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By Melissa Miroslavich and Katrina Viegas

As collaboratively trained attorneys, we often find ourselves in a unique position—advocating fiercely for our clients while simultaneously collaborating with the other side to achieve a mutually beneficial outcome. It’s a dance we’ve perfected through our training in the collaborative process and mediation, and it’s a dynamic that serves our clients exceptionally well, especially when it comes to those sometimes-uncomfortable but essential conversations.

You might be thinking, “Uncomfortable conversations? About what?” Well, if you or someone you know is getting ready to say, “I Do,” let’s talk about prenuptial agreements—or as they’re legally known in Minnesota, antenuptial agreements. It’s a topic that often carries a bit of a stigma, conjuring images of distrust or a lack of romance. But what if we told you that, much like thoughtful estate planning, a prenuptial agreement can actually be an act of love and a foundation for a stronger, more financially harmonious marriage?

We recently found ourselves discussing Minnesota’s updated prenup law, which took effect last year on August 1, 2024. As two attorneys who believe in proactive planning, we immediately recognized the opportunity to shed light on how the collaborative process can transform this often-dreaded task into a positive and empowering experience.

Melissa – Let’s Talk About the ‘Why’ – What Exactly is a Prenup, and Who Benefits?

From my perspective as a legal advocate, a prenup is a vital tool for clarity. It’s a private, binding contract that two people of legal age enter into before marriage. It outlines what happens with your assets and debts if your marriage ends due to legal separation, divorce, or even death. I know, you’re thinking nobody gets married expecting to get divorced, but with financial problems being a leading cause of marital breakdown, having these conversations before the ‘I Do’ can actually strengthen the foundation of your relationship.

Katrina – And from the Collaborative Angle, it’s About Financial Harmony, Not Just Protection.

While it offers legal protection, the beauty of a prenup, especially when approached collaboratively, is its power to foster financial harmony. It’s not just about what happens if things go wrong, but about how you manage expectations and communicate about money during your marriage. For all couples, it can open lines of communication. But if you own a business, help with a family farm, or have children from a previous relationship, it’s especially critical to proactively address the needs and wishes of everyone involved—from your soon-to-be spouse to business partners and other loved ones.

Katrina – Minnesota’s Updated Law: The New Rules of Engagement.

As an attorney, I want to make sure people are aware of the latest changes in Minnesota law. Effective August 1, 2024, two big things happened. First, timing is everything. You now need to sign your prenup at least seven days in advance of your wedding day for it to be presumed enforceable. If you sign it closer than that, it’s not automatically valid. So, procrastination is out when it comes to prenups! Ideally, this process begins at least two to six months in advance of your wedding date, sometimes even earlier.

Melissa – And the Collaborative Spirit of ‘Fairness’ is Still Paramount, Even with Legal Shifts.

The second change impacts how ‘consideration’ is determined. While a prenup is a contract that requires some kind of benefit in exchange for entering the agreement, Minnesota now recognizes the marriage itself as adequate consideration for the prenup to be valid. What this means is, as long as all other legal requirements are met, the court won’t automatically scrutinize the prenup for ‘fairness’ to both spouses. However, in the collaborative process, we still work to ensure the agreement actually feels fair to both parties, fostering a sense of mutual respect and understanding that goes beyond legal technicalities.

Melissa – So, How Do We Get This Done?

When clients come to me needing a prenup, I always lay out their options, including a collaborative process or a more traditional process. The traditional path can involve each partner hiring their own attorney, one side drafts the prenup and offers it to the other side, and we negotiate. It can be effective, but sometimes adversarial. An attorney’s priority is to protect their own client’s interests, not the client’s relationship or future spouse.

Katrina – Or, How We Guide You to a Stronger Start: The Collaborative Approach.

And that’s where the collaborative process shines as the preferred path for many couples. Think about it: you’re planning a wedding, a celebration of two individuals joining their lives together in partnership. Why not choose a legal process that supports that same spirit? As collaboratively trained attorneys, we work with you, not just for you, to transform a potentially stressful legal process into an experience that can actually strengthen your relationship.

In the collaborative model, we help you:

  • Co-Create a Shared Vision: We facilitate open and respectful conversations about your financial future, helping you develop a vision for your marriage that aligns with both your individual and shared financial goals.
  • Receive Individualized Guidance in a Supported Environment: Each soon-to-be spouse receives individual legal advice about their rights and responsibilities. This isn’t about one person winning; it’s about both parties understanding their positions and finding common ground.
  • Bring in Financial Expertise: We often work with a collaborative financial professional. They help you identify and understand all your assets, liabilities, and cash flow, ensuring full and transparent disclosure. This level of understanding is key to making informed decisions together.

