Having friends scattered throughout the country has shown me just how drastic divorce proceedings and turnarounds can be. My friend in Baltimore, Maryland, who was married for 5 years with no kids, had no battles over property division, and her divorce still took just over 2.5 years to complete, including a mandatory year of separation before filing (this law has since changed recently for those without children). A friend in Milwaukee, Wisconsin, her divorce with one child and a business involved, took just 6 months to the date. And my good friends (haha), Miranda Lambert and Blake Shelton’s Oklahoma divorce after four years of marriage complete with pre-nup and no kids, took just days from when they filed. Here in Minnesota the length of time to complete a divorce depends upon several things, including custody, parenting time, child support, and division of debts and property. It can take anywhere from about 6 weeks to a year and a half or more, depending upon whether the parties are cooperating, and depending upon the issues involved. The length of a divorce also largely depends on how the case is resolved. For example, divorcing collaboratively, where both party’s attorneys agree to settle without going to trial and the underlying threat of litigation, can significantly reduce the time it take to complete the divorce for several reasons, the biggest factor being avoiding months awaiting a divorce trial. Divorce is the time to practice patience, and to always prepare yourself for the divorce process to take longer than anticipated. Even in our instant gratification society where you can have Amazon deliver within the hour, your divorce could take months to years. No matter how long your divorce proceedings may take it is important to remember that divorce never really ends with a “victory” by either party. Both parties typically leave the marriage with substantially less material wealth than they started with prior to the divorce. Occasionally, you may hear about a spouse receiving a very large settlement or substantial alimony compensation. But more commonly, both spouses must compromise in order to reach an agreement. If there are any real “winners” in the process, it’s those who maintain positive relationships with an ex-spouse so that they are able to successfully co-parent their children.
When contemplating the pros and cons of getting divorced, I doubt anyone ever puts in the pros column “easier to claim Social Security Spousal Benefits”. Some people may not even realize that they can get Social Security spousal benefits based on their ex-spouse’s work record. Below are some of the basics of claiming spousal benefits after divorce. Social Security spousal benefits, whether married or divorced, are calculated to be 50% of the spouse’s Primary Insurance Amount (PIA) at their Full Retirement Age (FRA). That is 50% of the benefit amount the ex-spouse would receive if they applied for benefits sometime after their 66th birthday (currently). In order to be eligible to claim spousal benefits on an ex-spouse’s work record, one has to be over age 62 and so does the ex-spouse. The marriage has to have lasted at least 10 years and one has to be divorced for 2 years. Finally, one cannot have remarried and it doesn’t matter if the ex-spouse has remarried. The advantage of being divorced and claiming spousal benefits is that the ex-spouse does not need to be receiving benefits. Married couples have to undertake some complicated paperwork machinations if one spouse wants to claim spousal benefits while the other spouse continues to work. A divorced person doesn’t even need to interact with their ex-spouse to claim benefits based on that person’s work record. One has to provide the ex-spouse’s social security number, a marriage certificate and a divorce decree to claim spousal benefits. The ramifications of claiming spousal benefits prior to your own FRA should be thoroughly understood before applying early. The same reductions in benefits that affect anyone applying for benefits before their FRA also apply to spousal benefits. For example, an ex-spouse claiming spousal benefits as early as possible – age 62, will have their benefit reduced by approximately 25%. Instead of receiving 50% of their ex-spouse’s PIA, they will receive approximately 35% of that benefit. Another important consequence of applying before one’s own FRA is that social security actually awards benefits based on one’s own work record. If the spousal benefit is greater than one’s own benefit, social security adds the difference to one’s own benefit instead of solely awarding spousal benefits. There is a misconception that one can claim spousal benefits prior to their FRA, let their own benefits continue to grow and switch to their own benefit later. Since social security is actually awarding one’s own benefit for a claim prior FRA, this strategy not possible. The good news is that one can do the switching strategy after their FRA. We have helped divorced working women who have reached full retirement age claim spousal benefits based their ex-husband’s work record. They can receive spousal benefits beginning at their FRA until age 70, while their own benefits continue to grow. By delaying claiming their own benefits until age 70, social security automatically increases their benefits 8% for each year they delay past their FRA. Continuing to work may increase their benefit even further. An additional advantage of waiting to claim benefits until after one’s FRA is that benefits will not be reduced if still working. Anyone claiming benefits prior to their FRA and earning over $15,000 in W-2 income from a job will likely see their benefits reduced. After one’s FRA, one can work without a reduction in benefit and as already mentioned may see their benefit increase. Social Security is a complex program, so whether divorced or married, it is best to meet with a financial advisor to discuss when to take social security before applying for benefits.
