Minnesota Divorce & Family Law Firm

The Brown Law Offices, P.A., is a Twin Cities divorce and family law firm. Our attorneys have represented thousands of clients since 1998. We use common sense and attempt to resolve matters as efficiently as possible. If necessary, our lawyers are prepared to take matters to trial. We have substantial experience in Hennepin, Anoka, Sherburne and Wright County.

How Are Businesses Valued And Divided As Part Of A Divorce In Minnesota?

Many of our current and former clients are entrepreneurs – owners of small businesses, including restaurants, hair salons, trucking entities, vending services, auto repair shops, construction companies and web design firms. Important to keep in mind that even if the business was started and managed by just one spouse, it may be “marital” in nature. Marital assets are generally subject to an equal division among the parties.

The first step in allocating a business interest involves ascertaining a market value for the entity. It should come as no surprise that business owners typically think their enterprise is worth very little when a spouse comes knocking with divorce papers. That’s when a divorce attorney experienced in complex property valuation and allocation cases can help.

In an effort to combat the difficulty associated with determining the market value of a business interest, one (or sometimes both) parties will retain the services of a qualified business appraiser to evaluate the asset. The best business appraisers are certified in their field, have many years of experience and hold advanced degrees and credentials in accounting. We have ongoing relationships with some of the best appraisers in the Twin Cities.

The cost of a business appraisal varies widely, depending upon the qualifications of the appraiser and the nature of the company being valued. Naturally, the larger the enterprise, the more involved the appraisal will be. Base rates for appraisals of simple sole proprietorships typically range from $4,000 to $6,000.

As part of their valuation, business appraisers will produce a detailed report. These reports become evidence in the case and describe the information gathered by the evaluator, methods utilized to determine value and an ultimate opinion as to the value of the business.

Evaluators will use some, or all, of the following approaches in determining the value of a business:

  • Income Approach: Values a business based upon the ability to generate economic benefit for the owners. For example, if a small business is a “high risk” investment, a buyer may wish to realize a return of 20% per year on equity. As a result, the business may be worth five times the profits of the business.
  • Asset Approach: Values a business based on a balance sheet of assets less liabilities. Profits are not taken into account, just equipment, inventory and goodwill, offset by debts owed.
  • Market Approach: Values a business by comparing historic sales of similar businesses. An evaluator may research recent sales in the marketplace to determine what a willing buyer would pay for the business interest.

Please contact me if you have further questions about the division of business interests in a Minnesota divorce. Our Minneapolis divorce lawyers offer a free consultation to all potential clients.

Podcast: Establishing Physical & Legal Custody Under Minnesota’s Best Interest Standard

In this edition of The Family Law Show, we offer an overview of the standards Minnesota judges use in determining the physical and legal custody of children.

Custody is an emotionally-charged issue, with a lot of uncertainty for parents and kids.

Topics in this podcast include the difference between physical custody and legal custody, joint custody as compared to sole custody, the “best interest of the child” factors and the key facts judges look toward in making custody decisions.

Run Time: 12:52

Click to Listen[hr]

The Benefits Of Working With A Parenting Time Expeditor

Under Minnesota law, the parties, or the court, can seek the appointment of a parenting time expeditor as part of a divorce or paternity proceeding. Parenting time expeditors can save the parties time and moneyby keeping parenting time disputes out of the court system entirely. No attorney to pay. No motion filing fee to pay. No two-month waiting period to speak with a judge.

A parenting time expeditor works to resolve parenting time disputes by interpreting and enforcing an existing court order. Some parties never use the expeditor, even if appointed, because no conflicts arise. Others use them once. Still others…quite regularly.

Expeditors are supposed to first mediate disputes between parents. If the parents are unable to come to an agreement on their own, the expeditor issues a written decision.

Once a dispute is brought to the attention of the expeditor, they expeditor will meet with the parties in a relatively short period of time – often the same day, by telephone.

If a decision is required of the expeditor, it must be consistent with the existing order. In other words, an expeditor does not have the authority to create new schedules or conditions of visitation.

The decision can include an award of compensatory parenting time, along with an award of attorney’s fees and costs. The opinion must be written and mailed to each party, and is subject to review by the district court if either party requests a hearing. Usually the expeditor’s decision is subject to “appeal” to the district court for a period of 14 days. Thereafter, the right to have the matter addressed by the court is extinguished.

Either party can move the court to remove the parenting time expeditor, but must show “good cause” for doing so. Such a feat can be rather difficult, but tempting to those who are not happy with the decisions of the expeditor.

Give Yourself The Advantage: Tips For Dealing With Custody Evaluators

Child custody can be a controversial issue; it is common for both parents to want physical custody – or for one parent to seek sole custody over a joint custody arrangement.

The disagreements can go on and on, and that means the court has to intervene with the custody evaluation process. A custody evaluator is appointed, or hired, to review the situation and create a report that the court uses to determine what is in the best interest of the minor child.

It is best to cooperate with the custody evaluator in every way possible. How you interact with the evaluator is going to carry a lot of weight in the evaluation – even though the relevant statute doesn’t reference your conduct during the process.

