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When filing for divorce, many people are aware of the common financial ramifications, including: property division, child and spousal support, and healthcare coverage changes. The impact of a divorce on the parties’ taxes, however, is often overlooked or misunderstood.

Divorce may affect your tax situation in a number of ways. The right to claim a dependent child will affect the amount of money owed or refunded at the end of the year. There may be money owed to the IRS from the sale of marital property, such as a house. Additionally, there are important things to know about the tax consequences of child support and spousal support payments.

Child support payments are treated as if they have no tax consequence: they are not taxable to the payee, nor are they deductible for the payor. However, spousal support typically is treated as income for the payee. As such, the payee generally must pay taxes on the spousal support payments received and the payor is allowed to deduct the money paid.

A more severe tax consequence may occur years after a couple divorces. Many married couples file their tax returns jointly. This means that each spouse has both individual and joint liability for any taxes owed for that tax year. In many cases, one spouse handles all of the finances for the household, including the taxes. If that spouse makes a mistake on the year’s tax return or purposefully claims less income than the household received, the other spouse is jointly liable for that error and any money owed to the IRS as a result.

The innocent spouse may have no knowledge that money was hidden or that the returns were done incorrectly. However, the IRS will still hold the spouse liable for the money owed unless a claim for “innocent spouse relief” is filed.

If you find yourself in a situation where the IRS is penalizing you for back-taxes owed from a year you were married and you had no control or knowledge of your financial situation at that time, you may be able to claim “innocent spouse relief.” A qualified attorney can assist you with reviewing your situation to determine whether or not you have a claim for “innocent spouse relief.”

Getting divorced is never easy. An experienced family law attorney will walk you through the process and ensure you understand the implications of divorce on all aspects of your life, current and future. For more information about the tax consequences of a divorce, please contact Banas Family Law for assistance.

A cohabitation agreement is an agreement between two unmarried people who live together as partners. In Minnesota, a valid cohabitation agreement must be written and signed by both parties and is enforceable regardless of the sex of the parties.

Cohabitation agreements can be utilized to protect the financial interests of each party in the event of a breakup and to grant the couple some of the protections and rights typically obtained through marriage. The agreement may govern such issues as child custody, parenting time, property division and end-of-life decisions.

Whether you and your partner cannot marry or choose not to, a cohabitation agreement can provide you with peace of mind, ensuring your wishes are followed in the event of a dissolution of your relationship or of your or your partner’s incapacitation or death.

For more information, please contact the Minneapolis family law attorneys at Banas Family Law.

Under Minnesota law, “marital property” is any property acquired by either spouse during the marriage, unless it:

“(a) is acquired as a gift, bequest, devise or inheritance made by a third party to one but not to the other spouse;

(b) is acquired before the marriage;

(c) is acquired in exchange for or is the increase in value of property which is described in clauses (a), (b), (d), and (e);

(d) is acquired by a spouse after the valuation date; or

(e) is excluded by a valid antenuptial contract.” (Minnesota Statute 518.003 Subd. 3b)

As noted above, an antenuptial, or premarital agreement, can affect the court’s determination of “marital” and “nonmarital” property by specifying what property is to be considered nonmarital in the event of divorce, separation, or the death of one of the parties.

According to Minnesota Statute 519.11, to be valid, the agreement must be signed prior to the date of marriage in front of at least two witnesses, be based upon fully disclosed financial information, and have been signed after each party had time to consult with an attorney.

For advice on either preparing or signing an antenuptial agreement in Minnesota, contact Banas Family Law at (651) 361-8109.

A neutral professional is a third party called upon by either the parties involved or the court in an attempt to resolve a family law dispute as efficiently as possible without unnecessary, expensive court litigation. There are a variety of neutral professionals that may be utilized for this purpose, including: guardians ad litem, parenting time expeditors, custody evaluators, parenting consultants and custody mediators.

According to Minnesota Statute 518.165, the court may appoint a guardian ad litem in any proceeding involving custody or parenting time of a minor child. The guardian ad litem’s job is to represent the best interests of the child and advise the court of those interests, including recommending specific custody and parenting time arrangements.

