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

More and more Minnesota counties are providing divorce litigants with an opportunity to resolve their financial issues through a process known as "Financial Early Neutral Evaluation." Settlement success rates in the FENE model are astonishing - as high as 75% in some jurisdictions.

An FENE involves a half-day session (or two, or three, or four) with a court-appointed neutral. This neutral typically is an experienced family law attorney, or a CPA familiar with the financial issues involved in a divorce. The parties, and their lawyers, sit down with the evaluator very early in the case - in an effort to catch people before they become too embroiled in conflict, or stuck in their position.

The process begins with the exchange of information, to ensure that there has been a full and fair disclosure of all income, assets and liabilities. A balance sheet is often created, which defines the universe of assets and debts, attributes value, provides a basis for the value, carves out any non-marital claims, and then allocates the relevant item to one of the parties. Once all allocated assets and debts are added up for each litigant, the cumulative value for each should be equal. This is typically the least controversial portion of the FENE, but can take some time.

The more controversial portion of the FENE involves the issue of spousal maintenance. With the assistance of the evaluator, the income and budgets of the parties will be scrutinized. A range of possible outcomes may be discussed, and recommendations may be made by the evaluator concerning the amount, and duration, of alimony in the event that the judge is left to decide the issue. Settlement discussions begin with that opinion as a backdrop.

Why does FENE work so often? A few points:

• The parties have direct conversation with one another, and the evaluator, in a natural way. A far cry from the robotic "question and answer" method of introducing evidence during a trial.
• The rules of evidence go out the window at an FENE. Any issue is up for discussion, empowering participants to voice their real-life concerns.
• Emotions may be taken into account at an FENE. Issues concerning "fairness" and "hurt" may be addressed as part of the process. Frankly, the law of "no-fault divorce" precludes alot of this in the courtroom.
• The process can be therapeutic. People feel like they can speak their mind, and they are listened to. Sometimes all a party needs is to be heard by someone. 
• Spouses have to look each in the eye as they discuss the issues. Very different from sitting 25 feet apart in the courtroom, facing front.
• There is a real sense that the parties can "get it done" during the process. Litigants believe that closure has real value, and may be worth a compromise.
• The process is a respectful one. Most evaluators know how to keep tempers from flaring.
• The evaluators, not the lawyers, control the agenda. Both parties feel they are on a level playing field. 
• Opinions matter. Litigants afford substantial weight to the perspective of the evaluators. They know the evaluator has no stake in the outcome, and the experience to back up their opinions.
• The neutrals are forced to "show their work." What I mean is that the parties are literally walked through each of the elements of the case, together, and hear the same thing at the same time. They see how the opinions of the evaluator are created right before their eyes, giving them more credibility.
• The surroundings are comfortable. There are no robes, no gavels, no court reporters, and no security. Just people sitting around a table, with their favorite beverage, talking.

As time goes on, I suspect the FENE process will gain statewide acceptance. Most of the counties in the Twin Cities metro area have adopted such a program. Why wouldn't they? With a 3/4 reduction in divorce litigation, everybody wins....except those lawyers whose practice model is based on "dog fight" mentality. But, who's feeling sorry for them anyway?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The lawyers with Thyden, Gross & Callahan, LLP, authors of the Maryland Divorce Legal Crier, recently published an article entitled "Putting the Fault Back into No-Fault Divorce." They point out that despite the fact that several states on the east coast have moved (like Minnesota in the 1970's) to "no-fault" divorce, fault still creeps into the mix.

The same is true in Minnesota. While easy to simply utter "we're a no-fault state," we're not entirely no-fault. Here's a compare/contrast between they Thyden summary and Minnesota law:

Property:

East Coast. In determining how marital property is to be equitably distributed, each jurisdiction has another list of factors the court must consider.  In Maryland, there is a catch all provision that includes any other factors that the court considers appropriate.  In Virginia, one factor is circumstances contributing to the dissolution of marriage.  In DC, it is circumstances contributing to the estrangement.

