I hope that young children were not still up and watching the *Academy Awards broadcast when Will Smith got out of his seat, walked up the concourse, and forcefully slapped Chris Rock for making a poor joke at the expense of his wife Jada Pinkett Smith.  But even if children didn’t watch it live, they are likely still being exposed to the ongoing coverage and analysis of this startling event on social media and mainstream media.  Disagreement abounds over which man was most in the wrong.  Some posters and oped writers try to justify each man’s actions.  There have been thoughtful critiques about toxic masculinity in our culture, and how it inevitably leads to violence of one kind or another. Many believe Chris Rock was bullying Jada Pinkett Smith by publicly mocking her bald head, especially given her alopecia.  Some respond that comedians insulting celebrities at “star-studded events” and roasts has become something of the norm and is to be expected.  Some say Will Smith’s retaliation was also bullying behavior, since Smith was trained to box like a professional for the film Ali and is much bigger and stronger than Rock.  But others respond that his response was justified to “protect” his wife. (I confess, I thought Pinkett Smith’s grimace of disgust and exaggerated eye roll at the weak joke was a pretty potent response in and of itself). What does this whole event model for our children, who emulate adult behavior?  Is mocking others, especially for things they can’t control, ever justified?  Does saying “Just kidding!” after a cruel remark make it okay?  Should bystanders go along by joining the mocking laughter, or do they have a responsibility to call out bullying behavior? Is lashing out aggressively after a perceived put-down ever justified?  Does being “in the heat of the moment and not thinking clearly” make an impulsive violent response, okay?  Should bystanders go along by saying nothing, or do they have a responsibility to call out violent behavior? What does this event say about how women and girls should expect to be treated?  In the Me Too era, a time when native women have disappeared in shocking numbers, when human trafficking and domestic violence are still huge social problems, we know that women do need the strong protection of laws and social norms.  Is this kind of protection the same or different than what happened at the Oscars? If you haven’t already, I encourage you to watch the documentary “When We Were Bullies.”  This film was also featured briefly at the Academy Awards as a nominee for best short documentary.  Ellen Bruno, the creator of the masterful film Split about the children of divorce was a creative consultant for this film, which is extremely well done.  It focuses on a 5th grade bullying incident and the lingering effects, 50 years later, on those who participated.  Like this essay, it raises important questions and examines context and perspective, but does not aim for simplistic resolutions. As parents and adults who care about children, we need to have open conversations with them, and ask curious questions about bullying behavior vs. respectful behavior and the difference between control and power.  We need to ask ourselves what it really means to create safety for others, and what responsibility we all share when safety is violated.  And we need to always be aware that the most powerful tool in the adult toolkit is modeling the behavior we want our children to emulate and taking responsibility rather than blaming others for any time we (as humans) fall off the high road. *Since this article was written, Will Smith has apologized publicly for his inexcusable behavior at the Academy Awards ceremony.  He has been banned from the Academy of Motion Picture Arts and Sciences and the Awards ceremony for 10 years. Author: Deborah Clemmensen, M.Eq., L.P. is a Neutral Child and Family Specialist in Collaborative Practice and Family Law deborah.clemmensen@gmail.com
Former Minnesota Supreme Court Chief Justice Sandy Keith
            Thirty years ago, in 1990, a family lawyer in Minneapolis named Stu Webb had an idea.  He thought the idea was good enough to share with the Minnesota Supreme Court Justice at the time, “Sandy” Keith.  Stu’s letter of February 14, 1990, to Chief Justice Keith starts out: Dear Sandy, I met you at a party . . . several years ago. Stu did not even know Sandy Keith!  But undaunted, Stu plows ahead: I think I’ve come up with a new wrinkle that I’d like to share with you.  One of the aspects of mediation that I feel is a weakness is that it basically leaves out input by the lawyer at the early stages [of the mediation process]. . ..  By that I don’t mean adversarial, contentious lawyering, but the analytical, reasoned ability to solve problems and generate creative alternatives and create a positive context for settlement.  …[Y]ou and I have both experienced, I’m sure, those occasional times, occurring usually by accident, when in the course of attempting to negotiate a family law settlement, we find ourselves in a conference with the opposing counsel, and perhaps the respective clients, where the dynamics were such that in a climate of positive energy, creative alternatives were presented.  In that context, everyone contributed to a final settlement that satisfied all concerned—and everyone left the conference feeling high energy, good feelings and satisfaction. More than likely, the possibility for a change in the way the parties related to each other in the future may have greatly increased.  As a result, the lawyers may also develop a degree of trust between them that might make future dealings more productive. So, my premise has been:  Why not create this settlement climate deliberately?  . . . I would do this by creating a coterie of lawyers who would agree to take cases . . . for settlement only.  . . . I call the attorney in this settlement model a collaborative attorney, practicing in that case collaborative law.  This little history might end here but Chief Justice Sandy Keith did respond to Stu’s letter(!!): Dear Stu, Many thanks for one of the most thoughtful letters I have received these past months.  Congratulations .  . . on the model you are setting up in the family law area.  . . . I know it will be successful.   . . . I think you have thought it through better than most attorneys and I think it is a very valid model in the family law area. Both Stu Webb and Sandy Keith were pioneers in family law practice.  Sandy was a pioneer in using a mediation process in family law; Stu was a pioneer in creating a collaborative process in family law.  Thanks to them, out-of-court processes—mediation and collaboration—are benefiting clients all over the world.  Sandy Keith—former Minnesota Supreme Court Justice, former Lieutenant Governor, former State Senator, and former family law attorney—died October 3, 2020.  His support of the Collaborative process is not forgotten. Footnote from Stu Webb, 10/6/20: Here is the link to the Star Tribune Obituary of Sandy Keith, who died last Saturday, October 3 at 91!  I could say that Sandy is responsible for releasing Collaborative Law to the world!  In 1990, when I self-questioned the credibility of the concept, I wrote him a letter describing the process and, essentially, highlighting some potential advantages of it over mediation (which was his former practice specialty!)  Instead of defensively ‘shooting it down’, he Immediately sent a short note back, basically saying ‘wonderful, go for it’!  And years later, I had the honor of participating in a Collaborative Law case with him in my home office!  WHAT A GUY!! Star Tribune Obituary \Sandy Keith: https://www.startribune.com/sandy-keith-former-minnesota-supreme-court-chief-justice-dies/572638202/ About The Author Tonda Mattie, has been a Family Law attorney for over 40 years and has practiced exclusively Collaborative Family Law since 2006.  She has been involved in the Collaborative Law movement since 1992.  She has been past President and past Co-President of the Collaborative Law Institute (CLI) of Minnesota.  She has headed the CLI Training Committee as chair or co-chair since 2004.  She is engaged in the practice of her dreams using a collaborative process that 1) allows good people to be their best despite the crisis they are in; 2) is centered on the well-being of the children; 3) creates a safe environment for difficult conversations; 4) focuses on the future rather than on blame and past grievances; 5) identifies and meets the needs and interests of all family members; 6) empowers parties to control and create their own mutual settlement; and 7) creates a climate in which healing can begin to occur. Visit her website at www.mndivorce.com
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.
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).
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 nomineethe 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.
I am a Counselor at Law. I have been for more than 37 years, although I’m not sure how valuable my counsel would have been then. Today, most of the questions I’m asked center around divorce. -My wife/husband wants a divorce.pexels-photo-258510 -How long will this take? -How much will it cost? -I want full custody of my kids. -Will I lose the house if I move out? -She/he had an affair! -I had no idea! I hear these comments hundreds of times a year. And then I’m asked, “So, what happens now? How does this work?” The answer is perhaps not what you expected, and it sounds like this: “Not the way you think; kind of like you think; and, it depends on what you’re trying to do.” Here’s what I mean. Last things first. What are you trying to do? A divorce is an “official” determination that two people aren’t married any more. That’s an element of every divorce. It’s the minimum definition. The determination takes the form of a court order, which is required to talk about certain subjects, which I’ll get to in a moment. The question of what you’re trying to do is directed toward how that order affects your life after you’re divorced: For example: Do you have kids? Who do they live with? How often? Who supports them? How? When do they see his family? When do they see hers? How do they experience Christmas/ Hanukkah/Kwanza/Easter/Passover/Thanksgiving/Halloween/July 4th/and other significant times? What happens if their parents start a new relationship? Or two? Will their parents divorce them, too? That court order I mentioned can address all those questions, or very few of them. It might incorporate a 15-page Parenting Plan that discusses all these things. It might have two paragraphs that says one of the parents has legal and physical custody of the children, and the other parent will pay the custodian $1500 every month. And the parents will alternate having the children on major holidays. And that’s it. A divorce is ‘kind of like you think,’ in the sense that a judge has to sign that order, even if the couple doesn’t agree on what should be in it. Maybe they never agree. Maybe they come to an agreement eventually. If they never agree, a judge will tell them how it’s going to be. Period. Does someone win while someone loses? Often, both of them feel as if they’ve lost. How is it ‘not like you think?’ People are often surprised to learn the judge who signs the decree doesn’t have to make all the decisions. In fact, the only decision the judge really has to make is whether to sign the document a couple says they want as their decree. It’s true! Before that decision is made, the judge will need to be satisfied that the document includes everything it should–all those ‘certain subjects’ I referred to. But it’s much less work for a judge to agree with a couple’s decisions than it is to make the decisions for them. Every couple who gets a divorce in Minnesota has the absolute right to make their own decisions about those ‘certain subjects.’ I can repeat that, or you can read that last sentence over again. And one couple’s decisions may not look like any other couple’s in the history of the state. Which is okay. I am asked, “Well, what does the law say?” I answer as best I can, but often the question results from a misunderstanding of the law’s role. That role is not so much “You MUST do this,” and closer to “If you can’t work it out, this is what’ll happen.” Think of the written law as a safety net that keeps one spouse from taking serious advantage of the other. What it means is, if a couple can reach their own agreement on those ‘certain subjects,’ the court will usually honor that agreement. Yes, there are conditions. You can’t agree to something that violates public policy. An example: a couple can’t agree that neither parent will ever pay child support to the other. Why? Lots of reasons, mostly having to do with reimbursing the government if you need government assistance. What you CAN agree to is what’s called a “reservation” of child support. When the court reserves support, it means no money changes hands. Usually, I see that in families where both parents earn enough to support their children independently of the other parent’s financial assistance. Another condition: the court would like to know the couple got some legal advice, and legal representation is better. The ‘certain subjects’ include the marriage, real property, personal property, children, support of the family, which includes the children and either parent, financial assets, and debts. But divorce decrees can include conversations that disclose why the couple reached the agreements they did, and how those met the goals they have for their family, now and in the future. Those decrees may read much less like a fight and more like a strategic planning document. How do you create that kind of divorce decree? It helps if you can bring a little different perspective to the task, what some lawyers call a “paradigm shift.” The original paradigm, the impression we had when we left law school, was that a divorce was first and foremost a legal dispute, like any other. Sure, it had overtones of emotion and psychology and money and relationship, but if we could get the legalities straight, we’d be doing our job. Decades and cases later, many of us have realized that a divorce is more accurately described as an emotional, psychological, financial, and relational matter that has some legal overtones. We realized that by shifting the model of what we were doing, focusing on the realities and not the theories of the matter, our clients and their families got results that fit better, lasted longer, and let them experience the benefit of their family structure, which changed, but didn’t disappear. Not everyone is independent enough to do this. Some folks have been so hurt before and during their marriage, that their own pain is all they can see. Working with someone they hold responsible is an impossibility. For couples–people–who need someone to decide, the judge can and will make those decisions. It would be a different and arguably a better world if a divorcing couple had resolved their personal issues before starting their divorce, but it only rarely happens. But for couples who have enough insight to know divorce is not a substitute for therapy, control of the divorce outcome can be very much in their hands. Next time, I’ll discuss how couples can get the information and the perspective they need to make those often complicated decisions. Spoiler alert: it takes a village–or a team.
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
house for sale Divorce has a way of completely upsetting one’s expectations for the future.  One day things are moving along just fine, and the next you are making decisions that will impact the rest of your life.  One of the big decisions is whether or not to keep the family home.  It may really be two questions: “Should I keep the house?” and “Can I keep the house?”.   Let’s consider both in turn. Whether you “should” keep the home is more of an emotional question.  What does the home represent to you?  Often it is an emotional safe haven full of good memories that you have spent years getting just right.  It could also be an emotional roadblock to moving forward with your life. “Can I keep the house?” is more of a financial question.  Will your income post-divorce allow you to maintain the house?  Will taking the house in the divorce mean forgoing other marital assets such as retirement accounts, that may be more valuable in the long run?  Perhaps keeping the house will require keeping your ex-spouse as co-owner, do you want that? Due to its functionality, your house is an asset different from a stock or retirement account.  So, in many cases, the decision is a compromise focused on the question: “How long should I stay in the house?”. If you are unsure of the best way to handle the house, there are 3 exercises that you should go through to determine your best decision or when you should expect to sell.
