Divorce, Valuation Dates, and Finances

Question:  

Consider for a moment that you and your spouse decided to divorce in May of 2007, separated your households and began living apart, but you did not file for divorce until May of 2009.  You know that your house is worth less than it was worth two years ago.  You may even be under water on the house now, whereas two years ago, you may have had $20,000 or $30,000 worth of equity in your home.  What date is used to value the house in a divorce?

 Answer: 

Under Minnesota law, the valuation date is presumed to be the date of the first regularly scheduled pretrial hearing.  However, parties to a divorce can agree to use a different valuation date.  More importantly, a different valuation date can be used by the Court if it finds that the alternative valuation date is more fair and equitable under the circumstances.   This used to be an issue that was rarely litigated, but with the global economic crisis affecting the value of houses and retirement assets so dramatically, it is now a topic of divorce litigation in almost all of my cases here in Minnesota. 

 Workarounds: 

There are ways around the issue.  For example, with retirement and investment assets, parties can agree to simply split the asset equally without placing a value on the asset.  Or, parties can trade similar assets that have been affected equally by the economy without placing a value on either asset.   What you can work out depends of course on how much cooperation you can get from the opposing party.

 Jennifer Moore
Moore Family Law, P.A.
www.MooreFamilyLawMN.com 

jennifer.moore@moorefamilylawMN.com

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High Net Worth?

Get Divorced Now

 

The January 2009 issue of the ABA Journal (American Bar Association www.abajournal.com  ) contains an interesting and relevant article for our high net worth readers, written by Eleanor Breitel Alter.

 

With thanks to Ms. Alter, here is my take on her article.

 

Ms. Alter, who practices in New York City, cites her own experience of getting a steady stream of high-net-worth divorce clients starting from the time Lehman Brothers failed in September of last year.  From a rational viewpoint, this makes sense:  divorcing when your net worth is down means that you will have less to divide up with your soon-to-be ex, and it means disencumbering yourself when you have major concerns regarding finances, life style, career, and children. 

 

At the same time, faltering markets, unsure markets, down markets all force your hand.  The article cites increased reappraisal of assets and increased scrutiny of values during the divorce proceedings.  Where I office, we are finding increased litigation as spouses do battle over who will get the house that’s under water, the summer cabin that can’t be sold, and the retirement and investment funds they both fear will be worth, in round numbers, zero.  Now can be a good time to quantify these potential losses, come to grips with them, and move on.

 

Furthermore, Ms. Alter points out, there are clients with large incomes and expenditures just as large, at best.  More than one family has been maintaining a certain life style on a deficit, and the consequences of being wedded to a spendthrift, or of being one, are usually painful.  Our experience here in Minnesota bears this out.  We are finding that all the above can combine for a more complex, harrowing, and expensive divorce.

 

Which brings us to another of Ms. Alter’s points — and a hopeful one:  these conditions can also be motivation for both sides of the divorce to work together to come up with a rational, fair, and less traumatic, divorce.  Often, decrees are negotiated with an eye to renegotiating them again when economic and personal conditions change in the future, reducing the complexity and expense of trying to predict what is inherently unpredictable.  It’s up to you.

 

All of which we hope is food for thought.

 

Thomas Moore

Office Manager

Moore Family Law, P.A.

 

Our web site:

www.moorefamilylawMN.com

 

Our email:

mfl@moorefamilylawMN.com

Market Risk and Divorce

April 22, 2009

Market Risk and Divorce

 

One of the biggest issues in divorce involves the liquidity of the assets.  In a typical divorce, there will be a house, bank and investment accounts, and retirement assets.  The house and retirement accounts are not readily convertible into cash (especially in this market).  The bank and investment accounts are cash equivalents.  A good divorce settlement will attempt to match the needs of each party to the liquidity of the assets awarded to them in the divorce.  Thus, if one party will need cash to go back to school or fund a new home purchase, he or she should be awarded enough liquid assets to accomplish this goal.  At the same time, however, market risk is inherent in less liquid assets.  For example, until recently, real estate was a phenominal investment, but in the last year, prices have declined substantially, and there is a chance that it will be difficult to sell the home. 

 

Consider this extreme example of an unbalanced divorce settlement:  http://consumerist.com/5215609/divorcing-a-tycoon-you-win-some-you-win-some  The comments to the story are also interesting reading. 

Jennifer Moore
Moore Family Law, P.A.
(763) 951-7330
mfl@moorefamilylawMN.com
www.moorefamilylawMN.com

Welcome!  Today I’d like to address what’s happening in the legal profession and how it affects you as a client of a family law or probate law attorney.