Minnesota: We see fault creep into asset and liability allocations through the dissipation of assets, concealing of assets, or "sin spending." If a party dissipates assets (sells while divorce is imminent) the non-selling spouse will likely receive their share of that asset, on the balance sheet, as part of the ultimate distribution. If a spouse conceals assets, the court may ultimately award the concealed asset, in full, to the innocent spouse. And, if one party gambles away marital assets, or incurs substantial debt in relation to alcohol abuse, cheating or gambling, the court may allocate the financial consequences of "faulty" behavior to the "sinning" spouse. 

Custody: 

East Coast. Marital misconduct does not necessarily make you a bad parent.  The test is best interest of the children.  But the parties think it is important that the judge know what a scoundrel the other parent is, especially if the other parent is slinging mud, too.

Minnesota. Minnesota's "best interest standard" takes into account behavior that impedes a spouse's ability to adequately parent a child. For example, if alcoholism led to a breakdown in the marital relationship, no impact on spousal maintenance. Custody? The court is absolutely interested in hearing about it...and how the alcohol abuse has affected the children. The same is true with domestic abuse, adultery or late night partying.

Alimony:

East Coast: In each jurisdiction, the law provides a list of factors the court must consider in determining alimony. In Maryland and DC, one of the factors is circumstances surrounding the estrangement of the parties. In Virginia, adultery can prevent a spouse from receiving alimony unless the court finds that would create a manifest injustice.

Minnesota: A list of factors for the court to consider, but the circumstances surrounding the estrangement of the parties is not one of the them. Nor is the question of adultery. Many of our clients are shocked ("outraged" is a more accurate description) to learn that their spouse's cheating has no bearing on an award of spousal maintenance. Might a newly-elected conservative legislature in Minnesota be open to changing the statute? Wouldn't surprise me.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In this edition of The Family Law Show we summarize how judges value and allocate assets and debts as parties dissolve their marriage.  

Every case, regardless of the age, income or educational level of the litigants, will involve an analysis of the relevant property interests of the couple - even if they've only been married for a short time.

Topics discussed in this podcast include the concealing of assets, tools for uncovering assets, the difference between marital and non-marital property, and the general rule of an equal division of assets and debts, despite the relevant statute requiring a "just and equitable" distribution.

Run Time: 13:24

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Michelle O'Neil, a divorce attorney with O'Neil Anderson in Dallas, Texas recently posted about an app she helped create for the iPhone: Divorce Cost & Preps. She writes:

CNN Headline News featured the Divorce Cost & Prep iPhone App created by Dallas Divorce Lawyer Michelle May O'Neil and Fort Worth CPA Bryan Rice. The story originally ran on CBS11 in Dallas on Wednesday night, but by Friday The Morning Express with Robin Meade Show on CNN HLN picked up the story and it spread throughout the US and the world.

According to O'Neil, the app serves two purposes. First, a person contemplating divorce can assess the hidden and direct costs of divorce, such as the cost of providing two houses, two wardrobes for the children, or transportation costs for exchanging the children between houses. Second, the app gives divorce clients a list of information and documents to gather for their lawyer to assist preparation of their divorce.

Divorce Cost & Prep is available on iTunes for $4.99. Lots of apps for lawyers to use, but only a limited number geared toward clients. Congrats to Michelle and Bryan for their creative success.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

I was browsing the California Divorce Blawg yesterday and fellow family blogger John E. Harding highlighted a recent article by Laura Petrecca in USA Today on prenuptial agreements.

At least once a week our firm is contacted by a soon-to-be bride or groom, who have taken time away from cake, dress and music selections to ask that age-old question: what if?

Here's what Petrecca reports:

Specific data about the often-complex contracts don't exist, mainly because prenups fall into the area between family law and estate planning, so there is no single trade group continually tracking trends, says Steve Hartnett, associate director of education for the American Academy of Estate Planning Attorneys.

But a number of factors are fueling the prenup bump. At a broad level, they have gained more acceptance as a financial-planning tool.

Personal-finance expert Suze Orman encourages every engaged couple to get one to protect their current and future assets as well as to shield themselves in case a mate secretly runs up massive credit card debt (which could damage both partners' credit scores).

Elizabeth Gilbert, author of the blockbuster tome Eat Pray Love, recently made the case in her new best seller, Committed, for why she and her husband got a prenup.

"Marriage is not just a private love story but also a social and economical contract of the strictest order," she says. "If it weren't, there wouldn't be thousands of municipal, state and federal laws pertaining to our matrimonial union."