Here are some things you should keep in mind when working with a custody evaluator:

  • They will sometimes make you feel that they are on your side. This is so you will put your guard down. Never ever make the assumption that the evaluator is on your side.
  • Keep in mind that they are human, and will react adversely to certain personalities. If you’re honest and open, then that is going to work in your favor.
  • The custody evaluator doesn’t care about who the good guys and the bad guys are. It is what is best for the child that concerns them.
  • Do not argue with the custody evaluator. You need to make eye contact and listen to them. You need to establish rapport with them, so it may help that you nod your head in acknowledgment of what they are saying. If you disagree, disagree nicely. You need to get your own points across so that they are considered.
  • Provide the evaluator with all supporting documentation, and any other documents that may be requested. It is also important to provide these documents in a timely manner.
  • If there are any collateral contacts, provide the evaluator with their names. These are individuals that are aware of your competence as a parent, and can vouch for the weak points of the other party.

About 95% of the time, the judge will adopt the recommendations of the custody evaluator. We’ve successfully tried many cases, however, in which we were able to discredit the opinion of the evaluator and gain an award of custody in favor of our client. Still, the odds are against if the report comes back in favor of your spouse. For obvious reasons, it is critical to have the custody evaluator on your side.

Family Court: A Few Simple Rules To Follow

Thanks to Mark Pfenning, a divorce lawyer and author who has published many articles geared toward helping parties through the divorce process. His recent article, Divorce Courtroom Tips, provides some helpful strategies and a useful summary of the basic rules of decorumin family court. Here’s what Mark has to say:

  1. Settle Some Things. This means the judge won’t be in control of everything.
  2. Expect Unfavorable Decisions. There are three directions the judge can go when making a decision: Your way, your spouse’s way, or the Judge’s way. As you can see, two out three are not in your favor.
  3. Let Your Divorce Attorney Do the Talking. Do not speak unless asked to do so by the Judge.
  4. Respect is an Absolute. When addressing the Judge with respect by addressing him/her as “Your Honor.”
  5. Don’t Address Your Spouse. Never speak to or make comments to your spouse when you are before the Judge.
  6. Check Your Emotions at the Door. Do not make faces or gestures when the judge or your spouse’s attorney is speaking. Judges see this and do not appreciate it.
  7. Dress for the Occasion. Your attorney will have a certain strategy on how he/she wants you to be portrayed. Therefore, consult your attorney on how he/she wants you to dress.
  8. Write. Don’t leave anything to chance. Your attorney will be very busy during the process and cannot remember or write everything down.
  9. Come Prepared. Bring as much information, documentation and any pertinent documents that you possibly can with you. It is better to have too much ammunition than not enough.
  10. Be Ready to Wait. You will sometimes wait for hours before your case is called.

Good suggestions. We would also suggest leaving all digital devices in the car. We recall a lawyer whose cell phone rang in the middle of his intense cross examination of our client in a recent trial. The more memorable impression was the expression on the judge’s face.

The Parties, The Lawyers, The Judge And Uncle Sam: The Key Players In Most Divorces

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.

What Is An FENE…And Why Do They Work?

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, we 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?

Division Of Retirement Assets In Divorce: Field Guide To QDROs, SEPs, ESOPs, TSPs And Other Beasts

In addition to homes, automobiles, bank accounts and furniture, retirement plans may be “marital property,” subject to an equitable divisionamong the parties to a divorce.

Many twenty-pound books have been written about the methods of valuing, and dividing, retirement interests. In fact, some lawyers make their living handling only the orders associated with slicing and dicing retirement plans, for two key reasons. First, this stuff is rather confusing, even to the most qualified divorce attorneys, making specialization critical. Second, many family lawyers don’t wish to test the strength of their malpractice coverage by lurking in dark places.

A few key terms to understand:

  • Qualified Domestic Relations Orders (QDRO): An order drafted after entry of a divorce decree that splits ownership of a retirement plan. The plan administrator will have sample language to follow. Learn more about Qualified Domestic Relations Orders.
  • Certified Judgment and Decree: A copy of a final divorce decree that contains the seal of the court administrator, validitating authenticity of the decree.

In an effort to help you get your arms wrapped around retirement interests, we offer the following: (1) common plan descriptions; and (2) method utilized to divide them:

