I Hit the Jackpot! Does That Mean My Spouse or Ex-Spouse Did Too?

 

When someone wins the lottery, it can make headlines. When West Allis local Manuel Franco won the $768 million Powerball in April, it was big news for weeks. State lotteries are becoming a growing phenomenon, with the winnings often accruing well past the million-dollar mark. So, if you hit the jackpot, does that mean your spouse or ex-spouse did too?

Let’s talk lottery winnings and divorce. Say you’re in the middle of a contentious divorce, and the stress of it all has you on edge. You’re at the gas station filling up your car on the way home from work, and you feel like you need a win. So, you try your luck and buy a Powerball ticket. Unbeknownst to you at the time, that lottery ticket is going to make you a millionaire. The Wisconsin Lottery does the Powerball drawing, and you find out that your ticket won you the $400 million jackpot.

So, now you’re wondering – how does this big win impact my divorce?

The short answer is, those winnings are now property of the marital estate. Since Wisconsin is a community property state, the court is going to presume that your lottery winnings should be split equally. Although this may seem unfair, it is consistent with how family courts in Wisconsin split other assets (and debts) in a divorce. When considering the marital estate, the lottery winnings will go in the “assets” column of your estate, and your soon-to-be-ex will likely get a chunk.

Although Wisconsin is a community property state, that does not necessarily mean your spouse will necessarily get exactly half of the winnings. The court can unequally divide assets based on a variety of factors.  From an equitable standpoint, the court could decide that it is unfair to equally divide the lottery winnings based on the fact that the ticket was purchased after the divorce action was filed.  However, a recent case in Michigan found that the husband was required to pay the wife nearly one-half of his winnings under the same circumstances, finding that because he had regularly played the lottery during the marriage, the losses he incurred came from the marital estate so the winnings should be equally shared as well.

Further, the court will likely consider the “final” winnings from the lottery –even if you win a $400 million jackpot, there will be taxes and other deductions from that amount. So even though you win $400 million, it doesn’t mean your ex gets $200 million and you’re stuck having to pay the taxes and other deductions out of your share. Those should be split equally.

So, what happens if you aren’t in the middle of a divorce, but you’re paying child support to her pursuant to a court order from a prior divorce, or a paternity case?  Or, you aren’t divorced yet but you still would owe child support or possibly maintenance?

In situations where you are ordered to pay child support, the court generally weighs two factors when they set child support: your placement schedule, and your income. If you’re unsure how child support gets calculated, check our other blog posts for more information on calculating child support. So now you’re asking yourself – are my lottery winnings income? Those winnings aren’t regularly recurring (if you take the lump sum payout option), and you aren’t guaranteed future lottery winnings. How can they call lottery winnings “income”?

Unfortunately for you, the court can consider your lottery winnings as income when they calculate your child support. How they consider the winnings will depend (in part) on how you are being paid your winnings – did you take the lump sum payout option, or are you getting regularly recurring monthly payments of your winnings? If you are getting the regularly recurring monthly payments, then it is more likely the court will consider that “income” because it is regularly recurring and available for child support purposes. If, however, you take the lump sum payout, then it is less clear what the court will do. Child support is intended to “equalize” the households of both parents so that the children have similar experiences (and opportunities) at both parents’ houses. The court doesn’t want one parents house to the be “fun” house with lots of expensive gadgets and fancy food, and the other parents house to be boring. Clearly if one parent wins the lottery, the standard of living at their house is very likely to increase. Whether or not the courts would award the other parent a portion of your lump-sum winnings will likely depend on the facts specific to your case. It will also depend on the amount of winnings – if you win a $10,000 lottery, the court will look at those winnings differently than a $10,000,000 win.

Even though your winnings may be included for child support purposes, they may not be included for maintenance purposes.  The stated goal of maintenance under the law is to maintain your spouse at a standard of living enjoyed during the marriage.  Clearly, a large lottery jackpot is far above any standard of living that was enjoyed during the marriage.  There is a case in Wisconsin where the appellate court found that a post-divorce lottery win should not necessarily be grounds for an increase in maintenance to the other spouse for that reason.

The worst thing you can do, however, is to try to hide your winnings. Any time someone tries to hide assets during a divorce, the court could penalize that person by awarding the entire asset, or an unequal share, to the other party.  After all, one-half of $400 million is still $200 million dollars!