More than one-third of adults — 36% — said prenups make smart financial sense, according to the Harris survey. When Harris asked that same question in 2002, 28% said so.

In a recession, people want to hang onto the assets they have, so they increasingly look to these pacts as an option, says Robert Nachshin, co-author of the prenup guide I Do, You Do ... But Just Sign Here.

Catch Petrecca's full article here. Find Minnesota's statutes on prenuptial agreements here. The Minnesota State Bar Association has also published an easy-to-understand summary on prenups. Find it here.

Key Points:

• Prenuptial agreements are a mechanism for parties to re-write the statutes that govern divorce to conform to their own expectations.
• Even if a prenuptial agreement has been executed, the party to a divorce may seek to challenge its contents.
• A prenuptial agreement must meet both a "substantive" and "procedural" fairness test to be enforced under Minnesota law.
• Minnesota law requires a prenuptial agreement to be in writing, signed by two witnesses and notarized to be enforceable.
• The parties to a prenuptial agreement must disclose all of their income, assets and liabilties as party of the agreement.
• The parties to a prenuptial agreement do not need to be represented by lawyer (but should), but the parties to a postnuptial agreement (a prenuptial agreement executed after marriage) must be represented by counsel under Minnesota law.

When I meet with a couple who want to have a prenuptial agreement in place, we try to have a little fun. I mean, what else could be more enjoyable during the happiest time of your life than thinking about the worst possible scenario?

How in the heck do you raise the issue of a prenup with the love of your life? For the true romantics out there, and with a little help from Relationship Online Information, here are a few ways to surprise the one you cherish:

• Does your girlfriend love the movies? If so, then organize a movie-night at home complete with DVDs, popcorn, candy, soda and a prenup.
• Slip a prenup between the pages of a book your fiance is currently reading, into her lunchbox or even her handbag or purse if you get the chance. Just think of the surprise she’ll get next time she goes to pay for something, opens her lunch at work or starts reading her novel.
• You could mail your fiance a prenup. This is almost a lost art form these days, taken over as they are by emails and instant messages. What a surprise he'll get if you write a heartfelt prenup on elegant stationery, add a touch of your perfume and drop it in the mail. Different, unique and definitely a special way of expressing your passion for him!

If you've got another idea to pass along, such as a tastefully packaged gift certificate to a law firm for Christmas, let me know.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Minnesota law categorizes property as marital or non-marital.

Marital property is usually divided equally while non-marital property is allocated entirely to the party who maintains the non-marital interest. Non-marital property involves the interest a party has in property accumulated prior to a marriage or property received as a gift or inheritence by one spouse, individually, during a marriage. Marital property involves any property that the parties accumulate during their marriage, including home equity, retirement assets, business interests, bank accounts, investments, motor vehicles and other property of value.

In order to ascertain the value of property, experts are typically retained. These include real estate appraisers, actuaries, business valuators and other individuals with specialized knowledge in determining the market value of various assets.  These experts can be retained by one or both of the parties.

Once all property interests are valued, a balance sheet is put together to reflect the allocation each party will receive.  Naturally, one party will receive more property than the other as items are divided.  When this occurs, a cash payment (equalization) is typically made from the spouse receiving more property to the spouse receiving less property in order to equalize the cumulative value of the assets they receive as a result of the dissolution of marriage.

Debts are typically treated the same way as assets.  Quite often, the court will allocate all debts incurred during the marriage equally.  Debts that remain from a time preceding the marriage are typically allocated to the party incurring the debt.  The same is true for debts incurred post-separation. The value of a particular debt is usually verified through a recent statement. Typically, if the party is allocated an asset they will take any debt that accompanies it.  A prime example involves an automobile.  If one spouse takes a car, they will likely have to accept responsibility for the debt associated with it.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Time Magazine's Belinda Luscombe recently published a piece entitled "Will the Market Kill Your Marriage?" So much of her article rings true in these tough economic times. I highly recommend reading it in it's entirely. She does a nice job laying things on the line.

