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When Minnesota couples choose Collaborative Divorce, they are choosing a process designed to resolve divorce without court, without escalation, and without unnecessary financial damage. At the center of this process is a role many people have never heard of—but one that often makes a significant difference in long-term outcomes: the Financial Neutral. A Financial Neutral does not advocate for one spouse over the other. Instead, the role is to provide objective, forward-looking financial guidance so both individuals can make informed decisions that support long-term stability. Many Financial Neutrals hold advanced credentials such as Certified Divorce Financial Analyst® (CDFA®) and Certified Financial Planner™ (CFP®), bringing a deeper level of financial insight to the collaborative process.

In Minnesota, Collaborative Divorce is a voluntary, non-litigation process where each spouse retains their own collaboratively trained attorney, a Financial Neutral is jointly engaged, and in many cases a parenting or mental health professional is included to support communication and family dynamics. Everyone involved commits to resolving issues outside of court. The Financial Neutral works for the process—not for either party—providing unbiased financial analysis, translating complex financial information into clear and understandable options, ensuring transparency and accuracy, and keeping the focus on long-term outcomes rather than short-term positioning.

The role of the Financial Neutral becomes especially important in gray divorce, which continues to rise across Minnesota. For couples over 50, financial decisions often carry permanent consequences. Many are navigating retirement that is already underway or approaching, pensions, 401(k)s, IRAs, and Social Security benefits, as well as long-held real estate and healthcare considerations such as Medicare and insurance transitions. A Financial Neutral helps couples understand not just how assets are divided, but how each decision impacts lifetime income, taxes, and long-term financial independence.

Within the collaborative process, the Financial Neutral brings clarity to complex financial decisions by preparing clear summaries of assets and debts, developing post-divorce cash flow and budget projections, and presenting side-by-side settlement scenarios. This allows both spouses to work from the same set of information and make decisions based on facts rather than fear. In Minnesota, where equitable division does not always mean equal and equal does not always lead to equal outcomes, the Financial Neutral plays a critical role in evaluating retirement sustainability, Social Security strategies, tax implications, and long-term healthcare costs. The focus is not simply on dividing assets, but on ensuring both individuals can maintain financial stability after the divorce.

Because the Financial Neutral is jointly retained, the process often reduces conflict, time, and overall cost. There is one shared financial analysis, fewer outside experts are needed, and less time is spent disputing numbers. This can significantly reduce legal fees and improve efficiency for both spouses. Just as importantly, the Financial Neutral supports better decision-making during what is often a stressful and emotional transition. By slowing the process enough to allow for thoughtful and informed decisions, the Financial Neutral helps ensure outcomes are aligned with long-term goals, which is particularly important in long-term marriages.

Collaborative Divorce in Minnesota is a team-based approach. The Financial Neutral works alongside collaboratively trained family law attorneys, and often with mental health or communication professionals, to support both spouses together. This integrated model helps align legal, financial, and emotional considerations so they work together rather than in opposition. As a result, many Minnesota couples choose Collaborative Divorce because it preserves assets that might otherwise be spent on litigation, encourages transparency and trust, allows for customized solutions rather than court-imposed outcomes, and supports respectful communication throughout the process.

Divorce does not have to be a financial battle. With the right structure and professional support, it can be a carefully planned transition. A Financial Neutral helps clarify complex financial decisions, reduce unnecessary conflict and cost, protect retirement and long-term financial security, and support informed, durable agreements. For many Minnesota families, Collaborative Divorce offers a respectful, non-litigation path forward that honors both the financial and emotional realities of divorce.

If you are considering divorce in Minnesota and want to better understand how Collaborative Divorce or mediation works—especially from a financial perspective—a conversation can be a helpful place to start. You don’t need to have everything figured out. You just need a place to begin. If it feels helpful, you’re welcome to schedule a confidential conversation to explore your options.

About the Author

Michelle Leisen, CFP®, CDFA® is the founder of Divorce Smart and a member of the Minnesota Collaborative Law Institute. With over 27 years of experience in financial planning and investment management, she serves as a Financial Neutral in Collaborative Divorce, helping couples navigate complex financial decisions with clarity and confidence. Michelle brings a thoughtful, client-centered approach, translating financial details into practical options that support long-term stability—especially in gray divorce. She holds a degree from the University of Minnesota and attended William Mitchell School of Law.

