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

Many of our clients are worried about the fact that they believe their spouse is hiding assets or won’t provide the information necessary to move a case along. The Minnesota Rules of Civil Procedure give divorce attorneys a series of tools that allow us to gather information in a number of ways, including:

• Interrogatories;
• Requests for Production of Documents;
• Requests for Admission;
• Depositions; and
• Subpoenas

The first tool that we utilize involves a series of written questions to your spouse. These are called interrogatories. Your spouse must provide us with written answers to all of our inquiries within thirty (30) days. The answers must be sworn to and signed before a notary. Interrogatories are an effective tool to use in gathering financial information.

In addition to interrogatories, we typically request that your spouse produce documented evidence of your financial situation through a request for production of documents. This will include a request for recent tax returns, bank statements, retirement statements, brokerage account statements, and any other items that may provide information that will be useful to us in ascertaining the values of various assets that will be divided.

As the case progresses, we always hope to narrow the issues for trial. One of the tools at our disposal for doing so is called a request for admission. These are questions that are framed in a "yes or no" format, asking your spouse to either admit or deny certain things. Items that are admitted by your spouse will have little, if any, time devoted to them at the trial. This is an effective tool for reducing the length of a trial and, therefore, the costs associated with a trial.

In addition to written discovery, we sometimes take the deposition of your spouse. Typically, depositions are reserved for cases in which your spouse has provided vague or evasive answers to our written discovery. A deposition involves asking questions of your spouse, who is placed under oath by a court reporter and recorded.

The benefits of a deposition are plentiful. While litigants have much time to think about the precise manner in which they want to respond to written requests, they are not afforded the same luxury during an impromptu inquiry on certain issues. The testimony offered by your spouse is given the same weight as testimony offered in the courtroom. In other words, if they contradict themselves in the courtroom, we will use their earlier testimony as impeachment material.

Finally, we frequently use subpoenas to gather information and documentation from third parties. This may include credit card companies, mortgage lenders, realtors, appraisers and others. However, in divorce court, subpoenas are rather rare. Pursuant to the Rules of Civil Procedure, we must afford your spouse every opportunity to produce the documents requested on their own before a subpoena may be utilized.

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Depending upon the facts and legal issues involved in your divorce, a number of experts may play a role in your case, including a home appraiser, actuary, custody evaluator, business appraiser and vocational assessor.

The most common expert we employ is a home appraiser. In most cases the most valuable asset for division is the marital homestead. If one party elects to remain in the homestead we must calculate the equity in the house to determine the value of the property settlement. Naturally, the first step to establishing equity involves the determination of the market value of the property. A typical homestead appraisal costs around $350. They take approximately one (1) week to complete. Many clients ask if a realtor’s market analysis can substitute for an appraisal. If the parties agree, a market analysis is sufficient. However, a realtor’s market analysis does not hold the same evidentiary weight as a certified real estate appraisal. For that reason, the appraisal is usually preferred.

Another expert we commonly retain is an actuary. An actuary is an accountant with specific knowledge on the formulas utilized to calculate the present value of various retirement interests. Aside from a house, the most valuable assets that the majority of couples possess are their retirement accounts. Some accounts, such as a 401(k) plan, are easy to value. A recent statement will tell us the value of the account. However, pension interests have a present value as well. Suppose you are 40 years of age and your union pension indicates that at present you qualify to receive $1,000 per month at age 55. Those benefits, despite the fact they are not yet realized, have an economic value. It is the job of an actuary to calculate that value. Clients are often shocked to realize that their pension interest, in terms of present dollars, totals several hundred thousand dollars. If the pension interest was accumulated during the marriage, it is subject to equal division. This may be done by a cash off-set or an award of future benefits to each party. If the cash buy-out is contemplated, then we must know the present value of the benefit. An actuary typically charges a couple hundred dollars for their services.

If custody is a contested issue in your case, a custody evaluator will be appointed by the court. This individual typically possesses a degree in psychology or social work. The custody evaluator will meet with each party individually, and meet with them in the presence of the children. They will gather documentation such as medical and school records involving the children. Custody experts often speak with counselors that might be involved with the family. Parents will often refer the evaluator to several acquaintances who can speak of their ability to affectively parent the children. The process of completing a custody evaluation typically takes several months. Once all of the necessary information is gathered by the evaluator, a report is generated that addresses the information gathered in relation to the standard for an award of custody in Minnesota – the best interest of the child. These reports are often twenty (20) or thirty (30) pages in length and may include painstaking detail about the family situation. The final part of the evaluator’s report includes a series of recommendations. Most often, the court will adopt the recommendations of the evaluator. There are two types of custody evaluators in Minnesota: court appointed and privately retained. There is no legal distinction between the two, but a private evaluator will typically charge more than $10,000 for their services. In some situations, a private custody evaluation will be done much more quickly than an evaluation conducted by court services. If court services performs the evaluation they, too, charge a fee. But it is typically much less than the fee associated with a private evaluation. 

