Gislason & Hunter Law Blog

Reading your divorce decree is not exactly a fun task.  Not only is reviewing the document dissolving your marriage emotionally difficult for many people, the documents are usually full of "legalese" and not always drafted with any eye toward making the document easy to read.  For complex cases, there may be more than one document to read of the parties agreed to "bifurcate" or deal with property issues separate from custody and parenting time, for example.  Complex cases can result in divorce decrees that look like (and weigh as much as) a book when they are done.   

It would be a big mistake to avoid reading and understanding these documents just because they are complex or picking them up causes a flood of emotions.  These documents guide and direct much of your life going forward, whether it is when and how you must pick up and drop off your kids in the absence of an agreement with your ex-spouse or under what circumstances and when  your ex-spouse has to chip in for unreimbursed medical expenses, you need to know and understand what your divorce decree actually says.  If you don’t understand something, call your lawyer and have him or her explain it to you—preferably before you sign it.

Andrew M. Tatge is a partner and chair of the Family Law and Divorce Practice Group at Gislason & Hunter LLP (www.gislason.com).  He regularly represents farmers, business owners, professionals, and other high earning and high net worth individuals (or their spouses) in divorce and related actions.  Andrew 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 Minnesota divorce cases, trial judges have significant power to determine when and how to award marital assets.  Rarely are their decisions overturned on appeal.

Even before a divorce is final, judges have the power to permanently divide or dispose of marital assets.  If a judge believes it is necessary to preserve marital assets, the judge can order a sale of the homestead (or sale of any other marital asset—including business interests, farm land, etc.) and can also dispose of the funds from that sale as the Court deems fair and just.  The judge may also make a partial distribution of assets to one party or the other for good cause shown.  “Good cause” is hard to define, but most judges would probably say that they know it when they see it.  

Pre-decree sale and disposition statutes give judges the power to preserve assets, protect the parties’ interests, and otherwise "keep things fair" while a divorce case moves through the system.  Of course, the parties are free to avoid judicial involvement and divide or protect their assets on their own, but to do so requires cooperation.   

Andrew M. Tatge is a partner and chair of the Family Law and Divorce Practice Group at Gislason & Hunter LLP (www.gislason.com).  He regularly represents farmers, business owners, professionals, and other high earning and high net worth individuals (or their spouses) in divorce and related actions.  Andrew 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.

Many time, a significant discussion needs to occur early on in a divorce case about the possible benefits of securing expert witnesses to help with the divorce. 

In divorce cases, the expert witnesses needed may vary.  Expert witnesses can include real estate appraisers, forensic accountants, business evaluation experts, and vocational experts, among many others. Many clients want to hold off on retaining expert witnesses and try and settle a case without them in order to avoid the cost. Sometimes that works; however, in a lot of divorces—especially those involving complex assets, significant income, or a high net worth—that is not the right move. This is because expert witnesses add value. They help the attorneys prepare for temporary motion hearings and settlement discussions. They narrow down the issues and can provide credible expertise and testimony to a case.

Instead of thinking of an expert witness as a cost, think of an expert witness as someone who can add value to your case.

Andrew M. Tatge is a partner and chair of the Family Law and Divorce Practice Group at Gislason & Hunter LLP (www.gislason.com).  He regularly represents farmers, business owners, professionals, and other high earning and high net worth individuals (or their spouses) in divorce, business, and related legal matters.  Andrew 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.

It’s very common for wills to grant property to a particular person, then add that if that particular person doesn’t survive the testator (person who makes a will), the property goes to that person’s “descendants.”  “Descendants” (or sometimes “issue”) is an extremely important word in many wills, but what does it mean?  The short answer is, it means whatever your will says it means, so you need to make sure the definition in your will matches your intentions.

Who Am I Excluding From My Will If I Exclude “Illegitimate” Descendants?

Particularly in older wills, it’s common for the definition of family terms like “descendants” and “issue” to specifically exclude “illegitimate” children.  For example, one option in the Minnesota CLE Drafting Wills and Trust Agreements (6^th Ed.) suggests:

“Descendants” means all persons who are lineally descended from the person whose descendants are referred to (including legally adopted lineal descendants) but excludes illegitimate descendants and their descendants. For the purposes of this Will, an illegitimate descendant is a person (other than an adopted descendant) whose biological parents were not married at the time of such person’sconception or anytime after such conception and prior to the Settlor’s death.

This definition meets the needs of many families, but that’s not the right question to ask when making your will.  You want a will that meets the needs of your family.

First, the term “legitimacy” may not accurately reflect who you consider a part of your extended family and intend to remember in your will.  According to the National Center for Health Statistics, 41% of all U.S. births in 2009 occurred outside of marriage, up from 11% in 1970.  Changing social trends in the acceptance of non-marital relationships also mean that more of these babies are being accepted as “part of the family” by grandparents, aunts and uncles, and other extended family members.

Even more dramatically, both the law and society in general are shying away from treating non-marital children differently from marital children.  Note that the above definition of “descendants” wouldn’t disinherit a descendant that had a non-marital relationship, which the testator may disapprove.  It would disinherit the child born from that relationship, who did nothing to “deserve” disinheritance.  If that is not your intent, you may want to consider a definition of “descendants” that doesn’t use a term like “legitimate” at all.

