Jennifer R. Lewis Kannegieter

Divorce

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New York Becomes 50th State to Recognize No Fault Divorce

New York recently became the 50th state to enact some version of no-fault divorce legislation.  No-fault divorce allows couples to seek a divorce based upon an “irretrievable breakdown” of the marriage, “irreconcilable differences,” or simply “things are not working and we want a divorce.”  California was the first state to recognize no-fault divorce in 1970.

Prior to the introduction of no-fault divorce, a person seeking a divorce would have to prove his/her spouse was at fault, based upon such grounds as abandonment or adultery.  A judge would hear these allegations, and the other spouse could provide defenses.  The judge would then make a decision based upon whether the first spouse had proven the second spouse was at fault.  If so, the first spouse was entitled to a divorce.  In some cases, a judge could decide both spouses were at fault, and as such neither spouse was entitled to a divorce.

No-fault divorce allows divorcing couples to divorce amicably and without the need to air dirty laundry or make accusations.

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Divorce and Retirement Assets

In a divorce, marital property is divided between the spouses.  Marital property includes all things that have been accumulated during the marriage, including real estate, vehicles, savings accounts, and retirement assets.  Retirement assets can often be overlooked.  In order to reach an equitable division of property, it is important to understand what assets are available, what the value of these assets are, and what makes the most sense in dividing these assets.

There are many different types of retirement assets.  Some, such as IRAs and 401(k)s are easy to determine the true value just by looking at a recent statement.  While you may be subject to taxes and penalties, the funds in these accounts can generally be liquidated early.  Other retirement assets, such as pensions, can be difficult to determine the value of, and you may need to hire an expert to value these assets.  With a pension there is no way to receive funds until the retirement of the employee.

Once you have determined the value of the retirement assets you and your spouse can figure out an equitable way to divide these assets.  Many times, divorcing couples immediately jump to “we’ll split them all equally” – meaning Husband will get half of Wife’s IRA, half of Wife’s 401(k), and half of Wife’s PERA and Wife will get half of Husband’s IRA, half of Husband’s 401(k), and half of Husband’s pension.  This can cause a lot of headache, and extra expense, when it comes down to dividing the retirement accounts.  Instead of focusing on splitting everything evenly, when developing a plan to divide retirement think about what will be required for the division and what the receiving spouse intends to do with those funds.  You can still reach an equal division of the assets by offsetting the amounts rather than splitting each asset individually.

Sometimes a spouse wishes to use retirement assets after a divorce towards a down payment of a new house or payment of marital debt.  In these situations receiving an award of the 401(k) or IRA will be much more useful than the pension.

Many retirement accounts will require a separate court order specifically regarding the division of that account – a Qualified Domestic Relations Order (QDRO), governed by federal ERISA law.  One QDRO can cost a minimum of $300 each.  Some accounts (such as IRAs) do not require the separate court order, and other accounts (such as PERAs) allow for special language inserted in the divorce decree for division.  You can save several hundreds of dollars by dividing the retirement assets in a way that minimizes the need for QDROs.

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Custody Fights… Over the Dog

In many households, the dog or cat has become an important member of the family. So it is not surprising that battles over Fluffy and Fido are becoming more common in divorce court. However, legally, pets are still viewed as property, and the courts will not make a decision based upon “the best interests” of the pet.

If you find yourself in the middle of a pet custody battle, consider some practical tips:

  • Have a frank discussion with your attorney about the situation and reasonable expectations
  • Try to amicably resolve the situation by talking to your soon-to-be ex or mediating the issue
  • If you have children who are attached to the pet, consider an arrangement for the pets to go where the kids go

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Minnesota Divorce and Bankruptcy: An Introduction

Today’s post is a guest post by Elizabeth Rosar Chermack. Liz is a Minnesota bankruptcy attorney providing compassionate and practical advice to her clients. Liz is the author of the Minnesota Bankruptcy and Housing Blog.

Bankruptcy and divorce often go hand-in-hand. Sometimes financial problems lead to the breakdown of a marriage. Other times the breakdown of the marriage causes the couple to have to file for bankruptcy. When a couple goes from running one household together to living separately, their expenses increase. Now there are two rent payments, two sets of utilities, two kitchens to keep stocked. The process of divorcing can also lead to increased expenses.