  • Develop a post-divorce budget to see if you can afford to keep the home. Perhaps with child support it may make sense to stay. When the kids go, the house may need to go as well.
  • Run a retirement projection to see how keeping the home will impact your retirement and other financial goals.
  • Finally, list the benefits and tradeoffs of keeping the home. The benefits may be proximity to work and school. A tradeoff may be that you are now in charge of the upkeep.
There is no doubt that a house is treated different from a retirement account. Even so, it needs to be viewed with an honest and objective lens to determine how it will influence the unfurling of your new future as you blossom into the new you.
In Part 1, vortex was defined as: 1) a whirling mass of water or air that sucks everything near it towards its center; 2) a place or situation regarded as drawing into its center all that it surrounds, and hence, being inescapable or destructible.tropical-cyclone-catarina-1167137_1920 The second definition provides a visual for what many think a divorce “looks like.”  While the end of a marriage is emotionally tumultuous and devastating, the actual legal process of uncoupling does not have to be.  But, it is critical that you choose a process that promotes healing.  The Collaborative Process does just that. Collaboration is a holistic approach to divorce.  It can be utilized by couples who are ending either a marriage or significant relationship, or who have a child or children together.  Although some people question whether it is an appropriate process when domestic abuse or mental health/chemical dependency issues are present, many others think it can (and should) at least be attempted.  If you don’t want to be another “divorce horror story,” the Collaborative Process will likely be a great fit. Collaboration focuses on the future (i.e., the relationship of co-parenting in two homes) rather than the past (i.e. the vilification of one spouse); is a win-win for both partners (rather than a court-imposed win-lose); and emphasizes the well-being of the entire family.  You don’t air your dirty laundry in court, and you aren’t (literally) judged.  In fact, you never set foot in a courtroom.  The negotiation model is interest-based/win-win, rather than positional/win-lose.  You pay attorneys to help you solve problems, not argue and keep you stuck in the past.  Every family is unique, so every family deserves a unique solution.  And if you have young children, please keep in mind they need you present and available.  You can’t be present when you are fighting the other parent in court.  In Part 3, we will discuss the various professionals in the Collaborative Process and how their expertise can help you avoid the divortex.
house for sale When divorcing, whether one spouse stays in the family home is often a pivotal decision.  For most, there are several considerations that go into deciding whether to sell or stay.  The tax impact of selling the marital home is unlikely to be at the top of that list, but with home values on the rise, it is worth understanding. The current tax rules are quite favorable to people realizing a gain on the sale of their home.  The IRS allows each taxpayer to avoid paying capital gains tax on the first $250,000 of capital gain on the sale of one’s residence. That means that a taxpayer filing “single” could exempt the first $250,000. A couple filing “married filing jointly” can avoid paying taxes on $500,000 in gains.  The capital gains tax on a $250,000 gain can range from $0 to about $75,000 so it is worth it for divorcing couple to make sure they cover this in their divorce arrangements. To qualify for the exemption, the IRS requires that the home meet the principal residence test, which is based on ownership, use and timing. For ownership, you need to have lived in the home for at least 2 years, (24 full months) in the 5 years before the sale.  These 24 months do not need to be continuous.  The use criteria require that the home be your principal residence for those 24 months.  This can be an issue if one spouse was employed in another city, where they kept a second residence. One spouse meets the use test, but the other does not.  Finally, the timing criteria requires that you have not excluded the gain on the sale of another home in the past 2 years. Tax law gives divorcing couples some leeway in these criteria. Transfer of home ownership between divorcing spouses is not considered to be a taxable event by the IRS. If ownership is not transferred during the divorce, detailing the home ownership arrangement in the divorce decree is key to minimizing taxes when selling the home later.  An ex-spouse that continues to be an owner of the home but does not live there, can still use the exclusion if there is written documentation in the decree that lays out this arrangement. Dealing with home decisions during the divorce can be a complex.  Be sure that in your home decision analysis, you are clear on your tax implications! And keep in mind that cabins, vacation homes and investment real estate generally will not meet the principal residence test, so they may have tax consequences when sold. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.