Here are of a few excerpts:

Recession and divorce, it is said, go together like carriage and horse. Those who labor in Splitsville have several explanations for why that might be. There's the lawyer theory, that money provides the soft fatty tissue that insulates the marital skeleton; once it's cut back and people get a good look at the guts of their relationship, they want out. And there's the marriage-counselor theory, that couples who were never quite on the same page in the checkbook finally get pushed off the ledger by endless bickering over their dwindling resources. And the therapist theory, that financial worries cause stress, stress can cause depression, and depression is a total connubial buzz kill. 

The two assets that typically need to be divided are 401(k)s and the family residence. But suddenly 401(k)s aren't worth as much, and that home whose mortgage was the mother of all argument starters is not an asset at all. It can't be sold - or at least not for a price that provides money to start over. Instead of working out who owns what, lawyers and mediators are trying to figure out the fiendishly trickier conundrum of who owes what. "We're negotiating debts - not assets," says Henry Gornbein, a family-law attorney in Oakland County, Mich. "Two, three years ago, I'd be telling you that houses had equity, and you'd either be doing a buying out or selling the house and splitting whatever the proceeds were. Now it's the reverse. You go into court; the judges just don't know what to do."

Therein lies the dilemma.

Not long ago, people had lots stuff (equity in homes and retirement accounts) to divide. No more. The vast majority of homes involved in a divorce are mortgaged for more than market price (perhaps 80% of our present clients find themselves in this situation) and retirement assets are worth one-half of what they worth a year ago. Tax what's left (oh, and penalize another ten percent for early withdrawal), and then begin to discuss the $20,000 marital credit card debt outstanding. Not a pretty picture.

The good news for families (children in particular) is that we are seeing a sharp increase in a more respectful, uncontested approach to divorce. I don't know if that's because there's nothing to divide, or because people don't have the resources to litigate.

Couples seem to be in the mood to work together. Some agree to keep one spouse in the home, but both continue to split the mortgage payments and ride out the market. They might be able to sell and break even (or even yield a profit) in a few years. Others remain business partners, in a sense, renting out their home when they vacate with a plan to sell when the market picks up. Others are agreeing to let the home go into foreclosure and banking money along the way. Still others are working with the lender to arrange for a short sale.

Elsewhere in our Blog, you will find information concerning property division, home foreclosure, bankruptcy and uncontested divorce. Always best to learn as much as you can about your options going forward.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Thanks to Mark Wortman, a top Kansas City divorce lawyer, for his recent post surrounding the "dance" between bankruptcy and divorce. In his Missouri Divorce and Family Law Blog, Wartman writes that it may be better to file bankruptcy before the divorce, in light of the following:

• Federal bankruptcy law will allow married couples to file jointly, eliminating the need for two separate bankruptcy filings and two separate attorney fees after the divorce;
• The parties can exempt (protect) double the amount of property if they file jointly;
• Most married couples have joint debt. Even though the divorce court can divide the debt, it cannot alter the contract with the creditor, meaning that if the spouse ordered to pay doesn’t, creditors are going to come after whoever’s name is on the account. Then the only remedy is a contempt of court proceeding, which is time consuming (up to a year) and costly. All the while, the other spouse has to make the payment or suffer the credit consequences. Joint bankruptcy can eliminate the debt all together and avoid the problem of who pays who;
• Joint filing before the divorce will eliminate the need to litigate issue of debt in the divorce, which reduces the time and expense of the divorce, and avoids the result described above. Remember, a divorce decree is just a piece of paper, enforcing it is a whole different matter;
• Although the bankruptcy law will not allow a divorcee to discharge debts ordered in the divorce, the problem of collection and contempt may cause greater credit problems than the bankruptcy itself;
• Joint filing before divorce will allow for a higher income threshold for Chapter 7 qualification (means test avoidance);
• It most likely (almost guaranteed) that you can rebuild and re-establish your credit much faster than you could ever have paid off the debt, while at the same time getting the past problems behind you and truly getting a “fresh start”; and
• Bankruptcy is not the end of the world. It can be an effective solution to a real problem that real people have during these times.

Well thought advice. Of course, you should speak with a bankruptcy lawyer about these issues if you are really serious about filing in the midst of divorce. Bankruptcy is a niche practice and few divorce attorneys (including, admittedly, this one) have a strong command of the nuances of bankruptcy law and procedure.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

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.

• Email This
• Print
• Comments
• Trackbacks
• Share Link