Michelle Leisen, CDFA®, CFP®
Mediator, Financial Neutral
Divorce Smart LLC
michelle@wealthplanninggroupmn.com | 612-419-9956
https://www.mydivorcesmart.com

 

 

 

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A qualified domestic relations order (QDRO) is not to be confused with a divorce decree or property settlement agreement. A QDRO specifically recognizes a spouse, former spouse, child, or other dependents’ right to receive a predefined portion of a qualified ERISA-sponsored retirement plan. A QDRO must be issued by a state court or authority.

To “qualify” as a QDRO under the Employee Retirement Income Security Act (ERISA), a QDRO must have (or not):

  • The name and last known mailing address of the participant and each alternate payee;
  • The name of each plan to which the order applies;
  • The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee;
  • The number of payments or time period to which the order applies;
  • The order must not require a plan to provide an alternate payee or participant with any type or form of benefit, or any option, not otherwise provided under the Plan;
  • The order must not require a plan to provide for increased benefits (determined on the basis of actuarial value);
  • The order must not require a plan to pay benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO; and
  • The order must not require a plan to pay benefits to an alternate payee in the form of a qualified joint and survivor annuity for the lives of the alternate payee and his or her subsequent spouse.

With that, a QDRO must also “qualify” under the terms and conditions of the specific retirement plan. All retirement plan is different, and some have unique terms and conditions such as annual vs. daily valuations dates, ROTH contributions, frozen benefits, vesting requirements, shared vs. independent options, survivors benefits, and timing requirements.  Each retirement plan is required to have written QDRO procedures and model language available to Participants upon request but watch out! The model language is designed to protect the interests of the Plan, not the Participant, and never an Alternate Payee.  It is suggested you understand the terms and conditions for each account along with the ERISA requirements above, prior to any agreements or the decree language being drafted.

It should also be noted that QDROs are not specific to divorce.  A QDRO can be used in several other circumstances including child support, past-due arrears, or even in other court jurisdictions where the circumstances may warrant a non-taxable transfer to a spouse, former spouse, child, or dependent.  As long as a state Judge or court commissioner will sign the QDRO, it must be deemed “qualified” under the terms of the plan assuming it meets all of the requirements above.

It can be well worth the time and money to consult with a retirement plan specialist as soon as you identify the need for a Qualified Domestic Relations Order.  For more QDRO tips continue to follow our blog or contact Michelle Leisen at Divorce Smart anytime.

Michelle founded Wealth Planning Group, LLC after 22 years of experience in the Financial Services Industry. Michelle graduated from the University of Minnesota,Tewin Cities and attended William Mitchell School of Law in St. Paul, Minnesota. Born and raised in Minnesota, Michelle lives in Eden Prairie with her two children Katie and Nick. Michelle enjoys volunteering and family and running races.