Ultimately, whether through the collaborative or traditional process, attorneys draft the prenup, seek consensus from both of you, and ensure it’s signed at least one full week before your wedding day. The benefit of the collaborative process is starting with your goals as a couple, and then drafting, not the other way around.

Want to learn more about how the collaborative process can help you navigate this important step before your “I Do”? Contact Melissa Miroslavich or Katrina Viegas for more information about collaborative prenuptial services and to schedule a no-cost consult. Both Melissa and Katrina have been accepted into the Collaborative Law Institute of Minnesota and are honored to serve on its Board of Directors. Katrina is the current Co-President and Melissa serves as Chair of the Public Education Committee.

About the Authors

Melissa Miroslavich is a dedicated and experienced estate planning and collaborative attorney. She expertly guides individuals and families through the often complex processes of planning for the future. With a compassionate and thoughtful approach, Melissa helps clients navigate sensitive matters, including collaborative prenuptial and postnuptial agreements, ensuring their wishes are honored and fostering peaceful resolutions. Her expertise in both legal strategy and collaborative communication makes her a valuable advocate and trusted advisor.

At Miroslavich Law, we understand that planning for the future requires careful consideration and a personalized touch. Whether you’re in the Twin Cities, or the surrounding areas in Minnesota, and need assistance with estate planning, business succession planning or prenuptial agreements, we are here to provide you with clear guidance and support. Contact Miroslavich Law today to take the first step towards securing your future and finding peaceful solutions.

Melissa Miroslavich, Estate Planning Attorney, Mediator
Miroslavich Law PLLC
Email: Info@MiroslavichLaw.com
Website: www.miroslavichlaw.com

Katrina M. Viegas,
Partner/Attorney & Rule 114 Family Mediator
Beaumier Trogdon Orman Hurd & Viegas Attorneys at Law, PLLP
4 West Fifth Street, Duluth, MN 55806
Ph: (218) 722-1000 | Email: kviegas@btolawyers.com
Website: www.btolawyers.com