We frequently employ business appraisers to ascertain the present value of a business owned by one or both of the parties to a divorce. There are a number of ways that a business appraiser calculates the market value of a particular business. The evaluator will look at the overall business revenue, profits, assets and marketability of the business. The cost for a particular appraisal varies depending upon the nature of the business being valued. In most situations, a business appraisal will cost between $5,000 and $10,000. Once the appraisal is concluded, the evaluator will present a written report. The report will include the various formulas utilized for determining market value and offer an expert opinion concerning the value of the business based upon dozens of factors that have been taken into account.

In cases involving spousal maintenance, we often employ a vocational assessor. This individual is asked to evaluate a spouse’s capacity for employment and potential annual earnings based upon their educational background, skills and the market place. The person being evaluated will be asked to spend the day with the vocational assessor. An interview takes place and the individual is asked to complete a series of psychological tests, including the MMPI and other skills tests. Once the evaluator has opportunity to get to know the individual, they will generate a report that discusses the skills and abilities of the individual, along with a host of potential careers that are available to them. The assessor we retain will take into account market conditions specific to the Minneapolis area. A vocational assessment typically costs approximately $1,500. The conclusions drawn by the assessor provide significant evidence for the court to consider in light of a request for spousal maintenance.

The foregoing experts are the most frequently retained individuals to assist our clients through the divorce process. Certainly there are others, such as vehicle appraisers, psychological experts, chemical abuse experts, accountants and others. The costs associated with retaining many experts is substantial. For that reason, we work very closely with our clients to balance the costs of the involvement of an expert against the benefit that we hope to realize in retaining that individual.

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One of the more common questions I face from a potential client involves title to property - whether a car, boat, house, ATV, business, bank account or otherwise. They ask, "My spouse says that because my [insert the property interest] is not titled in my name, I am not entitled to any of it. Is that true?"

One highly unique aspect of family practice is the fact that the litigants, unlike basically all other lawsuits, often continue to speak with one another (and even live together) during litigation. Sometimes that can be productive - if the parties are discussing issues in good faith. Other times, one spouse is simply trying to play games and get inside the head of the other. My suggestion? Don't get your legal advice from your soon-to-be ex.

Here's the answer: Title to property is essentially meaningless in divorce court. Minnesota law defines marital property as anything accumulated by the parties during their marriage. Marital property is subject to equal division. The timing of the purchase, not the title, dictates the ownership interest for purposes of a divorce.

Of course, the law recognizes non-marital property, which is not subject to division. Non-marital property has a very specific definition. For the sake of this post, understand that nowhere in the definition of non-marital property is the concept of "marital title" addressed. Unless a piece of property was brought into the marriage by one spouse or received as a gift to one spouse but not the other during the marriage, the property at issue will likely be divided equally among the parties.

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Yesterday, the Minneapolis Star Tribune published part one on a series outlining the deteriorating housing market in the Twin Cities. Written by Chris Serres, Jim Buchta and Glenn Howatt, Minnesota’s New Ghost Towns offers a surprising and depressing look at the current status of suburban real estate in Minnesota. 

We have seen a drastic shift in thinking over the last five years in terms of real estate and its sale during a divorce. Not long ago the concept of a short sale or foreclosure was rarely discussed (perhaps once in 300 divorces). In today's market, however, we frequently discuss with potential clients their options when their mortgage exceeds the market value of their property.

For most parties, dividing assets is the easier part of the equation. People are often eager to receive something of value. More and more, however, we are handling disputes that involve nothing but an allocation of debt. Many seem not to have the incentive to step up to the plate and take on their equitable responsibility under the law - leaving the other to incur more debt, in the form of attorney's fees, just to make things happen.

In the past two months, I have probably spoken with two dozen couples going through a divorce about the sad reality of their housing situation. The most common scenario involves a couple who purchased a house within the last two years, when the market was at its peak, and put little down on the property. They bought as much house as they could afford on their combined incomes. Now, however, the couple will split and cut their pool of resources in half.

In the old days (all of two years ago), this did not present a problem. The parties could list the home for sale and, within about a month or two, walk away with equity to divide. Today they face the prospect of losing $40,000 or $50,000 in conjunction with the sale. Both must come up with a large sum of cash just to get out. Ironically, this is the same couple who just a couple years back had very little money to put down on the property in the first place. What are they to do?

The first option we discuss involves protecting the credit rating of each and minimizing loss on the home. It is becoming more common for parties to agree to remain business partners, in a sense. One will remain in the home and pay the mortgage for a number of years, with some assistance from the other. Then, the parties will sell the home once the market picks up. The problem with this solution is that markets are speculative. The old rule that real estate never loses value has turned to dust and many experts don't think we've seen the worst of this yet.