Second, if your will has a clause excluding “illegitimate” descendants from inheriting, does your will define what “illegitimate” means, as the example above does?  Some wills—particularly older ones—may not, assuming that everyone would understand and agree on what “illegitimate” means. 

That’s not the case anymore.  The words “legitimate” and “illegitimate” are no longer used to describe children in the Minnesota Statutes.*  Some older definitions of the word “legitimate” even exclude children whose parents marry after the child is born.

Third, even if your will defines “illegitimate” the way the above example does, children resulting from some modern family structures don’t always fall neatly into either the “legitimate” or “illegitimate” category.  For example, what if a child only ever had one “parent” in the legal sense, such as when a single woman has a child using a sperm donor?  What about a child born to a same-sex couple who are married under the laws of one state, but not under the laws of the state where the testator lives, or maybe even where the couple lives?

Or what about a situation like that in Astrue v. Capato, a recent Supreme Court case involving a widow who, with his permission, used her late husband’s frozen sperm to have children born two years after his death?  Technically, those children are “illegitimate” under the example definition above.  The widow wasn’t married at the time of the children’s conception or afterwards, because you can’t be married to a dead person.  Would the late husband’s parents really intend to disinherit their biological grandchildren in a situation like that?  

How Should I Handle So Many Different “What If’s” in My Will?

If all of these questions feel too overwhelming, you may want to consider having broader definitions in some places in your will than in others.  For example, you may know you and your spouse only have “legitimate,” marital children, but you don’t want to accidentally disinherit a great-grandchild just because, years from now, one of your grandchildren might have a child in one of these less-traditional ways.  In that case, you could ask your attorney to limit the definition of “children” in your will, but have a broad definition for descendants in later generations. 

The truth is, you can’t expect to foresee exactly how your extended family will grow and change over time.  That’s one of the reasons why it’s important for you to talk to your estate planner on a regular basis.  Explain your definition of “family” and what your intentions are in limiting who is included in your will.  And if you already know that someone in your family has a non-traditional family of their own, tell your estate planner.  Part of an estate planning attorney’s job is to come up with a will that best fits your desires and your family, no matter how traditional or unique your family’s structure may be.

*The preferred term for children born outside of wedlock—and the one Minnesota Statutes now uses—is “non-marital children.”

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.

In Minnesota, divorces involving farms and farming operations can be some of the most complex and difficult matters to resolve. In addition to the emotional issues concerning the family farm or a farming operation that has been in existence for some time, there are also significant financial and cash flow considerations to take into account as well.

It is vitally important when negotiating and resolving a property division involving a farm to understand the nature and character of the farm assets and to take into account issues of cash flow and valuation. Particularly in the current economic climate, the substantial value of a farm operation may be tied up in the land—which the farming spouse needs to retain in order to continue operations. If there is a lack of significant liquid or other assets to divide or transfer in exchange for the land, a circumstance can arise where it is impossible to equitably divide the marital estate at the time of divorce, meaning that payments will need to be made in the future to provide an equitable division. When this occurs, some of the many details which should be discussed and addressed include the following:

• The amount of payment.

• The payment schedule. For example, will payments be made on a yearly basis, monthly basis, or some other schedule?

• Will interest be paid on the principal of the outstanding amount or not?

• Will there be a lien on property awarded to the farming spouse to ensure payment of the cash settlement? Are security agreements and other documents necessary to adequately protect the spouse who will be obtaining future payments in exchange for the farming spouse being awarded the farm assets?

• Should assets awarded to the farming spouse be titled in his or her name immediately, or should that transfer be delayed until sometime in the future?

• Should there be option agreements or are other sophisticated transactions appropriate or desirable between the parties?  If so, what are the triggering events?

• What happens if the farming spouse does not pay? Should there be specific provisions about the other spouse obtaining assets through repossession or some other consequence, including payment of attorney’s fees, indemnification, etc.?

• Should spousal maintenance be reserved until the cash settlement is paid in full?

Many times it is necessary or appropriate for divorcing parties engaged in a farming operation to enter into settlement agreements which allow cash flow to the farming spouse and a reasonable and equitable payment over time to the non-farming spouse. It is important to understand and work with experienced attorneys who regularly represent parties in farm divorces to adequately protect your interests.

Andrew M. Tatge is a partner and chair of the Family Law and Divorce Practice Group at Gislason & Hunter LLP (www.gislason.com).  He regularly represents farmers, business owners, professionals, and other high earning and high net worth individuals (or their spouses) in divorce and related actions.  Andrew 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.

If you’ve been paying attention to what Congress is (or isn’t) doing this year, chances are you’ve heard that several advantageous estate and gift tax provisions are set to expire at the end of this year.  However, it’s less likely you’ve heard that the adoption tax credit—one of the largest tax credits available to families—is set to expire for most families at the end of 2012, too.

Aside from being one of the largest tax credits, the adoption tax credit has a history of being one of the most changeable and confusing credits as well.  In 2011, the credit was a refundable credit of $13,360 per child.  In 2012, it decreased to $12,650 and became non-refundable—meaning that if the adopting family doesn’t have $12,650 in federal tax liability in 2012, they won’t receive a refund for the unused balance of the credit, but they will be able to carry the unused balance over and apply it to tax liability for the next five years. 