In disputes involving parenting time, a parenting time expeditor may be appointed by the court (either at the court’s discretion or upon the request of either party) to facilitate a resolution. Generally, the parenting time expeditor is authorized by the court to make a binding decision resolving the dispute.

During contested child custody proceedings, an investigation and report concerning the custodial arrangements for the child may be ordered at either the court’s discretion or at the request of one of the child’s parents. According to Minnesota Statute 518.167, the investigator, or custody evaluator, “may consult any person who may have information about the child and the potential custodial arrangements except for persons involved in mediation efforts between the parties.” This includes, with consent from the child’s parent, obtaining information about the child from medical, psychiatric or school personnel. The investigator’s subsequent report will include the investigator’s custodial recommendation and the reason(s) for the recommendation. This report, including the recommendation, may be used in court at the custody hearing.

Parents also may choose to utilize parenting consultants and/or custody mediators to help them resolve their differences amicably through negotiation. These trained professionals will facilitate the discussion between the parties, helping them reach agreements that are in the best interests of their child(ren). While the professionals may give recommendations to the parties, in the event that no agreement can be reached, they typically are not authorized to issue binding decisions.

Courts are increasingly utilizing the services of neutral professionals to help resolve family law disputes, and often depend on the professionals’ recommendations when rendering decisions. It is important for your case that you understand the roles and impact of such a professional. For more information on your Minnesota family dispute, contact Banas Family Law at (651) 361-8109.

Traditional divorces are often highly confrontational and antagonistic, causing undue stress on the individuals involved. This adversarial approach may make it difficult for the parties to work together after the divorce is finalized, particularly in regard to child rearing decisions and parenting time agreements. Luckily, there are other options available to those wishing to dissolve their marriage as amicably as possible.

Alternative dispute resolution processes help parties come to amicable agreements outside of the courtroom. There are several types of alternative dispute resolution, including: mediation, arbitration, collaborative law, and (in Hennepin county) early neutral evaluation. These resolution processes typically produce less stress, cost less and are resolved more quickly than a traditional divorce.

Meditation is a process through which the two parties, along with their attorneys, work together to reach a mutually agreed upon settlement. A highly trained third party, called a mediator, facilitates the negotiation. Mediation is non-binding, which means if the parties cannot reach an agreement the case may still proceed to court.

Arbitration is much like mediation, except that the third party, called the arbitrator, issues a final, binding decision. Due to its binding nature, and to the fact that obtaining an appeal is highly unlikely, arbitration is most often used to settle post-divorce issues, including those involving child custody and/or parenting time.

Collaborative law is a relatively new process through which both parties and their attorneys formally agree to work together to reach a settlement. If during the course of negotiations a settlement cannot be reached, the attorneys must withdraw and the parties must obtain new representation in order to proceed to court.

A process created by the Hennepin County Family Court, early neutral evaluation utilizes a team, made up of at least one male and one female, to evaluate the case and inform the parties of the most likely resolution if the case were decided by a judge. This enables the parties to understand what would most likely happen in the event they cannot reach an agreement. This process may be used in conjunction with mediation and collaborative law.

To learn if mediation or another form of alternative dispute resolution is right for your Minnesota dispute, contact Banas Family Law at (651) 361-8109.

Except for child custody issues, the division of marital property is often the most adversarial and stressful aspect of a divorce. Determining who gets what can be complicated. The overall division typically depends on whether the property, or asset, is deemed to be marital or non-marital in nature.

According to Minnesota Statue 518.003, Subd. 3b, “Marital property” is defined as all property, whether real or personal, “acquired by either spouse subsequent to the marriage and before the valuation date . . . regardless of whether title is held individually or by the spouses in a form of co-ownership.” This includes retirement accounts and vested public or private pension plan benefits or rights.

In Minnesota, the court presumes that “each spouse made a substantial contribution to the acquisition of income and property while they were living together as husband and wife.” (Minnesota Statue 518.58, Subd. 1) As this is the presumption, the court strives for a “just and equitable division of the marital property,” and typically divides marital property equally between the parties. Valuations are generally based upon the date of the initial prehearing settlement conference, unless both parties agree to a different date.