Prenuptial agreements – “What’s Love Got to Do With It?” For people planning their wedding, the thought of entering into a prenuptial agreement may seem unromantic and pessimistic. It addresses what would happen if your marriage doesn’t work out. But a well thought out prenuptial agreement can give you and your spouse control over the terms of your divorce, if that should happen, helping you avoid future litigation, and it also can be a process for discovering your expectations and views about financial issues. In Minnesota, to enter into a valid and enforceable prenuptial agreement, you must sign a written agreement before two witnesses and a notary public before you are married. The agreement must include a full disclosure of each person’s income and property and a statement that each has had an opportunity to consult with legal counsel of their choice before signing the agreement. The better practice is to enter into such an agreement well before the wedding date so each of you has an opportunity to consult with their own attorney. The issues which are most often addressed in prenuptial agreements are deciding how property and debts existing at the time of marriage and acquired during the marriage will be divided in the event of divorce. Some agreements address whether there will be spousal support (alimony) awarded in a divorce and how much will be awarded. These agreements are generally enforced by Minnesota courts unless there are extreme inequities resulting from enforcement at the time of the divorce. Agreements on child custody and child support are not enforceable as part of prenuptial agreements in Minnesota. The court in a divorce examines the best interests of the children at the time of the divorce in deciding who should have custody, what the parenting time should be, and how much child support should be paid. Couples who have acquired substantial assets before the marriage, who have been married before and have children, or who want to preserve their estate plans for their adult children from previous marriages, enter into prenuptial agreements to ensure that their goals and financial expectations are followed in the event of a divorce. These are not the only couples who may need prenuptial agreements. For example, with the recent legalization of same-sex marriages in Minnesota, some-same sex couples contemplating marriage may need to consult with legal counsel to learn the differences in how their income and property will be treated once married under Minnesota law and whether a prenuptial agreement may be appropriate. Professionals are available for consultations on these issues. The collaborative process gives couples (not the court) the power to shape their future financial destiny. The collaborative process also ensures that the needs and interests of each person are addressed, with full disclosure of financial information, advocacy for each person and neutral professional financial and other advice. Making sure each of you have the information you need is what love has to do with it.
A recent article in Time Magazine called The End of Alimony discusses some of the potentially unfair and unrealistic outcomes that can result from the current family legal system. The example highlighted in the article discusses a second wife having potential responsibility to her new husband’s ex-wife for alimony payments. The article looks at both sides of the equation – the new wife having unforeseen and unwanted obligations and the first wife having financial struggles and dependence on this additional source of income. It is no doubt a complicated issue. Many issues in divorce are complicated. The challenge in court cases is often to balance the rights of the participants with the need for efficiency and structure in the law. Courts do not always have the time and resources to give every case the attention it needs to find unique and realistic resolutions. Unfortunately, there are rarely one-size-fits-all resolutions. Collaborative law provides an alternative. In divorce, the collaborative law process provides for unique outcomes that are tailored to the individual situation of the couple. A good collaborative team can gather the information needed and then take a 360 degree look at resolutions to take unforeseen circumstances into account. Where the courts may have formulaic outcomes in mind, collaboration can lead to outcomes that can change as circumstances change. Alimony or spousal maintenance, for example, does not necessarily need to end upon remarriage (as the law often presumes). Perhaps the parties agree to look at the realities of new partnerships and see if there are ways to find resolutions that take everyone’s interests into account? The resolutions may not be perfect, but they are reached together with all stakeholders at the table.