Navigating the family courts, whether its through a divorce of a paternity, can be complex. Introducing something like lottery winnings into the equation is likely to make things even more complicated. If you are going through a divorce of paternity case, contact the experienced attorneys at Nelson, Krueger & Millenbach, LLC at 414-258-1644 or at www.nkmfamilylaw.com for a free consultation to see what we can do for you.

 

 

Can the Court Award Custody of a Pet in Wisconsin?

 

When going through a divorce, the process is typically focused on the “big” issues. For most couples, this includes the division of assets and liabilities, support, and the custody/placement of minor children (where applicable). Most attorneys and judges are well versed in these issues because they are foundational to divorces.

A less common issue is what happens to family pets in the divorce. Are they considered “property” to be valued and accounted for in the division of assets and liabilities? Or are they more similar to minor children, and require a placement schedule for each party to spend time with the pet? According to the current applications of Wisconsin state law, pets are generally considered “property” and will be considered in the division of assets and liabilities. Although parties can agree to share the custody and placement of their pets, it is currently an uncommon practice in Wisconsin and courts are unlikely to approve or enforce an order which attempts to address custody of a pet.

While Wisconsin does not have laws pertaining to “animal custody”, a recent national trend in the law regarding pets may change that. A number of states, including Wisconsin, have enacted laws recognizing the need to include companion animals in domestic violence protective orders, with some going as far as ordering that abusers pay financial support for pets in the care of a victim of domestic violence.  Wisconsin Statute § 813.12(4)(a) states, part:

A judge or circuit court commissioner may grant an injunction ordering the respondent to refrain from … removing, hiding, damaging, harming, or mistreating, or disposing of, a household pet, to allow the petitioner or a family member or household member of the petitioner acting on his or her behalf to retrieve a household pet…

Further solidifying this trend in recognizing pets as more than property, Congress signed a law entitled the Pets and Women Safety (PAWS) Act in December 2018. The PAWS Act provides shelter and housing assistance for domestic violence survivors and their pets, service animals, and emotional support animals. This law recognizes that pets are more than simple property to their owners..

Although Wisconsin does not have any laws specifically granting custody rights to pets in a divorce or family law case, the court can still consider the facts unique to your case.  Even though the pet is considered to be property, if there is a dispute as to who receives the pet, some of the factors the court may consider are: who first purchased the pet; was it purchased during the marriage or before; who is primarily responsible for caring for the pet.  These are all factors worth considering, and although Wisconsin law doesn’t require family courts in Wisconsin to consider pets as more than property, legislation like the PAWS Act makes it easier for attorneys to argue that pets deserve special consideration in legal actions.

If you have a divorce or family law matter involving a beloved pet, contact the experienced legal team at Nelson, Krueger & Millenbach, LLC at 414-258-1644 or visit our website at http://www.nkmfamilylaw.com to set up a free consultation.

 

Children as Beneficiaries on a Life Insurance Policy in Divorce

When divorcing parties have minor children, the parents may want to consider what could happen if either parent dies before their children become adults.. While this is a very unsettling topic to consider, it is important and necessary to think about and include specific language in your agreement so as to protect your minor children. It is common for the court to grant an order and/or for parents to agree to require the parents to keep in effect or to obtain a life insurance policy, naming the minor children as the sole beneficiaries. This policy would essentially cover the remainder of the “child support” should a parent pass away and certainly would provide more financial stability for the child’s benefit. The court can also order that if a parent does not follow this order, (for example, changes the beneficiary on the life insurance policy or cancels the life insurance policy altogether), then the policy amount must be paid to the minor children from the deceased parent’s estate.  However, the problem with this remedy for violating such an order of the court has recently been addressed by the Wisconsin Supreme Court.

Recently, the Circuit Court in Waukesha County addressed this issue when a parent passed away shortly after the date of divorce.  The father was to name his children as the beneficiaries on his life insurance policy, with the value of $250,000, pursuant to the Marital Settlement Agreement, but instead he changed the beneficiary to his new spouse. Upon his death, the new spouse received the $250,000 life insurance payout, not his minor children. Based upon the parties’ Marital Settlement Agreement, the court could force the parent’s estate to pay the $250,000, but the parent’s estate only had $5,600 in it. Obviously, this  was a significant shortfall and unfair to the parties’ children.