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tax imageIt’s important for divorcees to review and adjust their W-4 payroll withholding or start to make quarterly tax estimates following their divorce. Often, they are so relieved to have reached settlement, they fail to think about these housekeeping items. If divorced in 2018, this is especially important if transferring taxable spousal maintenance. The payor spouse can likely change their payroll withholding to increase their net income. The payee spouse will need to withhold additional tax dollars on their salary or make quarterly estimated tax payments, to account for taxes on the spousal maintenance payments received. If the payor spouse doesn’t adjust their W-4, they may not be able to meet their budget during the year and would probably receive a large tax refund when taxes are filed. If the payee spouse doesn’t adjust their W-4 or start quarterly estimated taxes, they could have a large tax liability when they file their return. Even if there isn’t taxable spousal maintenance, individuals still may need to adjust their withholding. Things that can impact taxes and often require an adjustment are a change in their filing status, pre- tax payroll deductions (retirement contributions, health savings account, health insurance premiums), and itemized deductions such as real estate taxes and mortgage interest. Making these adjustments now will help cash flow match what was projected during the divorce process and save the headache later of a tax surprise.
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TaxAs we move into 2019, it’s helpful to know contribution limits and Social Security changes. Individual Retirement Accounts: The annual contribution limits for traditional and Roth IRA’s have increased to $6,000, a boost of $500 over 2018 contribution limits. The catch-up contribution limit for those age 50 and older remains at $1,000. 401(k)s: The annual contribution limits for 401(k)’s, 403(b)’s, most 457 plans, and the federal government’s Thrift Savings Plan have increased to $19,000, a boost of $500 over 2018 contribution limits. The catch-up contribution limit for employees age 50 or older in these plans stays at $6,000 for 2019. SIMPLE IRA: The limit for SIMPLE IRA’s goes up from $12,500 in 2018 to $13,000 in 2019. The catch-up limit remains the same at $3,000 for those age 50 and older.  Health Savings Accounts: The “self-only” annual contribution limit will increase from $3,450 to $3,500 and the “family” annual contribution limit will increase from $6,900 to $7,000 in 2019. Social Security Updates:
  • Beneficiaries will see a 2.8% increase in payments
  • Maximum taxable earnings will increase to $132,900
  • Maximum benefit at full retirement age increases to $2,861 per month
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clockIt is important to review and discuss tax planning for the year in which a divorce was completed, especially for high earning individuals who receive incentive compensation and plan to be divorced by December 31, 2018. As part of the 2017 Tax Cuts and Jobs Act, many tax law changes became effective in 2018. One change was to the flat tax rate that is withheld by companies on incentive income such as bonus income, commission income, exercised stock options, and vested restricted stock. As of January 2018, the federal rate changed from 25% to 22%. The Minnesota state rate remains the same at 6.25%. Most highly compensated individuals have marginal tax rates above 22%, so tax on the above income types is under-withheld. To avoid an unpleasant tax surprise come April 15th, be sure to address this potential additional tax liability and come up with a plan to handle it. Some options to consider are:
  • Estimate the tax liability now and include and allocate it as part of the property division.
  • Include language to share in the tax liability when return(s) are filed next year.
  • Consider whether it makes sense to load-up itemized deductions from the year to the higher earning spouse to help offset liability (i.e. real estate taxes, mortgage interest, charitable contributions).
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Amazon box manOne of the reasons that divorce is such a challenging life transition is its public nature. A couple might keep their problems private as they try to work through them. But if a rift opens that can’t be mended, the couple will have to share some very difficult news with friends and family as they separate from one another. Few of us will have to reveal emotional personal issues to as wide an audience as Jeff and MacKenzie Bezos recently did. The statement that Jeff released on Twitter suggests that he and MacKenzie are trying to make their split as amicable as possible by usin three insightful ideas that could help anyone struggling through a divorce.
  1. Be open and honest with those closest to you.
“We want to make people aware of a development in our lives. As our family and close friends know, after a long period of loving exploration and trial separation, we have decided to divorce and continue our shared lives as friends.” Couples need privacy as they deal with strains on their marriage. But once a decision is made, clear communication with your family, friends, and each other will be very important. That goes double if any young children are in the picture. The more open a couple is about what’s happening, the easier it will be for you to find the outside support that will help you through this transition. Good dialogue might also help you and your former spouse to focus on the essential tasks at hand, like dividing your assets and updating your essential estate planning documents.
  1. Be grateful.
“We feel incredibly lucky to have found each other and deeply grateful for every one of the years we have been married to each other. If we had known we would separate after 25 years, we would do it all again.” Shame, embarrassment, and guilt are common feelings associated with divorce. Playing the blame game or trying to “win” the divorce can quickly turn all those amicable best intentions into bitter personal and legal issues. Instead, the Bezos statement is a reminder that the end of a marriage – especially a long one – doesn’t erase all of the positive things that came before it. If an amicable divorce is possible in your particular situation, then don’t be ashamed or embarrassed. Cherish those precious shared experiences, like the birth of children, happy vacation memories, the difficult times you helped each other through. Embracing these feelings of gratitude will help ease both you and your partner through this process.
  1. Focus on the positives ahead.