Divorce Financial Professional/Mediator
Divorce Smart LLC
michelle@wealthplanninggroupmn.com | 612-419-9956
www.wpgdivorcesmart.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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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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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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If you want a respectful, affordable and uncontested divorce without breaking the bank, you’ll want to consider a Collaborative Divorce. blur-ceramic-close-up-161010 Do you have a reasonable level of trust and ability to work together with your spous if you have the help of professionals? Does your family makes $60,000 or less per year? If so, then you should apply for the Sliding Scale Fee Program of the Collaborative Law Institute of Minnesota. One of the most frustrating topics when thinking about divorce is “How much will this cost?” Thankfully, when you come to agreements in our Sliding Scale Fee Collaborative Divorce program you will almost certainly pay a fraction of what you would pay with any other professionals charging full price for their divorce services. Collaborative Divorce saves you money. How is that? First, we apply best practices to help you make the most of the time each professional spends working on your case. We think of this as using the right tool for each step of your divorce. Each of you will have your own attorney for legal adivce and advocacy, but you will do most of your work with specialized mediators to make efficient progress. This makes the process less polarizing and more focused on finding win-win solutions that meet both spouse’s needs as best as possible under the circumstances. Since our professionals don’t have to worry about fighting in court on your case, they can focus on helping you find the best solutions. They don’t waste time drafting time-consuming, hurtful and wasteful affidavits and other documents for contested court hearings for clients who are fighting. Second, in the Collaborative Divorce Sliding Scale Fee Program each professional works at a significantly reduced hourly rate. If your family makes $60,000 or less per year, then our Sliding Fee Scale provides that each professional will help you at a significantly reduced hourly rate (often a fraction of their normal hourly rates). For example, outside of the Sliding Scale Fee program, an attorney in the Minneapolis area will typically charge around $250-$350 per hour. In our program, the highest hourly rate is only $60 per hour. Our attorneys and mediators do not go to court in this program. They are here to help you get everything done in your divorce without setting foot in a courtroom. That frees them up to provide an exceptional Collaborative Divorce process to clients. There isn’t any other program like this in Minnesota. What makes this program different? There are only a few sliding scale fee attorney programs and they only provide one attorney on a sliding scale fee. There are no other programs that provide each spouse with a sliding scale fee attorney and specialized mediators to work with the couple on financial and parenting schedule issues, all in one package. In summary, this Sliding Scale Fee program provides a team of professionals so that we can apply the right professional for each step in the uncontested divorce process. Who is this program designed for? We can help couples who have income within our sliding fee scale and who are willing to pay a reduced hourly rate. This is not a pro bono program with free attorneys. It is significantly less expensive but it is not free. Also, you will need to be willing and able to communicate with your spouse and work together with mediators to resolve your financial and parenting time issues in your divorce, with the help of your own attorneys who will be assigned as part of this program. Who will you be working with? You will be working with attorneys, mediators and other professionals who are members of the Collaborative Law Institute of Minnesota who volunteer to take part in this program and accept a lower hourly rate for these cases. What’s the first step? What should I do next? The first step is for one spouse to submit a Sliding Scale Fees Intake Form (found on the Sliding Scale Fee page of our website). Then the Sliding Scale Fee Committee will reach out to you within a few days to help decide if your case is a good fit for the program and what you can do next to move the process forward.
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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
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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.
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blog picWhile researching for this post, I came across a number of divorce-related blogs.  The blog medium provides an efficient and concise opportunity to share information and educate the public.  This blog focuses on the collaborative process — where clients commit to an out-of-court, non–adversarial process. Here are some other blogs that may provide additional information as you navigate the divorce process:
  • Jeff Landers writes in Forbes Magazine about complex financial issues that women face in divorce.  He is a Certified Divorce Financial Planner who has extensive experience with high asset divorces.  His blog is informative and financially savvy.
  • Divorced Girl Smiling is a personal blog written by a woman during – and now after her divorce.  It is a personal account of her experience, as well as a gathering of resources for others who may be going through the same thing.  The archived blogs provide a great path through the litigation process, and provides some insight into why a non-adversarial approach may be better.
However you choose to get advice, being armed with information and prepared for the process can help you feel confident and ready for the transitions that come with divorce. There is a lot of information available online, if you know where to find it.
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150954514-african-american-businesswoman-looking-at-gettyimagesNearly every celebrity seems to have a divorce under their belt, but what about our local public figures – our children’s teachers, our mayors, city councilmen – how does the pubic feel about “those” public figures when they are facing divorce? About midway through the year I had noticed my daughter’s teacher’s name on Facebook (we have mutual friends) going from FIRST MARRIED to FIRST MARRIED MAIDEN, and I thought a divorce must be imminent. Admittedly my first thought was how a divorce might affect her teaching abilities for MY child. Selfish? Perhaps. Or are those type of reactions expected with public careers? Her private life is certainly none of my business, but is it easy to check your feelings at the door? Certainly not. The University of Minnesota is currently doing a study on the impact of divorce on a person’s career. Those results will be interesting to see, especially as there are careers can have a big impact on the public sector. Some may say that their divorce was the best thing that ever happened to their career. Perhaps work was a necessary distraction as their marriage crumbled at home. But on the other hand some people admit that they simply could not focus at work with their marriage on the rocks. Sometimes people can attribute their careers to actually being the CAUSE of their divorce. A husband that travels all week, a wife who tends bar on the weekends, a stay at home parent who never gets a break, and more often than not, simply the demands and stress of a person’s career can tear apart a marriage. Some careers are statistically at a higher risk for divorce, almost as if divorce is beyond their control. A few months later as school was coming to a close I noticed my daughter’s teachers name on social media is now: FIRST MAIDEN. Admittedly, my feelings changed from worrying about the affect her divorce would have on my own daughter to feeling horribly sympathetic towards her and her own children. As I leaned more I realized her husband holds a local political office and I began to wonder about the effects the divorce may have on his political career. It’s important to remember that everyone is human, divorce does not define a person, and even if you feel like your divorce is in the spotlight, remember that this too shall pass. Please share your thoughts about public divorces in the comment section below.