In 2012 and previous years, the credit has been available for most adoptions except stepparent adoptions.  Families that adopt “special-needs children”—usually children in foster care—have also been allowed to take advantage of the full amount of the credit, whether or not they actually have that much for upfront adoption expenses.

That all changes dramatically on January 1, 2013.  The adoption tax credit will drop to $6,000.  Even more dramatically, this reduced credit will only be available for domestic adoptions of special-needs children, and will only apply to upfront expenses.  Since adoptions from foster care usually have few, if any, upfront costs, very few families will be eligible for the tax credit in 2013.

With only a little over two months left before the credit expires, there may not be that much prospective adopting families can do to take advantage of the credit before it’s gone.  However, if you adopted a child in the past few years and didn’t claim the credit, there may still be time to file an amended return.  The IRS is notorious for auditing returns claiming the adoption credit, so it’s a good idea to consult your accountant and attorney to make sure you have the right documentation to back up your return.

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.

Custody and visitation issues are often the most important and contentious parts of a divorce.  If you and your spouse have embryos in storage at an infertility clinic or other medical facility, the question of who “owns” that stored genetic material may be almost as important as determining the custody of your existing children.

As I mentioned in a previous blog entry, assisted reproductive technology (commonly known as “ART”) law is so new that it’s difficult to say much about it with anything close to certainty.  However, trends in the laws of other states provide a preview of how these disputes could turn out in Minnesota.

(Note: In at least some jurisdictions, a person who intended to be the parent of a child of ART has the same rights whether or not that person contributed a gamete (sperm or egg) to make the embryo.  I use “intended parents” below rather than narrower terms such as “genetic parents” or “spouses.”)

There seems to be a consensus that frozen, unimplanted embryos are not “persons” for purposes of family law.  Courts tend to treat embryos more like property than people, but they also tend to recognize that a disagreement over who gets genetic material that could, in theory, become a child is very different from a disagreement over who gets the good china.  In practice, this means that courts usually give intended parents more opportunity to change their minds about disposition of genetic material than they would have under a normal contract, but the parties’ prior agreements are still important.

Significant trends in other states include:

• If both intended parents are in agreement, their wishes for the disposition of their embryos usually trump those of the medical facility.  The intended parents are responsible for any additional storage costs, though.

• If both intended parents agree in writing as to the disposition of their embryos prior to divorce, their written agreement usually controls what happens to the embryos.  However, some courts, including the Iowa Supreme Court (In re Marriage of Witten), have held that even if there is a prior written agreement, if the intended parents disagree at the time of divorce, the embryos will be placed in storage indefinitely until the intended parents agree on their disposition.

• If there is no written agreement between the intended parents as to the disposition of their embryos, and one parent wants to use them to have a child but the other parent does not, the parent who does not want the embryos used usually wins.

These are very general observations.  There are only a handful of ART cases throughout the country, so courts are very far from addressing all the twists of embryo ownership agreements and disputes.  Also, there is no guarantee that Minnesota courts will follow cases from other states.

These cases demonstrate at least one facet of ART very clearly: it’s not unusual for people to change their minds about what they want done with their genetic material.  Stored embryos created with an ex-spouse’s genetic material may be a person’s last hope of having a biological child, particularly for women.  Because feelings and circumstances surrounding fertility and stored genetic material can change so much, it’s a good idea to continue discussing this topic with your spouse or partner over time. Particularly:

• Though it’s not foolproof, if you and your spouse or partner are undergoing fertility treatments, it’s wise to have serious discussions about what will happen to your embryos if you’re no longer together and to consult an attorney about entering into a written agreement.

• If you’re contemplating or in the midst of a divorce or separation, stored genetic material is definitely something you should talk about with your attorney, even if he or she doesn’t ask you about it.

• Also talk about stored genetic material with your estate planner, both so it’s clear what happens to the genetic material if you or your spouse or partner dies, and so your attorney can make sure that your child will be provided for in your will, even if he or she is born after your death.

To learn more about ART, please visit our main Assisted Reproductive Technology page.

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.

If fraud occurs in inducing a party to enter into a marital termination agreement or settling the parties’ property and debt division, the district court may, within one year of the dissolution judgment, relieve a party from the judgment and grant a new trial or other relief for fraud, misrepresentation, or other misconduct of the adverse party.

It is important to keep in mind that the courts will require an affidavit of the party claiming fraud which presents a question of fact that fraud may have actually taken place. If such a fact question is presented to the court, the court may hold an evidentiary hearing (basically a trial) and can provide whatever relief the court deems appropriate.

Although claims of fraud are not brought in Minnesota very often after a divorce is final, certainly circumstances can occur after a divorce which would lead one party to believe that the other engaged in fraud in disclosing (or failing to disclose) assets or negotiating a martial termination agreement.

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

Many Minnesota divorces today involve couples where one or both are using social media, such as Facebook, Twitter, etc.  It is important to understand that information on Facebook is not private. Even if you remove your spouse from having access to your Facebook page, undoubtedly one of your spouse’s friends or confidants has access or will get access to anything you put on Facebook (same with Twitter, My Space, and any other form of social media).