 

YIKES!  TODAY, IT LOOKS LIKE A CRISIS TO ME

There is no shortage of alarming headlines nowadays about legal matters.  Look at these from the “Legal Strategy Review” published by CPA Global www.cpaglobal.com 

  • The Heat is on (the global economic crisis)
  • Disputes on the Rise (There has been a big rise in wage-and-hour disputes)
  • Opening the Book on Bankruptcy (Bankruptcy filings are expected to jump)

 

Here’s what I think after reading the magazine, with my thanks to the publishers for their inspiration.

 

IS YOUR ATTORNEY FOCUSED ON THEIR STRENGTHS?

The law firms that stay strongest during this economic and social crisis will be the ones planning for it and acting to meet it.  One way to do this is for the lawyer to avoid the temptation to grab just any client that comes along.  What is the smarter, more sustainable strategy is for the attorney to clarify and focus on what she does best, to help you discover those strengths, and to take the necessary steps to ensure that she can actually deliver what is promised.

 

Your focused attorney will use computerization, electronic record keeping, and paralegals and assistants to provide subordinate but necessary services to you (scheduling, discovery, document management) for less than the cost of a full blown attorney.  They will also bring their strengths to bear on your case.  Among these strengths would be:

  • Honesty:  they tell it like it is, as gently as possible – but the tell it.
  • Empowerment:  they work on a strategy that meets *your* needs.
  • Commitment:  they work for your commitment and work to win your case.
  • Concern:  they really do care about you and your goals. 

 

HOW DO YOU FEEL?

These are stressful times.  It pays to be in touch with your rational brain and with your feelings.  If you feel an attorney is just not right for you, keep on looking.  Think about it, yes, but if it does not feel right it probably isn’t.  Some attorneys are pit bulls looking for one pit bull to represent and a third one yet to oppose!  Some are not quite so pugnacious although just as effective advocates for your interests, in their own way.  This is especially true in the area of family law:  divorce, child custody, alimony, child support.  Find a lawyer who fits you in every possible way.

 

YIKES!  I OWE MY ATTORNEY HOW MUCH?

Sad but true, nothing is free.  If your lawyer is doing their homework, they are thinking about such things as the following in addition to your case and those of their other clients:

  • What is my cash flow.  How can I increase it?
  • What are my expenses.  How can I cut them?
  • What is my client base.  How can I identify and recruit them?
  • What are the needs of my clients.  How can I meet them?

 

You will want to hire an attorney who has asked and answered these very questions.  You want someone who has taken the steps to ensure, insofar as possible, that they will not be swept away in a flood of bankruptcy, crisis and broken contracts.  If that happens, they can’t work for you, no matter how high or low their bill is.  If they’re good enough to hire, they’re good enough to pay. 

 

What you want, and what you don’t want, are major determinants of the size of your bill.  Are you unwilling to compromise on any substantive issue?  It’ll probably cost you more in money, time and anguish.  Are you, for instance, bound and determined to get your wedding ring back?  Ditto.  To get what you want in the face of strong opposition, are you willing to pay your attorney an additional $5,000?  $50,000?  More?  Think it through; talk it out with your attorney, and be reasonable. 

 

I hope you have found this informative.  I’m Tom Moore, office manager at Moore Family Law in Plymouth, Minnesota

 

Our web site is at:

www.moorefamilylawMN.com

 

You can email us at:

mfl@moorefamilylawMN.com

 

You can call us at:

763-951-7330

Death and Divorce are Traumatic

 

OK, here you are seeking a divorce, or planning for the death or disability of yourself or a loved one.  You seek out an attorney to handle the divorce, trust or estate.  This is an emotionally charged time for you and your family.  We understand.  Many family law clients are angry, often but not always justifiably so.  Divorce, child custody, child support, property settlement, and alimony are hard topics.  So are probating a will, drawing up a will, crafting the estate plan you want for yourself or your loved one.  No wonder people get angry!

 

 

Not every good lawyer gets every client mad, but a really good lawyer can actually get you more annoyed, not less!  Why?  Because they’re good, that’s why. How do I know?  Look, I’m only the office manager at a small family law firm.  But I have survived a divorce, I’ve taken people to court over civil matters, and I‘m the fly on the wall when the lawyers in the office make legal decisions. 

 

 

What I notice is a lot of difficult communication.  We have attorneys because the law is complex, changing and can be unpredictable in its outcomes.   The law has been around for centuries — and it shows!