Sometimes one spouse may not have been forthcoming about the debt that was incurred during the marriage. The other spouse may feel betrayed when they realize that their spouse hid massive amounts of credit card debt from them. This debt could be in one spouse’s name, or it could be a joint debt. The process of identifying and separating this debt can be a burden.

The current housing crisis has resulted in some divorcing couples choosing to file for bankruptcy. The couple’s house may be “upside down” or “underwater.” If neither party is able to afford the house on their own, a foreclosure or short sale may be imminent. A foreclosure on the first mortgage or a short sale could leave a personal liability for a second mortgage. The combination of the couple’s other debts (credit cards, medical bills, etc.) and the negative equity or remaining liability could be enough to cause the couple to file for bankruptcy.

If a divorcing couple has a high debt load, it is important to learn about bankruptcy. Both a bankruptcy attorney and a divorce attorney should be consulted in order to fully understand the available options. There are important things to consider when deciding whether or not to file bankruptcy, and if so whether to file jointly before the divorce or individually after the divorce. These considerations will be discussed in upcoming posts on the Minnesota Bankruptcy and Housing Blog.

This is the first post in a series about Minnesota Divorce and Bankruptcy. To learn more about the interaction between bankruptcy and divorce and how bankruptcy can affect child support and spousal maintenance obligations, check out http://blog.chermacklaw.com throughout the next week.

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Divorce in the Recession

We have been hearing the word all over the news: recession. Unemployment is up, foreclosures are up, spending is down. In times like these, money and finances are likely a hot topic in many households and something that husbands and wives are fighting about. However, instead of divorce rates increasing during this time, many reports indicate a downturn. This may not be good news for those who are hoping that the recession will help their family reconnect through more stay-at-home nights. The increased tension in a household coupled with the fact that divorces can bear a large punch to the purse has left some frustrated couples with no way out.
With the housing downturn finally starting to shift, however slightly, there may be hope that one of the largest marital assets, the home, will start to regain its former value. On the other hand, there are reports that there will be more foreclosures to look forward to this year and that it will take several more years for the housing market to fully recover. People are continuing to look for work or struggling to make ends meet with their current jobs while their spouse is out of work. With everything so up in the air, it is easy to see why couples choose not to get a divorced during this time. Even those couples who do decide that they want to get a divorce despite financial difficulties often cannot move on entirely from the situation. Some couples are even continuing to live in the same house, despite starting (and even completing) the divorce process, simply because they cannot afford housing elsewhere.
There are several things to consider when deciding whether or not to wait out the recession before proceeding with a divorce. If you are in this position, be sure to consult with a divorce attorney to determine the best course of action in your situation.

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Will We Need to Go to Court for our Divorce?

In some Minnesota divorce cases, parties can get a divorce without ever stepping foot in the courthouse. In order to avoid a court hearing, the parties must reach a complete agreement. If you start the court process and are unable to reach an agreement, you will have court hearings (starting with an Initial Case Management Conference, Temporary Relief Motion Hearing, Scheduling Conference, or a Pre-Trial Conference). But if you and your spouse have a signed Marital Termination Agreement before your first court date, you may never need to go to court.

If the parties have no minor children or if both parties are both represented by counsel when kids are involved, the divorce may be granted without a final hearing. If a hearing is involved (when there are kids involved but not two attorneys, or in some cases where the judge has some concern even though there are no children or there are two attorneys), it will just be a final default hearing. It is a rather simple hearing, typically only the Petitioner and the Petitioner's attorney are required to be there (although the Respondent and Respondent's attorney can be there, and sometimes it is helpful for them to be there). The Judge will want a record of the facts of the case and the terms of the agreement. The Petitioner (and the Respondent if there) will be sworn-in and the attorneys will ask questions identifying the facts and agreements. The signed document will be identified and entered into the record. The Judge may ask additional questions regarding the best interests of the children. And that will be it. The Judge will sign off on the agreement and the divorce will be entered with Court Administration in the next few days or weeks.