The Circuit Court acknowledges that this was a “raw deal” for the children, but believed that there was no other option but to seek compensation from the deficient estate because of the language of the Marital Settlement Agreement.  The Court of Appeals, however, determined that the Circuit Court’s decision was in error because family court is a court of equity, and such an outcome unjustly enriched the new spouse to the detriment of the minor children and was in violation of the Marital Settlement Agreement.. The Court of Appeals overturned the Circuit Court, and ordered that the $250,000 be placed in a constructive trust for the minor children.   While this result is what the parties originally agreed to in their Marital Settlement Agreement, it was very costly and time consuming to get to this end result and protect the children in the case.

One way to avoid this issue is to include very specific language in a Marital Settlement Agreement to account for this situation and specifically include language allowing for a constructive trust as a remedy.  It is difficult to discuss topics like death during a divorce. Unfortunately, these considerations are necessary, even during a stressful divorce, in order to best protect your minor children and to avoid an unnecessary court battle in the event that children suffer the loss of a parent.  It is important to retain an experienced family law attorney to assist you through this process and to be aware of the changing law in this field.

If you are in the process of a divorce and wish to protect your children’s future support, please call our office at (414) 258-1644 to schedule a free initial consultation with one of our family law attorneys to discuss your case.

 

What Are The Benefits Of Divorce Mediation?

 

Going through divorce can be a complicated, stressful, and costly process. Some couples, however, choose to work with a third-party neutral to help resolve disputes, alleviate stress, and reduce the expense of court litigation. This process is called divorce mediation. Many couples who choose to resolve their divorce differences through divorce mediation find the process to be empowering. Divorce mediation is an alternative form of dispute resolution that allows divorcing spouses to retain a strong voice in the outcome of their divorce settlement by agreeing in advance to attempt to resolve all issues in their divorce outside of court and with the assistance of a neutral divorce mediator.

Potential issues that may be resolved through divorce mediation are not confined to a specific area. A qualified, certified neutral divorce mediator can guide couples toward resolving complex issues related to:

  • Property division, including real estate, retirement accounts, other assets, and debts
  • Child custody and placement
  • Child support
  • Spousal maintenance
  • All other divorce related topics

The mediator in a divorce acts as a third-party neutral who works to facilitate discussions to resolve disputes involving any aspect of the divorce. Moreover, an experienced family law practitioner who is a certified divorce mediator and serves as a neutral in the case who can provide the parties with knowledgeable education and guidance concerning all of the available options to resolve a particular issue. This educational prong of the mediation process can help the parties to explore personalized solutions that best serve their individual goals and needs, rather than focusing on an all or nothing fight in court. It is important to understand that the mediator does not act as judge, seeking to impose a final decision to resolve disputes, nor can the divorce mediator provide legal advice. The mediator is a neutral in the case who works to facilitate reasoned discussions between the parties to arrive at workable and mutually satisfying solutions to disputes.

As of 2018, under Wisconsin law, your divorce mediator may now draft all of the documents to memorialize the final mediated settlement and the pleadings necessary in your divorce case.  In other words, from start to finish, a divorce mediator can assist you with facilitating your divorce through the court system. While the mediator does not represent either side, in preparing the legal paperwork, your divorce mediator can give you peace of mind that the documents are complete and follow Wisconsin law to reduce the potential for additional disputes down the road.

Avoiding litigation may reduce stress and higher costs of divorce

Mediation provides a range of important benefits that are not achieved through a long battle in court, such as:

  • More control over the outcome of the divorce
  • Reduced costs from the absence of litigation
  • Reduced stress through the elimination of litigation and contested hearings
  • A concurrent positive experience for the children of divorcing parents

Attorney Alison Krueger of Nelson, Krueger & Millenbach, LLC is a Certified Divorce Mediator. She can educate you and your spouse about the options to resolve your divorce disputes and the legal process to be divorced. Moreover, after you and your spouse have reached a settlement through mediation, Attorney Krueger can draft all of the documents to memorialize the final mediated settlement and the necessary legal documents to begin and end your divorce action through the court system. Properly prepared  legal paperwork with the assistance of a certified divorce mediator can give you peace of mind that the documents are complete and follow Wisconsin law to reduce the potential for additional disputes down the road. Moreover, Attorney Krueger can help you and your spouse prepare for court where a judge will finalize your divorce. This education on the process can help you to move forward with knowledge of what to expect, alleviating the stress of the unknown.