But, what about assets held prior to marriage? If one spouse wishes to claim a sole interest in any asset, that spouse must provide proof that the asset is non-marital in nature.

“Non-marital property” refers to “property real or personal, acquired by either spouse before, during, or after the existence of their marriage, which (a) is acquired as a gift, bequest, devise or inheritance made by a third party to one but not to the other spouse; (b) is acquired before the marriage; (c) is acquired in exchange for or is the increase in value of property which is described in clauses (a), (b), (d), and (e); (d) is acquired by a spouse after the valuation date; or (e) is excluded by a valid antenuptial contract.” (Minnesota Statute 518.003, Subd. 3b)

Proving that property is non-marital in nature can be extremely difficult. Often, property that was originally non-marital can become partially marital during the course of the marriage. As experienced Minnesota divorce attorneys, Banas Family Law can assist you in satisfying the burden of proof required by the court. If necessary your attorney may utilize the services of a forensic accountant to “trace” your non-marital assets and provide expert testimony on your behalf in court.

In a divorce, identifying marital and non-marital assets and understanding how a court renders its valuations is essential to ensuring that your financial interests are protected. Minneapolis family law attorney Chris Banas has extensive experience assisting clients in asset identification and valuation. To discuss your case, call 651-361-8109 now.

A parent may not relocate a child across state lines without first obtaining permission from either the other parent or the court, unless the non-custodial parent has not been granted any parenting time under the child custody agreement.

According to Minnesota Statute 518.175, Subd. 3(a):

“The parent with whom the child resides shall not move the residence of the child to another state except upon order of the court or with the consent of the other parent, if the other parent has been given parenting time by the decree. If the purpose of the move is to interfere with parenting time given to the other parent by the decree, the court shall not permit the child's residence to be moved to another state.”

Permission for relocation by the court will be based on the court’s determination of the child’s best interests as determined by such factors as the child’s relationship with the non-custodial parent, the child’s age and stage of development, the change in quality of life for both the custodial parent and the child as a result of the move, and the reason for relocation.

The parent requesting permission for relocation must prove the move is in the best interests of the child, unless the court finds evidence that the requesting parent has been the victim of domestic abuse at the hands of the other parent, in which case the parent opposing the move must prove that relocation is not in the best interests of the child.

Relocating within state lines is not subject to the same regulations as moving out of state. However, if the parents have joint physical custody, or the move would alter the court-ordered parenting time agreement, a modification order and/or court approval may be required.

For more information on out-of-state or in-state moves, contact Banas Family Law, P.A. at (651) 361-8109 now. 

Needs and circumstances change. When they do, a post-decree modification can realign court orders to match the interests of the parties and their new situations. Minnesota family law attorney Chris Banas assists clients in filing motions for the modification of child custody and parenting time agreements as well as child support and spousal maintenance orders.

Child Custody and Parenting Time Post-Decree Modifications.

When deciding issues involving a child, the court focuses on the “best interests” of that child. To ensure your child’s interests are thoroughly represented, you need to obtain the services of a qualified family law attorney.

Often, unless “the court finds that there is persistent and willful denial or interference with parenting time, or has reason to believe that the child’s present environment may endanger the child’s physical or emotional health or impair the child’s emotional development” (Minnesota Statue 518.18(c)), there are time limitations imposed on when modifications may be filed and approved. Your attorney will assist you in determining whether you are eligible to file a modification.

Child Support or Spousal Maintenance Post-Decree Modifications.

When the financial circumstances of either party change, a modification of support is necessary. Orders involving how much, how long, and how often an obligor must pay an obligee are often based upon the obligor’s financial position and ability to pay, the obligee’s financial needs, and the income and expenses of both parties. A knowledgeable family law attorney can assist you in determining whether your situation warrants a modification, and will ensure that the court receives the necessary financial documentation.

To discuss your need for a Minnesota post-decree modification, contact Minneapolis family law attorney Chris Banas today. Call 651-361-8109 now.