  • 401(k) Plan: An employee contributes a percentage of income to the plan, pre-tax. The employer may match the contribution of the employee in part, or full. Withdrawals are taxed as ordinary income. Withdrawal before 59 1/2 usually results in additional penalties. Divided pursuant to a QDRO. Learn more about 401(k) plans.
  • 403(b) Plan: Similar to a 401(k) plan, but offered by public education organizations and other non-profits. Divided pursuant to a QDRO. Learn more about 403(b) plans.
  • 457 Plan: Similar to a 401(k) plan, but offered by some government employers. Divided pursuant to a QDRO.  Learn more about 457 plans.
  • Deferred Compensation: A portion of an employee’s income is paid at a future date, tax-deferred until payment is received. Many municipal employees, such as police officers, participate in deferred compensation plans. Divided pursuant to a QDRO. Learn more about deferred compensation plans.
  • Employee Stock Ownership Plan (ESOP): A portion of the employee’s salary is used to purchase company stock. The company holds the stock, in trust, for the employee. The employee receives cash, or shares, at time of termination of employment. Divided pursuant to a QDRO. Learn more about ESOPs.
  • Profit Sharing Plan: The employer makes a contribution to an employee’s account, if the company yields a profit, based on a formula. Divided pursuant to a QDRO. Learn more about profit sharing plans.
  • Pensions: Arrangement in which a retired employee receives periodic payments from their former employer, whether a private company, union, the military or government agency. Divided pursuant to a QDRO, or non-qualified DRO. Learn more about pensions.
  • Roth IRA: Individuals contribute to an account held in their name, on a post-tax basis. Growth on investment distributed tax free. Divided pursuant to a certified Judgment and Decree. Learn more about ROTH IRAs.
  • Simple IRA: An employee contributes a pecentage of income to the plan, pre-tax. The employer may match the contribution of the employee in part, or full. Similar to a 401(k), but less expensive to administrate. Divided pursuant to a QDRO. Learn more about Simple IRA accounts.
  • Simplified Employee Pension (SEP): An employee contributes a pecentage of income to the plan, pre-tax. The employer may contribute to the plan. Divided pursuant to a certified Judgment and Decree. Learn more about SEP plans.
  • Social Security: Individuals receive periodic payments from the government when they reach a specific age. Benefits are non-marital and, therefore, not subject to division among the parties. Learn more about social security benefits.
  • Thrift Savings Plan (TSP): Defined contribution plan for federal civil service employees. Similar in nature to a 401(k) plan.  Divided pursuant to a QDRO. Learn more about TSP.
  • Traditional IRA: Individuals contribute to an account held in their name, on a pre-tax basis. Divided pursuant to a certified Judgment and Decree. Learn more about Traditional IRAs.

Any number of other plans may be available to a particular employee, but these are by far the most common. If you have a question about another type of plan, such as a deferred annuity, TSA, money purchase plan or SARSEP, I invite you to contact me at your convenience.

Maryland Judge Awards Couple Joint Legal Custody Of Lucky The Dog

Michelle Lore, a contributing author to the Minnesota Lawyer Blog recently authored a post about the custody decision in Maryland involving…a dog. She reports:

A judge in Maryland recently decided a custody battle with a twist — it was over a beloved pet.

A childless couple heading for a divorce could not agree on who would have the right to keep Lucky, their 16-pound Lhasa apso.

Maryland treats pets as jointly owned marital property that must be sold if the divorcing couple can’t agree on who gets to keep them. The parties split the proceeds of the sale.

But retired Prince George’s County Circuit Judge Graydon S. McKee III, a dog owner himself, didn’t like that solution so he fashioned his own. After hearing testimony from both parties — Gayle, who lives in Alexandria, Va., and Craig, who resides in Dunkirk, Md. — McKee decided that the couple would split custody. Lucky will alternate homes every six months.

Comments seem to make great reading. No exception here. Law Lacky said, “That is nothing. I worked on a divorce case a decade ago that involved ferrets. The divorce decree included weekly visitations and “ferret support.”

In Minnesota, pets are viewed as property, with no clear answer on how to “divide” them.

Minnesota attorney Barbara Gislason, a nationally recognized animal rights lawyer has this to say about pets and custody:

It is an interesting phenomenon that they seem almost invisible in Family Law. Because about 2/3 of households have pets and spend in excess of 40 billion per year on them, and a majority of owners consider animals to be family members, should this continue?

Barbara’s position seems to make sense. I can’t imagine it would take the legislature more than a few minutes to adopt a quick set of standards for the court to consider, including who has been the primarily caretaker of the animal.

Sudden Divorce Syndrome: Two Experts Weigh In

Statistics show that there will be about a million divorces in the United States this year.  Interestingly, 75% are filed by women.  More and more, attorney Robert Mues says, his male clients are telling him that they were completely “blind-sided” by the divorce situation.  These are individuals in long-term marriages who have honored their wedding vows, are not abusers, and had not been separated.

This scenario is becoming so common that some lawyers and psychologists have given it a name: “Sudden Divorce Syndrome.” Mues teamed with noted psychotherapist Donna Ferber to tackle the subject. Great article…and very obvious that significant thought went into it.

In drafting for the Ohio Family Law Blog, they suggest:

Our goal is to present both the legal and emotional perspectives of a trend that we are seeing in our professional practices: long term marriages ending by divorce when the wife has come to the conclusion that she has just “had enough” and that the husband is seemingly caught “blindsided” by the situation. The intent of the article is not a male versus female point and counterpoint, but rather a collaborative discourse that can provide insight into the complexity of the issues.

Check out the Sudden Divorce Syndrome: Reality of Myth article for yourself.