 

There are rules and regulations and laws the ordinary person cannot be expected to know about and who can be expected to have a difficult time grasping.  There are doctrines in the law that are so much a part of everything that lawyers and courts do that it can be a culture shock to you, the client, when you find out about them.  For instance in Minnesota family court fairness – not victory — is the point of the proceedings.  Family courts in Minnesota are a really bad place to get revenge.  You can get justice regarding your divorce, alimony, child support, child custody, the division of marriage property, yes; but these are based upon fairness to all parties concerned, especially the children.  You cannot expect the court to base their decisions solely upon your case and especially not on your feelings.  The courts and the laws are required to balance the needs of all parties concerned.

 

 

What a Real Divorce or Trusts and Estates Lawsuit is NOT!

 

If a lawyer is really good, she or he will do things you never thought possible, necessary, or sufficient for your case.  Let me break this down.  First, here are a few examples of what will not happen:

 

*             A real case is not heard in a courtroom resembling “Judge Judy,”

“Law and Order” or “Boston Legal.”  Emotions don’t win cases. Facts, a winning strategy, and understanding and applying the law wins your case.

*             You won’t see someone on the other side break down and jump up

shouting from the witness chair, “Yes, I did it!  I did it!  I lied, lied about everything and I’m glad do you hear me, glad!!!”  Nope, that’

s not going to happen. 

  

*             A real case, especially one in Minnesota regarding family law

(divorce, alimony, child custody, child support, etc.) or one involving trusts and estate (Trusts, estate planning, probate, legacy planning,

etc.)  – is most probably not a celebrity case.  It will not involve a phalanx of attorneys on either side and it will not involve a barn full of evidence and a courtroom full of perky, quirky and technical expert witnesses who work in those really futuristic crime labs like you see on

CSI:  Miami!.

 

*             Your case, with a good lawyer, will probably involve fewer

witnesses, fewer exhibits and less time and emotion, and quite possibly

more money, than you think necessary.   

 

 What a Competent, Caring Family Law or Trusts and Estates Attorney Will Do

 

How come?  Well, here are some examples of what I think a good lawyer would do.

 

*             A good attorney will bear in mind where he or she is practicing

law.  We practice law in Minnesota.  Not only does that involve knowing Minnesota law, it involves knowing what judges here tend to like, and dislike, what the case law is, what juries like, and dislike, and so on.

 

For instance, Hennepin county juries do not usually award large dollar settlements for anything.  

 

*             A good attorney will charge you what they are worth, because a

good attorney has to pay for research, computers, office staff, think time, writing time, and so on.  You get what you pay for.  This does not mean your bill will be astronomical, but it also does not mean you want to retain the cheapest attorney, or that you can make a decision based on hourly rates alone.

 

 

*             A good attorney will carefully craft a strategy and tactics for

the case that will not only be designed to bring you justice but will also be designed to bring you the justice you can afford.  Let me be clear – you may be able to get a settlement more favorable than might ordinarily be expected, but doing so will almost certainly cost you more time, anguish, money, and work than if you get a good, but not astronomical settlement – one you can afford to pay for.

 

 

*             A good attorney who knows the family law and probate courts here

in Minnesota, will present the most telling argument, the most telling strategy, the most telling evidence, in your case.  She or he will not necessarily present all of the evidence you have helped gather and paid your attorney to gather.  Courts do not necessarily need to hear the same conclusion propped up in all sorts of different ways.  The courts are usually most impressed by a tight, cogent and brief argument which they can assume is your best argument.

 

 *            A good attorney won’t just throw affidavits, evidence, and

arguments at your case.  She or he will work to get the sharpest, most relevant argument winnowed out of the mass of emotions and data and paperwork involved.  

 

I hope you have found this informative.  I’m Tom Moore, the office manager at Moore Family Law.  You can reach us at:

 

 

 

Moore Family Law, P.A.

www.MooreFamilyLawMN.com <http://www.moorefamilylawmn.com/>

 

3350 Annapolis Lane North, Suite C

Plymouth, MN  55447

(763) 951-7330

 

mfl@MooreFamilyLawMN.com <mailto:mfl@MooreFamilyLawMN.com>

 

VISITATION AND PARENTING TIME 


Today we no longer call a father’s time with his children “visitation”.  We call it “parenting time”. 