“We’ve had such a great life together as a married couple, and we also see wonderful futures ahead, as parents, friends, partners and ventures and projects, and as individuals pursuing ventures and adventures.” When we work through the $Lifeline exercise, we emphasis that important transitions like retirement, children graduating, weddings, and yes, divorces, are ends in one respect, but also new beginnings. They’re the start of new chapters in your life. That might be difficult to see when the pain of a divorce is still raw. But it’s important to open yourself up to new opportunities when they present themselves. You’re about to start your single life all over again. And yes, it’s scary. It may not be what you wanted. And you may be bitter. But over time, you may be able to see what awaits you on the other end. It could be traveling that you’ve longed for. Maybe you’ll relocate, start a new career, begin new hobbies, and meet new people. You might have more financial resources at your disposal to explore solo than you did when you were younger and unmarried. And you might approach these experiences with a more mature and grateful perspective, enjoying every minute just a little bit more fully. We want to help you through all of life’s major transitions, the positives as well as the challenges. If there’s change on the horizon, make an appointment to come in and review the $Lifeline exercise with us. We can help you plan ahead so that the next chapter of your life is the most fulfilling yet.
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Checklist and pen When a joint investment account is divided, the financial institute will use only one Social Security number to report the earnings and thus only one 1099 will be issued for that account. For example, following their divorce, Dick and Jane divided their joint investment account and transferred their own share into an individual investment account solely in their own name, on November 1st. If the “primary” Social Security number on the joint account is Dick’s, he will receive one 1099 for the joint account earnings earned from January 1st– October 31st and a second 1099 for the individual account earnings earned on his individual account from November 1st – December 31st. And, Jane will receive only one 1099 for the individual account earnings earned on her individual account from November 1st – December 31st. If the goal is to share the tax liability for the joint investment account earnings, this can be accomplished in a few ways.
  • The tax liability is projected during the divorce process and an adjustment is worked into the property division.
  • The spouse who received the 1099 adds the investment income to their tax return and language is added to the decree outlining the agreement on how to share the tax liability at tax filing time.
  • The spouse who received the 1099 can “nominee”the correct portion of investment income to the other spouse by filing a 1099 and 1096 with the IRS and furnishing a 1099 to the other spouse.
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doctor w piggy bankIt’s that time of year again, when the trees become bare and days grow short, that one’s thoughts turn to health insurance. That’s right, the open enrollment window for renewing your existing health insurance plan or shopping for a new plan opens November 1st and runs through December 15th, 2018. For Minnesota residents, shopping for insurance means contacting a health insurance broker to get help in comparing different plans. Or, for those whose income qualifies them for financial help, applying and enrolling on the MNSure website. For those who live in states without their own exchange, plans can be compared on HeathCare.gov, the federal government’s national exchange site. Choosing the right health insurance plan depends on your family’s health and understanding which cost-sharing arrangement works best for you. The cost-sharing arrangement is how much you want to pay monthly for the insurance premium plus how much you are comfortable paying out-of-pocket for a doctor’s visit or medical procedure. You can pay less on a monthly basis for your premium if you are willing to pay more out of pocket for a doctor’s visit or medical procedure. The most prominent cost-sharing component is the plan deductible. This is the amount you pay every year before the insurance company pays its first dollar. Choosing a lower deductible amount and pushing the costs onto the insurance company sooner will result in a higher premium. By choosing the maximum deductible allowed, $7,900 for individual plans and $15,800 for a family plans in 2019, you will pay a lower monthly premium. Picking a high deductible plan with a lower premium may make sense for a healthy person who never needs health services, as well as someone comfortable with paying the out-of-pocket amount. Other ways that insurance plans share the cost is with co-pays and coinsurance. A copay is a fixed dollar amount that you pay every time you visit the doctor. That amount may be $30 with a typical insurance plan but it will be lower or possibly waived for a more expensive plan. Coinsurance is where the cost of a medical procedure is shared. The typical coinsurance arrangement kicks in after you meet the deductible amount. Then, you pay 20%, for example, of costs until you reach the maximum out-of-pocket limit amount. Finally, the out-of-pocket limit is the maximum amount that you will pay. It is the sum of the deductible plus the copays or coinsurance that you pay in any given year. Once you hit this limit, the insurance company pays 100% thereafter. This amount is established each year by the government as part of the Affordable Care Act. As noted above, for 2019, the maximums are $7,900 for individual plans and $15,800 for family plans. Once you understand how cost-sharing works, the cost difference between plans comes down to the services and prescription drugs that the plans cover. All plans are required to cover emergency services, hospitalization and maternity care, as well as mental health and substance-abuse treatment, at a basic level. All plans also cover the cost of an annual check-up and preventive care services (such as immunizations and mammograms) with any level of deductible. More expensive plans will also cover a greater level of preventative services, and higher levels of service, such as brand name drug coverage instead of generic-only drug coverage. So, as you rake up the leaves and pull out the winter coats, take time to review your health insurance plan because health insurance season will soon be here!
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architecture-family-house-front-yard-106399It goes without saying, but I’ll say it anyway…divorces are complicated! There are many questions that an experienced mortgage professional can help answer before you finalize your divorce. For example: Can one of us afford the family home or do we need to sell it? Will I have enough income to qualify for a mortgage after the divorce? Is my credit score good enough to qualify? Will I have enough assets to refinance or purchase a new home? Do I have the right job and/or job history for mortgage qualification? What’s my home worth? Will the family home appraise high enough to pull out equity to cover the cash I owe my spouse, or do I need to pull funds from another source? What’s the consequence if my Ex-spouse keeps the home but can’t refinance it into their name after the divorce? What’s the best loan for me post-divorce? Attorneys are not mortgage experts and there are many nuances in the mortgage world that can totally derail the perfect divorce settlement. Rainbow Mortgage Inc. takes a very proactive