Little surprises me, but I am amazed at how many screen shots I receive from clients of their spouse’s Facebook page containing damaging information which is both relevant and admissible in a custody or property dispute. The best piece of advice concerning is Facebook and other social medial is to simply delete your page while you are going through a divorce and do not post anything to anyone else’s Facebook or other social media site either. Once the divorce is final, you can go back about your business, but while you’re under the microscope, it is simply not worth it.

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.

The family law portion of my practice is a bit unique.  Usually, when an attorney says she practices family law, she means she practices in the high-conflict areas of divorce law and custody issues between unmarried parents.  My practice, on the other hand, focuses on areas where if I do my job right, everyone will hopefully leave the courtroom happy: adoptions, guardianships, and the emerging area of assisted reproductive technology law.

Assisted reproductive technology—also called “ART”—is any technology that an individual or a couple uses to have a child other than by sexual intercourse.  In legal circles, ART is also known as the “Wild West” of family law.  Technological advances and social changes in the past thirty years have provided more and more families the opportunity to raise children genetically related to one or both parents.  Many states have just started catching up to society with new ART-related legislation, while others make do with statutes written before in vitro fertilization and other fertility treatments were available.

Trying to figure out how that sort of outdated legal framework applies to modern, complex ART arrangements, which may have up to five people directly involved in the creation of a child, can definitely be a challenge.  Advances in ART also raise many new legal and ethical questions, and there is very little consensus as to the answers.  Especially when surrogacy is involved, state laws run the gamut: some states have criminalized surrogacy, while others heavily regulate ART, and yet others favor certain kinds of ART and disfavor others.  Many states have little or no law on the subject at all.

Minnesota statutes only deal explicitly with one ART scenario: intrauterine insemination (called “artificial insemination” in the statute) involving a married couple and a sperm donor.  If a married woman undergoes intrauterine insemination using sperm that is not her husband’s, her husband consents, and certain other conditions are met, the husband is treated as the child’s biological father, and the sperm donor has no parental rights or responsibilities. 

It’s an admirably clear law, but it also only covers a narrow segment of ART.  Does this same rule apply to egg donors?  Embryo donors?  What about single parents, same-sex couples, and unmarried opposite-sex couples who use a donor’s genetic material?  Whose names go on the birth certificate in those situations?  Who gets a hospital wristband when a surrogate gives birth, and who gets to take the baby home?  What kinds of consents and pre-birth agreements among intended parents, surrogates, and donors are legal and enforceable?

Minnesotans almost had a clear statutory answer to many of these questions in 2008, when the state legislature passed a bill that would have made the statute mentioned above apply to eggs as well as sperm, and to all intended parents rather than just spouses.  The bill would have also established a legal framework for surrogacy agreements.  However, Governor Pawlenty vetoed the bill,citing concerns about commercializing surrogacy and not having a best interests of the child test as a part of the statute.

I could write a lot about the pros and cons of the Minnesota ART bill and the rationales for the veto, but that would be a whole blog entry in and of itself.  What I will say is that ART is only going to become more prevalent, and state governments need to update parentage statutes to reflect the realities of family life in the twenty-first century.  Until then, children of ART, their intended parents, surrogates, and donors will have to rely on creative attorneys who have found ways to make the current statutory system work, even though it isn’t designed to handle many ART arrangements.

To learn more about ART, please visit our main Assisted Reproductive Technology page.

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.

In the case of Jacobs v. Jacobs, an unpublished opinion of the Minnesota Court of Appeals filed on July 16, 2012, the Minnesota Court of Appeals discussed the rule that income earned during the marriage, even from non-marital sources such as reinvestment dividends and interest off non-marital investments, are marital property.

In Minnesota divorces, income received during the marriage from non-marital investments is treated differently than appreciation of non-marital assets during the marriage. Income from a non-marital investment, such as interest or a dividend, produced during the marriage is always marital property.  However, determining whether appreciation in the value of a non-marital investment depends on what caused the appreciation.  If the appreciation is due to active efforts of one or both spouses during the marriage, then the increase in value is marital property.  If the increase is attributable to inflation forces or market conditions, the increase in value maintains its non-marital character. Thus, it is important when dividing non-marital assets which have appreciated in value during the marriage to determine whether that was a result of active management or efforts by one or both spouses, or is merely from market forces.

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.

A common question in Minnesota divorce cases, especially where one or both of the divorcing parties own substantial assets or businesses, including farms, is what to do with assets during the divorce (in other words, after the divorce has started but before the court makes its final order).  

Once a divorce is started by service of a Summons, there is a temporary restraining order on both parties requiring that neither party dispose of any assets except (1) for the necessity of life or for the necessary generation of income or preservation of assets, (2) by an agreement in writing, or (3) for retaining counsel to carry on or to contest the divorce proceeding. Also, all currently available insurance coverage must be maintained and continued without changing coverage or beneficiary designation.  If a party violates any of these provisions, he or she will be subject to sanctions by the court.  Minnesota law also provides that parties may not dispose of assets in contemplation of commencing a divorce either.