The second option we discuss involves a short sale. Parties can, usually without affecting their credit rating, negotiate with their lender and avoid having to come up with money at closing. Basically, the lender cuts a deal and allows the homeowners to satisfy their mortgage with sale proceeds that total less. You agree to pay 90% of the loan and the bank doesn't have to mess with selling (another) house through foreclosure.  

The third option that is discussed involves a foreclosure. If there is any light it is the fact that parties can allow the home to go into foreclosure and remain in the home for a period of six months until the statutory redemption period expires. The parties can pocket the money they would pay to the lender and walk away with cash. If their out-of-control ARM is $2,000 per month, they walk away with $12,000. Sounds good, but they probably won't own another home for quite a long time, given the tremendous burden this will place on their credit rating.

Finally, another option involves both parties leaving the property and renting it to a third person. Neither ever thought they would become a landlord, but the solution often allows the parties to buy some time with the hope of the market picking up.

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You and your spouse agree to sell the house (or other real estate) and divide the money from the sale 50%-50%. Here are some of the issues that come up in many divorces:

• While the house is listed for sale, who can live there?
• How will disputes over accepting an offer for the house be resolved? 
• Who will pay the mortgage, insurance, and taxes until the house is sold?
• What if the roof gets a leak? Who will pay for that?
• What does it mean to divide the sale money 50%-50%? What expenses and costs come out first?
• If the house is not sold before the divorce is final, how should the house be awarded in the divorce decree?
• Should the spouses remain "joint tenants" or each own half, as "tenants in common" or something else?

A good divorce attorney will ask about your situation and needs, and can advise you how to best protect your interests during a pending sale of the marital homestead.

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You owned a house before the marriage. You paid $15,000 cash, and took out a mortgage for $110,000. You made mortgage payments of $800 a month for 2 years before the marriage. Before getting married, you made substantial improvements to the house, increasing the value. After 5 years of marriage, you are getting divorced and you want to keep the house. The real estate market has been good for sellers, and the value of your house has risen to $180,000. Your spouse agrees you can keep the house but wants $90,000 (half the value.) What is your response and how do you support your position with Minnesota law?

This is an example of an asset that is part "marital" and part "non-marital". "Marital" assets are divided in a fair and equitable way (usually 50/50). Generally, non-marital assets are not divided - they are awarded to the spouse who owns the non-marital asset.

With this house, you need to figure out what part of the $180,000 is marital and what part is non-marital. The $15,000 downpayment, the mortage payments for 2 years before the marriage, the improvements you made before the marriage, and part of the increase in value of the house are "non-marital."

On the other hand, the mortgage principle spend down and increase in market value applied to that spend down is "marital." The process of running these calculations is know under Minnesota law as the Schmitz formula - named after a MInnesota Supreme Court decision that established the applicable standard. These determinations can become quite complicated, especially when, as in recent times, multiple refinances of a particular piece of property have occurred since marriage.

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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.

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The Minnesota Court of Appeals has opined that experts retained on a neutral basis by the parties to an action for dissolution of marriage are not entitled to quasi-judicial immunity (they are not immune from being sued for malpractice).

In Peterka v. Dennis, appellant sued respondents, an accountant and his employer, asserting that the accountant committed malpractice, for which his employer is vicariously liable, in evaluating businesses in connection with appellant’s dissolution action. Because the accountant was retained as an independent neutral evaluator of the businesses and a Hennepin County District Court Order required appellant and her husband to cooperate with and pay for the evaluation, respondents moved for summary judgment asserting quasi-judicial immunity. The district court granted summary judgment, holding that court appointment and public policy required that respondents be protected by quasi-judicial immunity. Because it concluded that respondent's accountant was not retained or appointed to perform a "judicial" function, the Minnesota Court of Appeals opted to reverse and remand.

The Court held that Dennis’ evaluation of business assets did not involve an "exercise of authority that is essentially judicial in nature." Dennis’ function was to apply sound accounting principles to develop factual bases supporting his expert opinion on the value of businesses in which appellant and her husband had an interest. Dennis had to exercise the same skill and judgment required by those in his profession; but exercise of that judgment did not equate to performing a judicial function. Dennis was retained, whether by appellant and her husband, or by the court, to give his expert opinion on the businesses’ value, not as a "decision-maker to determine competing claims" of appellant and her husband. For these reasons the Court concluded that even if Dennis was a court-appointed neutral, he was not appointed to perform a judicial function, and therefore is not entitled to quasi-judicial immunity. Because Dennis is not entitled to such immunity, Baune Dosen is therefore not entitled to vicarious quasi-judicial immunity.

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