role in assisting our attorney friends and their clients in making sure their post decree housing goals are met. We help you to (1) make realistic decisions about what is possible, (2) understand your loan options, and (3) structure a mortgage loan focusing on your post-divorce goals. We are happy to help you by participating in client-attorney meetings to discuss potential initial options, provide revised options (if necessary) prior to the final signing of the decree, provide an estimate of what your home is worth using our AVM tool (which is the same tool used by lenders to evaluate whether a value on an appraisal is reasonable) and at no cost to you or your attorney, review the decree prior to it being sent to the judge. Here are a few examples of items in a divorce decree that have caused client issues in the past: (1) The length of time that a person is to receive support payments does not meet lender guidelines to qualify for a mortgage loan. Different loans have different guidelines however, standard guidelines require that a borrower prove that they will receive the income for a minimum of three years following the funding of the mortgage loan. The dates listed in the decree must be carefully monitored and possibly adjusted if the divorce process goes on for an extended period before it’s finalized. (2) Child care expenses are being shared and the decree lists a payment that is to be made monthly to a specified bank account- underwriters will sometimes consider this child support which can throw off a person’s monthly budget causing them to no longer qualify for a loan. Divorces are complicated but the mortgage doesn’t have to be with the right professionals in your corner. We can offer you the help you need and why wouldn’t you take it? Contact us for a FREE consultation and decree review. We only get paid when you are happy with our service and your loan closes. It’s a Win-Win for you!
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Friends for lifeYour divorce is over. It’s time to start sorting through all the things you need to do, to get your financial life in order.  Here are just a few tips to help you thrive financially, as you move into this phase of your life.  Pay Off Credit Card Debt One of the most important steps to achieve your financial goals is eliminating credit card debt. Start by paying off the balance of one credit card at a time, by either:
  • Paying off the highest interest rate credit card first, or
  • Paying off the smallest balance first, then applying that payment amount to the next smallest balance
And, always pay more than the minimum. Build an Emergency Fund Life has a way of throwing financial curve balls. To pay for these unexpected expenses, it’s important to have an emergency fund. A good rule of thumb is to set aside at least 3 to 6 months of expenses in a savings account earmarked for emergencies. This will keep the money “out of site, out of mind” and help reduce your stress level when financial emergencies pop up. Know Your Credit Score Despite its importance, many people don’t know their credit score. Credit scores assist lenders in determining the interest rate you’ll be charged, so you’ll want to know yours and work on improving it. To get your free credit report, visit www.annualcreditreport.com. Reviewing your credit report may also help you catch signs of identity theft early. Start Saving for Retirement We’ve all heard it before, but it truly is essential to start saving for retirement as early as possible. This is because you want to take advantage of compounding – generating growth not only on the original investment, but also on the return you’ve already earned on the investment over time. Compounding allows the potential for your initial investment to grow exponentially. Also, make sure you contribute at least enough to your company retirement plan to get our employer’s match. Don’t pass up free money! Create a Budget Although it’s not always fun, following a budget ensures you will have enough money for the things most important to you. A budget helps you find money to fuel your dreams. Refer to the attached Create Cash Flow* to help you put your budget together. One of the most important things to remember is to pay yourself first! Always set aside money for your emergency fund and retirement before any discretionary expenses. * a chapter from my book Ultimate Women’s Financial Guide to Thrive after Divorce   All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
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questions answers signSpousal support that lasts more than a couple years may be subject to cost of living adjustments (COLAs).  This is negotiated as part of your divorce settlement. As the cost of living goes up, spousal support can increase as well, to meet its intent of maintaining the ex-spouse’s standard of living. Fortunately, the State of Minnesota’s Office on the Economic Status of Women (OESW) provides a booklet that contains a worksheet and instructions for calculating the cost of living increase for spousal support, as well as child support.  The OESW’s A Guide to Child Support & Spousal Maintenance Cost-of-Living Adjustments also has template forms for notifying the paying ex-spouse of the increase and an Affidavit of Service by Mail form. Why an Affidavit of Service by Mail form?  Because if the paying ex-spouse does not increase the support as requested, the affidavit is proof that they had been notified. All these forms and worksheets should also be filed with the court administrator where the decree was filed.  This is a lot of paperwork, but OESW’s guide also has a checklist to make sure all of the involved parties get the correct documents. One additional piece of information needed to complete the COLA calculations is the Consumer Price Index Table.  This table is also maintained and available for download at the OESW website.  The index numbers on this table are used to show the increase in the cost of goods and services over time. These index numbers are used in the calculations to determine how much spousal support (and child support) should increase to keep up.  The table shows over 20 years of data but, if one is being diligent about requesting increases, only the index numbers from the past couple of years should be needed. The Consumer Price Index Table contains sets of price index numbers: the CPI-U shows how much prices have increased on average for the entire United States; the CPI-U MSP shows how much prices have increased in the Twin Cities Metropolitan area.  Your divorce decree will likely indicate which set of index numbers you should use.  Note that while using the CPI-U MSP can most accurately reflect the increase in prices in Minnesota, this set is updated twice a year, in January and July, and it takes an additional month for the updated figure to be published. OESW’s A Guide to Child Support & Spousal Maintenance Cost-of-Living Adjustments is easy to follow and doesn’t require too many calculations.  If you are not good at math or filling out forms, it is a good idea to get help from a financial professional or your family law attorney. Link to the Guide Link to the Consumer Price Index Table