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Spousal Maintenance and the Minnesota High Net Worth Divorce Image

Spousal Maintenance and the Minnesota High Net Worth Divorce

Posted by: Andrew M. Tatge

When most divorces in Minnesota end, neither party is able to maintain the “marital standard of living.”  This happens because, not surprisingly, most people do not have a lot of money left over after payment of expenses while they are married and that issue only gets worse when the bills effectively double.

But when a high wage earner gets divorced and there is more than enough money to go around, it is not simply a matter of balancing the paying spouse’s ability against the receiving spouse’s need.  As such, the court’s analysis changes a little bit to determine what exactly is the receiving spouse’s need for maintenance with a full consideration of the standard of living during the marriage.  If you are involved in a divorce and there is more than enough money to go around, it is important to keep in mind the following:

  1. The receiving spouse is normally not required to invade the principal of his or her marital property distribution to pay for reasonable needs. In Minnesota, the courts will require the recipient spouse to use her investments and other marital property appropriately to provide for income (usually interest income and dividends, but sometimes also income from a business).  But the courts do not typically require the party seeking maintenance to change the nature of their investments or to sell the assets they receive as part of the property settlement in order to pay for their own needs.
  2. The marital standard of living is key. If the parties have a high marital standard of living, then, to the extent possible, the spousal maintenance awarded should provide that both parties are allowed the same standard of living after the divorce. Courts have taken into account a number of expense items that go well above the basic necessities. These can include tickets to games and other events such as opera or the theater. It may also include an expense item for savings and donations if those occurred existed during the marriage. Further, the court can award spousal maintenance to pay for other “luxury” items such as country club memberships, expensive vacations, and domestic services such as housekeeping, lawn and garden care, etc.
  3. The court cannot require the receiving spouse to get a job. Judges in Minnesota cannot force the receiving spouse to get a job. They have the equitable power to include the recipient spouse’s earning capacity as part of the overall analysis on spousal maintenance, but cannot affirmatively require anyone to work. For a high earning, high net worth, marital estate where the receiving spouse is out of the work force for a significant period of time and does not have transferable skills and her education and other skills obtained previously have become outmoded, the court may very likely find that the recipient’s ability to generate income from work is speculative and if that is the case, then the court is not required to impute income or otherwise limit spousal maintenance.
  4. Spousal maintenance is different in high net worth cases. It is important to analyze these cases in a different light than cases where the marital standard of living cannot be duplicated post-divorce.

This information is general in nature and should not be construed as tax or legal advice.