Month: April 2013

How To Divide Retirement Accounts in a Divorce

nelsonda General Divorce, Property Division , , , , ,

When divorcing, retirement accounts are often divided between the parties. In all cases where a retirement account needs to be divided, some type of affirmative action after the divorce is required to do so. Unless there are unusual circumstances or the parties agree otherwise, the account holder should NOT be required to cash out or liquidate his or her retirement account, either in whole or in part, to pay the other party what they are entitled to.

Many people make the mistake of assuming that this division will happen automatically, especially if they do not have an attorney. This is absolutely not the case. There are situations where, years later, the account holder retires and the other party wonders why they have not begun receiving payments. In fact, there was a recent case in Minnesota where the Wife lost her rights to the Husband’s pension because she failed to take any action to divide the account after the divorce. (For more information, see article here.)

There are several different types of retirement accounts which are divided in different ways. The most common type of retirement account is a “qualified plan.” The definition of qualified is set forth in federal law. However, these are most commonly the types plans such as 401(k)’s, 403(b)’s, deferred compensation or pensions. In order to divide one of these accounts, there needs to be a special order prepared called a Qualified Domestic Relations Order which is commonly referred to as a “QDRO.”

The processing of a QDRO can be complicated and lengthy. Essentially, a QDRO is prepared by an attorney or an outside firm who is hired for same. In Wisconsin, attorneys rarely prepare QDRO’s and usually hire an outside financial firm to do so. The QDRO is often sent to the plan first for pre-approval. Eventually, either before or after this pre-approval process, the QDRO is sent to the court for signature. Once the court signs the QDRO, a certified copy of this QDRO is required and then sent to the Plan for processing. The cost of the preparation of the QDRO is usually shared equally, at least in Wisconsin.

There are other plans which are non-qualified but which can also be or must also be divided by QDRO or by a different type of Order prepared separately from your judgment of divorce. Most often, for example, this applies to a TSP, FERS or other government retirement account.

Retirement accounts such as IRA’s, Roth IRA’s or annuities can often be divided without a QDRO. Typically, just the judgment of divorce and an internal form signed by the account holder is all that is necessary. The account holder should contact his or her Plan to determine what is required in these cases.

When a retirement plan is divided properly, there are no tax consequences or penalties to either party. Further, the receiving party is not dependent on the plan holder to pay him or her any monies that they are entitled to receive.

If you are divorcing or have divorced, it is imperative that you take all necessary steps to divide any retirement accounts awarded to you. If you don’t have an attorney and don’t know how to do this, it is well worth your time and money to hire an experienced divorce attorney to assist you with the division. If you do have an attorney, make sure that the division is done after the divorce. If not, you need to follow up with your attorney or hire another attorney to do so. Ultimately, it is your responsibility to make sure you that you receive what you are entitled to pursuant to the judgment of divorce.

If you are already divorced, it still may not be too late to divide a retirement account if this has not already been done.  However, the longer you wait, the more likely it is that there will be problems or that you could lose your rights altogether.  Contact an attorney immediately if you find yourself in this situation.

If you have any questions or concerns or need assistance in dividing a retirement account, please contact Nelson, Krueger & Millenbach, LLC (formerly Nelson & Davis, LLC) at 414-258-1644 to schedule a free initial consultation

Can my Child Decide Who to Live With in Wisconsin?

nelsonda Custody and Placement , , , , , , ,

Many parents want to know if their child can decide who they want to live with in a divorce or in a placement dispute.  Or, they ask at what age a child can decide who they want to live with.  In Wisconsin, the answer to that question is that children can never make the decision as to who they want to live with, at any age.

There are many reasons for this.  Primarily, however, the courts have determined that children are not emotionally mature enough to make such a momentous decision.  Further, parents should not be placing their children in the middle and forcing them to choose between two parents who they love.

Wisconsin statutes do provide that the judge must consider the wishes of the child when making a determination on placement.  However, that does not mean that children get to decide or make that decision.  Ultimately, it is up to the parents or the courts to make a placement decision.

The older the child gets, the more weight their wishes are given.  This is especially true for a child who is mature and/or has valid or legitimate reasons for feeling the way that they do.  However, parents often mistake strong feelings for maturity.  This is not the case.  I have had cases where the court does not listen to very immature teenagers (age 17) who want to live with one parent or the other for invalid reasons (a parent is too strict or a parent is trying to influence them).  I have also had cases where the court does listen to a mature younger child (age 12) who has very valid reasons for wanting to live with one parent over the other (abuse, alcohol, neglect, etc).