In Minnesota, each divorce party owes a fiduciary duty to the other for any profit or loss derived by that party, without the consent of the other, from a transaction or from any use by the party of the marital assets.

If a court finds that a party has, without consent of the other, in contemplation of commencing a divorce or during a divorce proceeding, “transferred, encumbered, concealed, or disposed of marital assets except in the ordinary course of business or for the necessities of life, the court shall compensate the other party by placing both parties in the same position that they would have been in had the transfer, encumbrance, concealment, or disposal not occurred.”  The burden of proof to convince a court that the other party has transferred or concealed or disposed of marital assets is on the party claiming that the other person has done so without consent of the claiming party, and that the transfer was not in the usual course of business or for the necessities of life.

If someone does transfer, conceal, or dispose of marital assets, the court, in dividing the marital property, may impute the entire value of an asset and a fair return on the asset to the party who transferred, encumbered, concealed, or disposed of it. Use of a power of attorney or the absence of a restraining order against the transfer, encumbrance, concealment or disposal of marital property is not available as a defense.

This means that hiding assets with family members or friends or selling assets to others at fire-sale prices to injure your soon-to-be-ex-spouse will not work and can come back to cost you substantially.  Think of what would happen if one spouse destroyed the other’s favorite impressionist painting worth $5 million—quite an expensive way to release some anger.  Although it may be fun in the short term, the financial consequences can be dire.

Although Minnesota judges cannot base a property division upon a finding of fault of one party or the other, Minnesota courts have great discretion in determining an equitable distribution of property and a court could certainly find other ways to “punish” one spouse or “protect” the other spouse.

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

What happens when a divorce has been started and one of the parties dies during the divorce proceeding? Typically, the divorce is ended and the case is dismissed. The surviving spouse receives the entire marital estate. There are some protections if a court actually enters a judgment and decree dissolving the bonds of marriage.  In those cases, courts will typically let the remaining asset and debt division to continue and place the decedent’s personal representative in his or her place.

In many instances, we recommend, in consultation with experienced estate planning attorneys, that spouses in the midst of a divorce execute a new will, expressly terminate any Power of Attorney, change their Health Care Directive so that the other spouse does not have the ability to make end of life decisions and, in some cases, sever real estate held in joint tenancy so that the parties are then tenants in common and any interest of one spouse does not necessarily become the property of the other.  These estate planning techniques can be done in anticipation of divorce.

Also, a valid antenuptial agreement can address issues of disposition of marital assets upon the death of either spouse, even if the parties are not in the midst of a divorce.

It is highly recommended to discuss these issues with your attorney early on in the process so that in case the unthinkable happens, you will be prepared and assets can be preserved appropriately.

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 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.

If you plan to take your child anywhere from a fishing trip to Canada to a Caribbean cruise, a divorce can create many complications, especially in getting the Bureau of Consular Affairs to issue your child a passport.  In addition to the normal proofs of identity, photos, applications, and fees, divorced and never-married parents have to work together to get their child’s passport application approved.

Federal law requires both parents to consent in order for a child under the age of 16 to get a passport.  If only one parent consents, that parent must show that he or she has sole legal custody (for example, a court order or a birth certificate naming only one parent) or that the other parent is deceased or legally incompetent.  Any parent who does not appear at the passport agency with the minor must sign a special notarized consent form from the Bureau of Consular Affairs.  If a parent unreasonably withholds consent for the child to travel with the other parent, the traveling parent can seek a court order specifically giving him or her permission to travel abroad with the child.

These days, passports are an essential form of identification for many children.  Passport applications take a long time to process even under the best conditions, so if your child is going to travel internationally, communicate with the child’s other parent well ahead of time.  Even if your child isn’t going backpacking in Europe next month, chances are good that he or she will travel abroad at some point in the future.  If you’re co-parenting a child with someone other than your current spouse, it’s wise to discuss your child’s passport and potential for international travel now, so there are no unpleasant surprises down the road.

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.

In the case of Haefele v. Haefele, filed on May 7, 2012, the Minnesota Court of Appeals made two important determinations concerning S Corporation distributions and calculation of income for child support and spousal maintenance purposes.   

The Court of Appeals held that distributions made by an S Corporation to a shareholder, specifically for the shareholder to serve as a conduit to relay the funds to another business entity for the S Corporation’s legitimate business purposes are not the shareholder’s income for calculating child support and spousal maintenance.  Courts must look at the corporate motive for paying out retained earnings—if there is a legitimate business purpose and the transfer is not found to have been made to avoid paying spousal support or maintenance, then the court should not include the distribution as income.  The Court of Appeals noted that this was a close question of first impression in Minnesota.

Also, distributions from an S Corporation to a shareholder solely for the shareholder to pay his or her share of the S Corporation’s tax liability on retained earnings are ordinary and necessary business expenses, rather than the shareholder’s income for calculating child support and spousal maintenance.  The court of appeals found that because tax expenses are both ordinary and necessary expenses for operating a business, a portion of distributions to an S Corporation shareholder made to cover taxes on his or her share of the S Corporation’s retained earnings is an ordinary and necessary expense required for “self-employment or operation of a business.” As such, reimbursing or paying an S Corporation shareholder for the tax liability associated with the shareholder’s share of corporate income for taxation purposes does not reduce the shareholder’s “personal living expenses” and is not therefore a reimbursement or in-kind payment which should be counted as income under Minnesota statutes.