Wow, the phrase “First vs. Second Wives” makes me cringe. There is so much wrong with it, or at least so much to dislike or be uncomfortable about. Let me count the ways (Keep in mind that this is in the context of Spousal Maintenance). It implies that there will be another wife after the first, which is a fair assumption, but still. It implies that the first and second wives will be at odds with each other over money, which is unfortunate and sad to think about. It implies that the husband, at least in his first marriage, is the breadwinner. In our culture of perceived independence and self-sufficiency, it may strike us as dependent and therefore inconsistent with current cultural standards. It uncomfortably reminds us that many spouses, most likely the wife and often for good reasons, give up career and educational advancement, and so their future financial independence and self-sufficiency, to stay at home with children for the benefit of the greater family. Then, if they divorce, they are in big financial trouble without consistent and lengthy financial support from their ex. I’ve seen many couples divorce where the breadwinner doesn’t want to or just won’t acknowledge the homemaker’s non-financial contribution to the family and opportunity cost of being out of the workforce or taking a lower-paying, more flexible job. I’ve also seen many cases where the homemaker never left home after the kids were older, when it would have been more appropriate to find employment, because re-entering the job market was likely the original marital intent. There is an interesting article in Time magazine’s May 27, 2013 edition titled “The End of Alimony” and a short radio segment, along eerily similar lines, on NPR titled “Alimony Till Death Do Us Part? Nay Say Some Ex-Spouses.” The basic premise of each is that there is growing momentum (but I’m not aware of any such movement in Minnesota) to limit Alimony court awards, or what we in Minnesota call “Spousal Maintenance.” The irony cited is that while ex-husbands used to be the only ones against Alimony, now second wives are also organizing to do away with Alimony, which their husband’s are paying to their ex-wives. The result, it is argued, makes for a pretty large constituency which legislators ignore at their own political peril. There is no Spousal Maintenance calculator in Minnesota. Instead it is a case-by-case, facts-and-circumstances analysis. One of the hardest, and grayest, part of the law in divorce is Spousal Maintenance. It often feels like pulling teeth to get a higher-earning spouse to even acknowledge that the lesser earning spouse has any reasonable financial need. Striking a balance to reach a fair outcome is the key. Traditionally trained attorneys, in my opinion, often do a terrible job addressing Spousal Maintenance. Just bringing it up is likely to start a battle that is out of proportion to the reasonableness of the request. That’s why Spousal Maintenance is a great issue to address with a Collaborative Divorce, because at the beginning of a Collaborative Divorce the attorneys and other professionals help the spouses identify their financial resources and shortfalls by analyzing their budgets in relation to their incomes. They also help the lower earning spouse explore their future career options (including going back to school) and therefore their reasonable financial need. The answer is not usually “yes” or “no”, in black and white. The initial answer is almost always “let’s evaluate this”, which is appropriate given the complexity of the question and the importance of the answer.
Spousal maintenance, or alimony, is one of the most difficult issues in divorce. How much? How long? Can it be modified? These are the questions that must be answered by divorcing couples. Faced with having to support two households rather than one, money is usually tight. Both parties wonder if they’ll have enough, creating fear all around. Clients ask me, “What would a judge do in my case?” The Minnesota spousal maintenance statute instructs the court to “consider “all relevant factors, including” and lists eight such factors. Predicting how a particular judge will apply the statute in a particular case is impossible. Looking at previous decisions in other cases involving the issue of spousal maintenance can also prove frustrating. Few cases are actually decided by the courts, and the facts in every case are unique, making comparison difficult. Minnesota is not alone in its lack of guidance on this issue. A recent article in the Wall Street Journal reported that several states are currently considering proposals to amend alimony laws. Some of the proposed changes include creating formulas to determine the amount and duration of spousal support. Others call for an end to permanent alimony altogether. While consistency and predictability are admirable goals, I question whether new legislation will produce fairer outcomes. Asking a judge to apply the law can be frightening. Having to live with a third-party’s decision can create resentment. So how can divorcing couples resolve this difficult issue without giving up control of the outcome? The Collaborative divorce process uses interest-based negotiation to guide discussion of spousal maintenance. A financial neutral (hired jointly by the parties) guides them, using the following steps:
- Help both parties identify their goals and interests
- Gather all relevant information regarding income and budgets
- Generate settlement options
- Evaluate settlement options
- Put the agreement into writing