneficial. Child support officers not only collect monthly support payments through wage withholding, but they also pursue unpaid support (arrears) with the assistance of the county attorney.

The Minnesota Department of Human Services has established a link to every child support office in the State of Minnesota. Visit the link here to obtain contact information about the child support office in your county.

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The Minnesota Judicial Branch has published an exceptional brochure entitled "From the Judges of Family Court: What to Expect...Divorce in Minnesota." In reviewing, it appears to serve as a "reality check" for the litigants. Much of it I endorse. Here is some of what the Court has to say:

A divorce can be a painful and difficult experience, but if you understand the functions and limitations of the legal system, the process becomes less frustrating. It is our hope, as Judges of Family Court, that this pamphlet will give you a better understanding of the process, and help you get through your divorce with realistic ideas and goals.

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In a proceeding for an OFP under the Domestic Abuse Act, the court may provide the following relief, upon notice and hearing:

• Restrain the abusing party from committing acts of domestic abuse;
• Exclude the abusing party from the dwelling which the parties share or from the residence of the petitioner;
• Exclude the abusing party from a reasonable area surrounding the dwelling or residences
• Award temporary custody or establish temporary visitation with regard to minor children of the parties on a basis which gives primary consideration to the safety of the victim and the children;
• Establish temporary support for minor children or a spouse and order the withholding of support from the income of the person obligated to pay the support;
• Upon request of the petitioner, provide counseling or other social services for the parties, if married, or if there are minor children;
• Order the abusing party to participate in treatment or counseling services;
• Award temporary use and possession of property and make other orders regarding property;
• Exclude the abusing party from the place of employment of the petitioner or otherwise limit the abusing party’s access to the petitioner at the petitioner’s place of employment;
• Order the abusing party to pay restitution to the petitioner;
• Order the continuance of all currently available insurance coverage without change in coverage or beneficiary designation; or
• Order, in its discretion, other relief it deems necessary for the protection of a family or household member, including orders or directives to the sheriff or constable.

Relief that is granted by the order is for a fixed period of time, not to exceed one year, except when the court determines a longer fixed period is appropriate.

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Minnesota is a no-fault divorce state. A divorce will be granted in Minnesota without the necessity of proving that one of the parties is guilty of marital misconduct. In earlier times, a party to a divorce was required to demonstrate that the other spouse was at fault for causing a breakdown in the marriage. Adultory was by far the most common basis, but others included domestic abuse, abandonment and an inability to consumate the marriage.

Today, a party to a divorce in Minnesota must merely demonstrate that there has been an "irretrievable breakdown" in the marital relationship. One spouse must simply acknowledge as much, and the court will grant their request to dissolve the marriage. A relatively low threshold - and a tough pill to swallow for those who feel that there is no "justice" in their case unless the court takes into account marital misconduct.

Potential clients often ask, "Should I fight the divorce?" Yes, if you intend to do so outside of the legal arena through counseling or therapy. Once it is obvious that the marriage cannot be saved, your resistence should be limited to that which is necessary to obtain a favorable court order. Not wanting the divorce can be used as leverage against your spouse if they are anxious to conclude matters. Often, the impatient spouse will buy a quick resolution by making an extremely attractive settlement offer. This strategy should be balanced against overdoing it. If you are fighting the dissolution process out of anger or spite, you are likely to cause significant economic and emotional harm to you, your spouse and your children.

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