As a result of the Minnesota Court of Appeals’ legal analysis, it reversed the District Court’s determination and remanded the case for determination of the proper child support payment.  It is unknown at present whether this case will be reviewed by the Supreme Court.  [ed. update:  On July 17, 2012, the Minnesota Supreme Court granted Mr. Haefele’s petition for further review.]

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.

Under the Internal Revenue Code, a transfer of marital property to the spouses incident to divorce is not a taxable event.  The tax basis in the property remains the same and the transfer is treated, for tax purposes, as a gift.

Nonetheless, the issue of taxes is more complex and arises not only in the property division realm, but also with regard to dependency exemption and family support issues, tax credit issues, retirement matters, as well as issues related to unpaid tax liabilities and penalties, including the innocent spouse rule. 

Even in the area of property division, although the transfer event itself is not taxable, taxes can and should play a role in the valuation and disposition of assets which include a likely tax obligation.  Minnesota courts have held that it is not an abuse of discretion for a judge to consider the tax ramifications of a property award in determining what award of the marital estate is equitable.  If an immediate or near-immediate sale of an asset is anticipated and such sale will result in tax consequences, the Court should hear testimony from expert witnesses about the nature of the tax obligation and then give due consideration to the tax consequences in valuing the marital property.

Taxes and tax planning are an important consideration in any high net worth Minnesota divorce as well as divorces where complex valuation, property and income issues are involved. 

Appropriate tax and accounting advice can be very helpful and well worth the cost in many cases.

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 recent years, lawyers have seen an unbelievable increase in the amount of electronic data used as evidence in all lawsuits, including the use of e-mail, internet browsing history, blogs, information placed on social networking websites (MySpace, Facebook, etc.), GPS devices, cell phone and text/instant messaging, computer hard drives and other storage devices, digital photographs, etc.  This increase is due, in part, to technology continuously improving, becoming cheaper, and more available. 

But what impact does electronic data have in a divorce setting?  Several years ago, a survey conducted by the American Academy of Matrimonial Lawyers, 88% saw an increase in the number of cases using electronic data as evidence in the past five years.  That survey found e-mail to be the most likely source of electronic evidence and found wives more likely than husbands to use electronic data.

In relatively friendly divorces, electronic data has very little impact.  However, in contentious divorces, the impact (and increased costs associated with the time, effort and expense of getting the information, reviewing it, and presenting it to the court) can be substantial.

However, courts do not like it when parties attempt to engage in self-help discovery outside of the litigation process.  Depending on what information you are obtaining, you may even be breaking the law since spying on your spouse’s e-mail transmissions, internet usage, or phone conversations may violate state and federal communication privacy and wiretapping laws.  The evidence also might not be admissible in court.  Minnesota’s Privacy of Communications Act specifically prohibits use of intercepted wire, oral, or electronic communications obtained in violation of the Act.  Even if not barred, judges have a lot of discretion and rarely allow illegally obtained evidence.

This does not mean that you divorce attorney can’t or shouldn’t seek electronic information as part of the divorce proceeding.  They can and they should.  Because of the importance of electronic evidence, the legal system has methods in place to allow parties to get information from each other. 

Generally speaking, courts are more than willing to allow parties access to relevant electronic evidence in divorce cases.  Finding out that your spouse failed to disclose assets or other relevant information can be grounds for an award of attorney’s fees or worse.  It doesn’t help the bad actor’s credibility with the court either.

In one case, Husband gave his old computer to the parties’ daughter.  Wife’s attorney had a forensic examination of the computer and found very valuable hidden assets.  In another case, Husband found information on Wife’s MySpace page that allowed him to get full custody of the children.  This and other information on the internet is extremely valuable and as long as it is readily available to anyone, obtaining it does not involve breaking the law.

E-mails are also valuable.  However, intercepting e-mail or stealing your spouse’s password to look at e-mail is probably illegal.  Some courts have found that viewing your spouse’s e-mail after he or she has downloaded it and saved it to the family computer is legal and admissible, but before you do so, you should consult your attorney.  It is never a good idea to begin spying on your spouse, or anyone else for that matter, without having a clear understanding of what you can or can’t do. 

Do not find yourself on the wrong side of federal and state criminal or civil laws (such as trespass or invasion of privacy).  Remember that you don’t get around the law by having a friend or paid private investigator do the illegal act for you.   Almost as important is that the ill-gotten information is not admissible in the divorce proceeding anyway.  So, keep in mind the following: 

• Don’t use spyware or intercept your spouse’s e-mails; 
• Don’t tape your spouse’s conversations without his or her permission unless you are a party to the conversation;
• Don’t plant bugging devices in your house;
• Do leave the information gathering to your lawyer.  In the end, you’ll be glad you did.

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 recent years, due to high divorce rates and a change in family dynamics, there has been a great deal of litigation over grandparents’ right to see their grandchildren. As a result, all states have created statutes authorizing a court to award visitation to a grandparent under certain circumstances

In Minnesota, courts have broad discretion to determine what is in the best interests of a child, including with regard to a grandparent’s visitation time.

