Gislason & Hunter Law Blog

In some divorces, a pension or other retirement asset can be a substantial portion of the marital estate to be divided upon divorce. Pensions are structured differently than 401(k) and some other retirement accounts.  With a pension, the recipient receives a set amount per month during retirement.  On the other hand, with a 401(k), money is put into the account during your working years and the money grows, hopefully, so that a certain large lump sum is available for distribution at retirement.

Division of a pension in divorce can be difficult.  Actuarial assistance can be crucial to determine the present value of a pension. Where an early retirement is allowed and the participant has not yet retired, it can be difficult to value and divide the pension in any meaningful way. If the recipient spouse says in the divorce that he will retire at age 65 and the pension is divided as if that asset is only worth what it would be worth if he retired at 65, and then he retires sooner, the spouse with the pension can obtain a windfall that was either not intended by the parties or at least probably not intended by the non-recipient spouse.

To deal with this issue, in the absence of an antenuptial agreement or post-nuptial agreement, the courts have addressed various methods of dividing these accounts:

1. First, the court can simply value the asset as if the recipient spouse retires at age 65 and award to the recipient spouse and award other assets to the non-recipient spouse to make up the difference. If this happens, it is important to reserve the right for the non-recipient spouse to obtain additional amounts of any benefits obtained by the participating spouse upon early retirement to avoid the windfall.

1. Second, the court can award each spouse for example, 50% of the pension. This is a good way to avoid having to value a pension, since it doesn’t matter what the asset is worth if both parties are receiving an equal portion of it; however, and this happens, if the recipient spouse dies before the pension benefits become available, the non-participant spouse could receive nothing. The issue is complicated further if there are survivor benefits and if those are not dealt with properly in the divorce, particularly if the participant spouse remarries.

1. Finally, the court can reserve jurisdiction over the retirement assets and create an equitable division of property at the time the recipient spouse retires. Again, the same concerns apply where the recipient spouse may die before receiving any pension benefits, and the non-participant spouse does not get any benefit as a result.

It is important to have a full and frank discussion with your divorce attorney and financial advisor concerning pension assets, especially pensions that are worth a substantial amount of money, where there has been a long-term marriage, or where the recipient spouse is not yet in retirement.

Andrew M. Tatge is a business and family law attorney with Gislason & Hunter LLP (www.gislason.com) and can be reached at atatge@gislason.com or (507) 387-1115. This information is general in nature and should not be construed as tax or legal advice.

Minnesota divorce lawyers are faced with unique and challenging issues when representing farmers in divorce proceedings, especially when dividing up the marital assets and debts.

Particularly important in light of today’s farmland prices and other issues contributing to the value of the marital estate, a substantial award of cash or equity in a farm to the non-farming spouse can leave the farmer in a precarious position.  Will he be able to cash flow the farming operations?  What if prices of the farm output go down and he can’t afford to keep the operation afloat?  Are there non-farm assets that can be awarded to the non-farming spouse to allow suitable income for him or her to live on without invading the farm or requiring spousal maintenance?  These are just a few of the difficult questions that must be analyzed in connection with a Minnesota farm divorce. 

When negotiating a property division in a farm divorce matter, it is important to take into account the future impact of the property division on the farmer’s income. If farm assets are reduced by a property division that fact should significantly impact the spouse’s income for purposes of not only child support and spousal maintenance, but what is equitable as a division of the property.

One way to keep the family farm is for the previous generation to have gifted the farm or farm assets directly to the family member spouse, and not to the family member and his spouse jointly. In Minnesota, a gift to one spouse and not the other is non-marital property. This is the best way to keep a multi-generation family business or family farm out of the hands of the divorcing spouse.  Antenuptial agreements can be utilized as well, as can tracing assets obtained by the farming spouse before the marriage to argue that those assets should not be divided.

If it is not possible to argue that the farm or farm assets are non-marital and there are not sufficient non-farm assets to divide, then it is vitally important to work with competent Minnesota divorce and business lawyers, financial advisors, accountants, and bankers to determine the best way to structure a “buy out” of the non-farming spouse so that the operation can continue on and support any new debt load it is required to undertake in order to buy out the spouse and ensure that the farm will be a viable business into the future.

There are numerous ways that creative attorneys can create asset and debt divisions which can provide significant advantages to the farm owner while also taking into account the risks inherent in farming and, as a result, make sure that the result is equitable.

Andrew M. Tatge is a business and family law attorney with Gislason & Hunter LLP (www.gislason.com) and can be reached at atatge@gislason.com or (507) 387-1115. This information is general in nature and should not be construed as tax or legal advice.

In my last entry, I talked about the headaches of getting a U.S. passport for a child under the age of 16.  As big of a hassle as the dual parental consent process may be, there are very good reasons for it, which are the topic of this blog entry.

Simply put, the U.S. government doesn’t care nearly as much about people exiting the country as it does about people entering the country.  U.S. border officials don’t routinely check travel documents of people leaving the U.S.  TSA screening rules don’t require minors to have photo ID at airport checkpoints.  Border officials of a foreign country may refuse to let a child enter their country without a valid passport, but relying on another nation’s border patrol to do the right thing can be a dangerous gamble.  One of the reasons the U.S. makes it so difficult for minors to obtain passports is because the passport application is the last real line of defense to keep children from being taken out of the country without both parents’ permission.

As I discussed in my previous blog entry, in most cases, a child cannot get a passport unless both parents consent, either by appearing in person with the child at the passport agency or by signing a special consent form from the Bureau of Consular Affairs.  If you’re concerned that your child’s other parent may flee the U.S. with the child, you can use these rules to protect the child by withholding consent.  Though the other parent may still try to seek a court order allowing the child to travel abroad, you’ll have the opportunity to tell the judge your worries and argue why he or she shouldn’t grant the order.

Additionally, any parent whose parental rights have not been terminated may register their child’s name with the Children’s Passport Issuance Alert Program (CPIAP).  The CPIAP will contact the registered parent if anyone—even a parent with sole legal custody—submits a passport application on behalf of the child.  Such notice gives you a chance to object to the passport application before anyone is able to take your child out of the country.  The CPIAP will also put all U.S. embassies and consulates abroad on notice, in case someone tries to apply for a U.S. passport for the child while outside the country.

If your child is a dual citizen, keep in mind that these safeguards only apply to the issuance of U.S. passports.  The other parent may be able to get a child with dual citizenship a passport from a foreign embassy or consulate within the U.S. without your permission or knowledge.  In such cases, your attorney may be able to help you work with a foreign embassy.  If your child already has a passport and you’re concerned that the other parent may abduct him or her, you can request the court hold your child’s passport.  Talk to an attorney about any concerns you may have with your child traveling abroad.

Kaitlin M. Pals is a business and estate planning attorney with Gislason & Hunter LLP (www.gislason.com), who also practices in the family law areas of assisted reproductive technology, adoption, and guardianships. Kaitlin can be reached at kpals@gislason.com or (507) 354-3111. This information is general in nature and should not be construed as tax or legal advice.