More importantly, if a parent is trying to influence their child too much or drag their child into a divorce or placement dispute, this will be construed negatively against them.  Parents want to be very careful about this or it could be used against them in a placement dispute.  Children, especially teens, often have strong feelings about a lot of things but that changes frequently.  Despite what they may say, however, they do not want to be placed in a position of having to choose between their parents.  If there are legitimate concerns about the other parent, such as neglect or abuse, then this should be pursued.  However, if the sole reason to change placement is simply because that is what the child allegedly wants, this is most likely not going to succeed in Wisconsin.

Sometimes, there is a situation where a child simply will not go with the other parent for placement.  The courts usually feel strongly that you are the parent and your children must listen to you and follow a court order.  After all, children do not get to decide whether to go to school, do their homework or a myriad of other tasks that they must do.  Parents must be able to control their children.  If the relationship between the child and the other parent has broken down to the point that the child will not go for placement, then counseling is in order to repair that relationship.  The reasons for this breakdown are important, of course, and the court will take those reasons into consideration.  Ultimately, however, the child does not get to decide whether to follow a court order or not.  Understandably, this often puts the placement parent in a difficult position.

If you have questions or concerns about a placement dispute, please feel free to contact us at 414-258-1644 to schedule an appointment.  We offer free initial consultations and can review the facts of your case to evaluate your placement dispute.

Family Law from the Voices of Students

nelsonda General Comments, General Divorce , , , ,

I recently spoke to a group of high school seniors during their Government class. The class was studying a unit on courts, attorneys, judges and other legal proceedings, so a friend of mine thought it would be informative for his class to hear from a practicing attorney.

I remember the attention I paid (or lack thereof) when I was in high school to a guest speaker, so I went in with the expectation that I would do forty-five minutes of speaking and maybe interest one student enough that (s)he would ask a question regarding family law. Well, I was wrong.

The students were between the ages of seventeen and eighteen and were surprisingly intrigued by what I do. So much so, that I was asked many questions that I did not have time to answer. I quickly realized as we began our discussions that it is not just people who come in to our office who deal with family law issues on a day-to-day basis. Even though I was speaking to students, family law is a relatable topic to them as well. I found it very interesting as to which topics interested the students.

The most common questions I answered were related to situations regarding “friends” of the students. Below are two of the examples of the questions I answered:

1. My friend got someone pregnant and even though he has a positive paternity test showing he is the father, his ex-girlfriend won’t let him see his kid. What can he do so he can have some time with his kid?

Depending on if the child or mother are receiving aid from the state (for birthing expenses, food stamps, and otherwise), the State may begin a paternity action on its own motion. However, if Paternity has been established through DNA testing and the State is not involved, then the father may file an action with the court to establish paternity. Either way, the father and mother are required to attend an initial paternity hearing where temporary orders would be made regarding placement, custody, child support, past-due child support, birthing expenses, health insurance coverage, tax exemption, and the child’s last name.

A lot can happen at an initial hearing, so I recommended preparing and progressing through these proceedings with the help of an attorney. Many young parents meet with attorneys after an initial paternity hearing, and often times it is as a reaction to receiving a negative ruling in Court. As you may suspect, it is much harder for an attorney to backtrack and modify “negative orders” then it is for someone to get an attorney at the beginning stages, where the attorney can be proactive and prepare a client correctly for the first and all hearings in these types of matters.

2. My friend’s parents got a divorce because my friend’s Mom cheated on her Dad. Her Dad keeps telling her Mom “I’m going to take you to the cleaners, the Judge is going to give me everything because you were unfaithful to me!”

It is very common, as a child of divorce, to experience and be witness to high emotions when your parents marriage is deteriorating due to one parent, or both, having an affair.

Wisconsin is a no-fault state, and therefore the wife’s affair is not something the Court will prioritize, or sometimes even consider, in making decisions on his divorce. In order to get a divorce in Wisconsin the court only needs to find that the marriage is “irretrievably broken,” and that the wife is not currently pregnant.*

The only possible exception to this is when there are children involved and the parents are arguing about placement and custody (legal decision-making) of them. In this instance, a parent may argue that the children are being harmed by a new relationship. Then, a Guardian Ad Litem–an attorney who advocates for the “best interests of the children”–will likely be appointed by the Court. That attorney may take into consideration the wife’s behavior if, for example, it is not in the best interests of the children.

The lesson I learned from my experience is that teens are very interested in family law and that they are as affected as much, if not more, than adults by a divorce or paternity.

 

-Madeleine Thompson-Davies

*Please see our blog on marital presumption in Wisconsin (here) to better understand why the wife must not be pregnant at the time of divorce.