Where, as is often the case, the grandparents are the parents of a deceased parent of the child, Minnesota law has created a mechanism for the grandparents to make a request for grandparent’s rights to visitation by filing a document called a petition. The court can grant the grandparent’s request if it finds that visitation rights would be in the best interests of the child and would not interfere with the parent/child relationship. The court will consider things such as the amount of personal contact between the parents or grandparents of the deceased parent and the child prior to the request.

A petition can be filed separately and outside of a divorce, paternity, or other legal action if the minor child has lived with the grandparents for a year or more. If that occurs, and the parent subsequently decides to remove the child from that grandparent’s home, the grandparents may petition the district court for an order granting them reasonable visitation rights to the child. In those cases, the court must consider the amount of contact between the parents or grandparents and the child prior to the petition.

If a petition for grandparent visitation is denied by the court, a grandparent has to wait six months to try again, unless the parties all agree otherwise.

Keep in mind that all grandparents’ rights to visitation are terminated when a biological parent’s rights are terminated and/or the child is adopted by a person other than a stepparent or grandparent. However, if a child is adopted by a stepparent, a grandparent or great grandparent may petition the court for an order setting visitation under certain circumstances.

These visitation laws do not protect only grandparents. Minnesota has extended visitation rights beyond only familial relationships. Under Minnesota law, any person who has cared for a minor, other than a foster parent, for two years or more may petition the district court for an order granting the person reasonable visitation rights to the child. The standard is very similar to that where a grandparent requests visitation rights, and includes a finding that the petitioner and child had established emotional ties creating a parent and child relationship. In such cases, the court is specifically directed by statute to consider the reasonable preference of a child, deemed by the Court to be of sufficient age to express a preference. That usually occurs around the age of 12.

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.

One of the most difficult areas of Minnesota family law (for both lawyers and clients) is spousal maintenance, otherwise known as alimony.  Unlike child support, there is no formula that you can plug numbers into and come away with a good answer. 

Instead, awards of spousal maintenance are based on social norms and public policy—therefore, not entirely consistent, and subject to significant change over time.  In the end, whether or not spousal maintenance is granted may come down simply to what one person thinks is “fair”—and what is fair to one person, is not always fair to another, especially the person ordered to pay.

That said, there are some criteria that the court must take into account when determining whether spousal maintenance should be awarded and, if so, how much. 

Some of those criteria include:

• Does the party seeking spousal maintenance have sufficient assets to support herself?  The court only considers income from the assets awarded, and not an invasion of the asset itself.  So, consider awarding the spouse who might receive spousal maintenance assets capable of producing income (i.e., rental properties, dividend-paying stock, etc.).
• Is the spouse seeking spousal maintenance “self-supporting?”  The court will consider if the spouse seeking spousal maintenance is appropriately employed.  
• What standard of living did the parties have during the marriage?  A higher standard of living during the marriage may show that spousal maintenance is appropriate. 
• Do the children have specific needs which require a parent to stay home or some other reason to justify one parent continuing to be a stay-at-home parent?
• If spousal maintenance is needed, how much? 
• Can education or training allow a party to become self-supporting at some point?
• What is the financial ability of the paying party?
• How old are the parties?
• What is the physical and emotional condition of the party seeking spousal maintenance?
• How long should a party receive spousal maintenance?

In many cases, it is possible to secure a waiver of spousal maintenance as part of an agreement to settle property issues, and sometimes even in exchange for parenting time or custody.

Spousal maintenance is also, generally, taxable income to the recipient and tax deductible for the paying spouse. 

Cases involving spousal maintenance deserve and require a significant conversation with your lawyer about your particular circumstances.  Skilled lawyers, accountants and financial planners can assist in creating a settlement or a court strategy that maximizes the net result to their clients. 

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.

For anyone who owns a business, the topic of what happens to their business upon divorce (especially if it is someone else’s divorce) is crucial.  Here are some tips and suggestions to help you plan for possibility of divorce, so that you can get back to doing business and save some money (and your sanity) in the event a divorce impacts your business. 

You need to safeguard against not only your divorce, but those of your co-owners, investors, as well as your adult children.

Antenuptial Agreement:  If you own a business with your spouse and there are no outside investors or owners, you should give due consideration to executing an antenuptial agreement (otherwise known as a prenuptial agreement) before marriage or a postnuptial agreement if you are already married.

Buy-Sell Agreement:  If you own a business or are an investor in a business which includes multiple persons, you should consider executing a buy-sell agreement.  These buy-sell agreements go by different names depending upon how your business is organized (corporation, limited liability company, partnership, etc.), but the general principles are the same.  The goal of these documents is to provide some certainty to an otherwise uncertain outcome.  They can be used to determine what happens to a business when a person dies, becomes disabled, retires, wants to sell his or her interest in the business, or when someone gets a divorce.

In Minnesota, divorce laws provide for an “equitable distribution” of marital assets.  Equitable does not mean equal, even though most people think it does.  This means that absent an agreement to the contrary, a judge decides how to divide marital assets.  This can cause absolute havoc on a business.  Even if a judge does not award the business interest to a non-participating spouse, at a minimum, the business can be pulled into court and have its business records and practices opened up to the other spouse and potentially the public—appropriately tailored confidentiality agreements and protective orders are of vital importance to protect intellectual property, trade secrets and the like.