 

A VERY BRIEF HISTORY OF JOINT CUSTODY

James Cook died on February 21, 2009 at the age of 85.  He is considered to be the founding father of joint custody laws in the United States.  In the 1970’s, Cook was going through a bitter divorce.  He asked for joint custody of his son, but was denied because the law favored giving custody of the children to the mother.  He ultimately lost his battle for custody, but lobbied extensively for the joint custody laws that we enjoy today.  http://www.latimes.com/news/obituaries/la-me-james-cook12-2009mar12,0,1547708.story

 

HOW MINNESOTA FAMILY COURTS TEND TO VIEW JOINT CUSTODY

There is still a strong presumption that the mother is the primary caretaker of young children.  This is not codified in anywhere in the law, but is certainly present in the results of disputed custody cases.  Consider that in disputed custody cases, both parents will typically present themselves as being primary caretakers of the children.  In such cases, Courts routinely rely on the impressions of custody evaluators or guardians ad litem to provide investigative feedback as to which parent served as primary caretaker (along with other factors which may not be as gender-skewed).  Then, if the case does not resolve itself after a custody evaluation, the Court (at least in Minnesota), will accept the custody evaluation as evidence in the case, and will take testimony to determine who is, in fact, the primary caretaker of the children.  Any bias by any professional involved in the case may result in a result that is gender-biased against the father–even though the law is gender neutral.

 

WHAT EXPERIENCE TEACHES US ABOUT CHILD CUSTODY

In my experience, these biases are best resolved by carefully establishing through testimony and documentary evidence that my client performs all or many of all the tasks associated with being a primary caretaker.  It is especially helpful if this evidence is objective.  For example, if my client took the children to every doctor and dentist visit, the care provider notes will indicate it.  If my client attended all student conferences, there will be a record of it.  If my client signs off on all the children’s homework, there is evidence.  If my client does all the transportation to and from daycare or extracurricular activities, there may be no documentary evidence of it, but there is probably some testimonial evidence of it. 

 

I would not risk my client’s relationship with his children based on the ideal of the unbiased judiciary.

 

Jennifer Moore
Moore Family Law, P.A.
3350 Annapolis Lane North, Suite C
Plymouth,  MN 55447
(763) 951-7330
jennifer.moore@moorefamilylawMN.com
 

This week, ABC’s Good Morning America had a feature on couples that are going through the divorce process while still living together.  Here is the link to the story:  http://abcnews.go.com/video/playerIndex?id=6912479

Be Careful About Living Arrangements During Your Divorce

I find this to be a very difficult choice for my clients.  Divorce places you in an adversarial situation with your spouse.  You are often fighting over very limited resources.  And it’s not uncommon for the couple to have diverse views about the future.  If you can work out some ground rules that allow you to continue living together, it is a cost-saving option.  Such ground rules should definitely include issues such as sleeping arrangements, parenting time, financial responsibilities, family time, and when/where/how the divorce will be discussed.  You will have to be more adult than your emotions may want you to be.

Think of Your Children

Other cost-saving options include moving in with family or friends, moving in with a room-mate, and renting a smaller apartment than you might otherwise want.  If you have children, ensure that you obtain living arrangements that will permit parenting time.  Your space doesn’t have to be perfect, but it needs to be safe for your children. 

 Thank you!  You can return to www.MooreFamilyLawMN.com for more information on family law, divorce, alimony, spousal support, custody, and child support.  There you will also find information on our will drafting, legacy planning, trusts and estates and probate practice.

 

 

 

 

Agreeing to Valuation Dates

February 18, 2009

You and your spouse have been through counseling and some tough times, and you’ve come to realize that it’s time to separate, or even, divorce.  During this emotionally taxing time, you also have to start thinking about dividing your physical property. 

 

The property you have to consider dividing includes just about everything, including the kitchen sink.  It includes your home, cabin, cars, possibly a boat and a pair of jet skiis.  The property represents a lot of investment of time and money in physical objects.  Further, there are intangible assets that are literally investments, including bank accounts, retirement assets, and investment assets. 

 

Before the recent downturn in the economy, it was relatively simple to determine the value of individual property.  Your home could be appraised, and you could refinance the mortgage fairly easily to buy out one spouse.  You could look up the Kelley Blue Book value of vehicles.  You could talk to your Human Resources director to get a current valuation of your 401(k). 

 

That’s not necessarily the case any more.  It has gotten more difficult to value property that has significantly lost value over recent time.  Setting the valuation date becomes an issue to be fought over, as each of you want a more beneficial valuation date to maximize your share of the property. 

 

Minnesota statute sets the valuation date of property to be divided in the divorce “as of the day of the initially scheduled prehearing settlement conference.”  Minn. Stat. § 518.58, subd. 1.  It is possible, however, to modify that valuation date if “agreed upon by the parties.”  Id.  Further, the court may make “specific findings that another date of valuation is fair and equitable.”  Id. 

 

Ideally, you and your spouse should agree on a date to determine the values of all your property.  This may include talking to a real estate agent to discuss the value of your home, an accountant to determine the value of your physical assets, and a financial advisor to determine the best time to value your intangible assets.  The more you and your spouse can cooperate on this one issue as you move through the divorce process, the more you can save in attorneys’ fees down the road.