These documents are certainly not easy to talk about – especially with a spouse or soon-to-be-spouse, but they are essential to proper business planning.  Your co-owners, on the other hand, should appreciate discussing these matters, since the protections included in these documents benefit them too.

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 Minnesota, couples may enter into agreements which determine what happens to their finances and property in the event that the marriage ends in divorce, separation, or in the event of the death of one of them.  Such agreements are called antenuptial agreements (sometimes referred to as a prenuptial agreement or “prenup”).

In most instances, antenuptial agreements are used to protect assets an individual wants to keep separate from marital property, but these contracts can also be used to determine how marital debt will be paid off, how spousal maintenance will be structured, and what will happen to assets in the event that the spouse in whose name the assets are held predeceases the other spouse.  Some people who have been previously married or have children from before the marriage wish to have an antenuptial agreement to protect and preserve their assets for those children.  The purpose of an antenuptial agreement is not to define what will occur during the marriage. 

The parties can be very creative in drafting an antenuptial agreement; however there are limitations.  For one, a court is not bound to uphold provisions of an agreement which violate Minnesota law.  Certain provisions of an antenuptial agreement, for example, who will have custody, the terms of visitation and/or child support, will be carefully scrutinized by a court at the time of separation and divorce to determine what is in the best interests of the children and whether the support provided is within the laws of Minnesota.  Courts are free to ignore entire provisions of an agreement if those provisions are against the law or public policy.

There are some very important considerations before executing an antenuptial agreement.  For one, be sure to have the agreement signed in advance of the wedding, but close enough in time so that the value of assets and debts are accurate.  That said, the conversation with your soon-to-be-spouse about entering into an antenuptial agreement should happen as soon as possible to avoid any claims of coercion.  The closer you get to the wedding day, the more likely a court could disregard all or part of the agreement if one party is pressured by a short timeline to sign.  Never sign an antenuptial agreement the day of the wedding.

Second, a court can disregard all or part of an antenuptial agreement if there was fraud involved.  If you ask your future spouse to sign an antenuptial agreement do not mislead him or her about your financial circumstances.  That could be viewed as fraudulent. 

Third, make sure your future spouse has a chance to consult with legal counsel of his or her own choice.

Finally, Make sure the agreement is fair.  If a court thinks that the agreement was unfair at the time it was created, it may not be enforced. 

Already married, but think an antenuptial agreement would have been a good idea? You can still enter into such an agreement (called a postnuptial agreement) if the agreement:  (1) complies with the requirements for antenuptial agreements and Minnesota law; and (2) at the time of its execution each spouse is represented by separate legal counsel.

Postnuptial agreements may not determine the rights of any child of the spouses to child support from either spouse or rights of child custody or parenting time.  Also, a postnuptial agreement is presumed unenforceable if either party commences an action for a legal separation or dissolution within two years of the date of its execution, unless it can be established that the agreement is fair and equitable.

In addition to these substantive requirements, there are important procedural requirements.  For example, both “prenups” and “postnups” must be in writing, signed in the presence of two witnesses, and notarized. 

This information is general in nature and should not be construed as tax or legal advice.  Please consult your tax and/or legal advisor for guidance in your particular situation.  The author can be reached at atatge@gislason.com or (507) 387-1115.

An issue of great importance in Minnesota divorce cases is confidentiality.  Confidentiality is even more important for Minnesota business owners, farmers and professionals who have significant assets, net worth and income and do not want publicity or public knowledge of private matters.

It is important for lawyers to understand the heightened need for confidentiality when working on these cases and work diligently to secure a court order and agreement of opposing counsel to keep documents and data confidential, to ensure that accountants, valuation experts, appraisers, and others working on the case obtain only the data necessary to perform the assigned task and acknowledge that they will keep any information gathered confidential to the extent allowed by the Court.

Minnesota business divorce attorneys, farm divorce attorneys, and attorneys representing professionals (doctors, engineers, dentists, other lawyers, and other professionals) should request court permission to file sensitive information and agreements under seal and be creative in securing client confidentiality, even in light of public policy preferring to keep court files open to the public. 

A very important issue in any farm divorce or business divorce is calculation of income because the amount of child support or spousal maintenance a court might award is based, in part, on this figure. 

Calculation of a farmer’s or business owner’s income cannot be accomplished by merely looking at tax returns.  In Minnesota, income from self-employment or operation of a farm or business is defined as gross receipts minus cost of good sold minus ordinary and necessary expenses required for self-employment or business purposes.  Minn.Stat. § 518A.30.  Specifically excluded from ordinary and necessary expenses are amounts allowable by the Internal Revenue Service for the accelerated component of depreciation expenses, investment tax credits, or any other business expenses determined by the court to be inappropriate or excessive for determining gross income for purposes of calculating child support. The person seeking to deduct an expense, including depreciation, has the burden of proving, if challenged, that the expense is ordinary and necessary.  This requires a more detailed analysis than is required for a typical “W-2” employee.  In Minnesota, courts have explicitly recommended employing the use of financial experts in calculating the income of a farmer or business owner.