 

WHAT TO DO WHEN SOMEONE IS NOT FOLLOWING THE COURT ORDER IN A FAMILY ACTION

When you obtain a court order after months of litigation, sleepless nights and mountains of attorney bills, you expect that this court order will be followed.  However, what happens when your former spouse or the other parent in your matter does not follow the court order?  What are your remedies and what can you expect to happen?

If you are faced with a situation where a party is not following a court order, you may be able to file a motion to have him or her found in “contempt”.  Contempt is a legal term which means that a person is deliberately and intentionally not following a court order.  The remedy for a contempt can range from financial sanctions, jail time and attorney fees.

At the contempt hearing it is important that you have evidence supporting your claim for contempt.  For instance, if you file a contempt motion because the other parent has not reimbursed you for half of the kid’s expenses, the court is going to want to have evidence that 1) the expenses was actually incurred 2) you presented the expense and the receipt and 3) he or she refused to pay.  In this circumstance, if you file a contempt, but do not have evidence that you provided the expenses request (email, certified mail or Our Family Wizard confirmation)  the court will be unable to find that the other parent acted intentionally in not paying you.  Accordingly, he or she will not be found in contempt.    Conversely, if you have documentation of emails, letters or the like requesting reimbursement and the other parent simply refuses it is likely the court will find him or her in contempt.   A person can be found in contempt for failure to follow any court order and the evidence required to support your client will vary.  It is crucial for the success of your claim that you have all the supporting documentation before you file.

If you are successful at a contempt hearing and the court finds the other party in contempt, he or she must be granted a purge.  A purge is a set of conditions that need to be complied with in order to avoid jail time. If a purge is not met, then the other party will have to serve the jail sentence ordered at the contempt hearing.  If the purge is met, then the reason for the contempt has been alleviated and the issue is considered resolved.

Attorney fees may be awarded if you are successful with your motion.  The amount of attorney fees awarded will vary depending on the circumstances of each case, the severity of the contempt and the amount of financial damage the contempt cost you.  It is also possible that you will not receive attorney fees despite the court finding the other party in contempt.  Contempt motions can be very detailed and require evidentiary hearings.  However, it is important that you do not tolerate the non-compliance of a court order.  Meet with an attorney to discuss your options.  At Nelson, Krueger & Millenbach, we will meet with you to discuss your case and help you evaluate your options so you can determine the best course of action.  Call us at 414-258-1644 to schedule a free initial consultation or visit our website at http://www.nkmfamilylaw.com.

Sara’s Law: A Law Intended to Protect Family Law Attorneys in Wisconsin

Family law is a unique area of law, often accompanied by an overabundance of emotions. Strong emotions typically tie in with family matters such as divorce, child custody and placement issues, and maintaining the co-parenting relationship for divorced or separated parents. It is not surprising that there are certain risks inherent with the officers of the court (attorneys, judges, guardian ad litems, etc.) involved in family law matters.

A tragic example is the story of Sara Quirt Sann, a Schofield, Wisconsin family law attorney. Quirt Sann, along with three other individuals (Everest Metro Police Detective Jason Weiland and Marathon Savings Bank employees Dianne Look and Karen Barclay) were killed on March 22, 2017 when Nengmy Vang carried out a violent attack on Quirt Sann’s office. Quirt Sann had been representing Vang’s wife in a divorce.

Quirt Sann’s story prompted the drafting of Wisconsin Act 272, colloquially referred to as “Sara’s Law” in memory of Quirt Sann. Sara’s Law was enacted on April 11, 2018 and makes it a Class H felony in the state of Wisconsin to harm or threaten to harm a current or former guardian ad litem, corporation counsel, attorney, or any of their family. Sara’s Law further specifies that the harm or threat of harm is in response to an action taken during a proceeding or other action that affects the family (i.e. a “family law” proceeding). Until Sara’s Law, threats made against family lawyers were not treated the same as judges, prosecutors, and law enforcement officers.

If a person is convicted under Sara’s Law, it would mean they are guilty of a Class H felony, which could result in the mandatory surrendering of weapons, a $10,000 fine, and up to six years in prison.

Sara’s Law is the first of its kind in the United States, and could prove to be indicative of a trend in American law to recognize and address the intrinsic risks with practicing an area of law so wrought with emotion. The attorneys at Nelson, Krueger & Millenbach, LLC are sensitive to the psychological and emotional tolls of family law, and are skilled in navigating these difficult matters. Should you have any family law related questions, please feel free to contact our office at 414-258-1644 to schedule a free ½ hour consultation with one of our experienced attorneys.  Or, for more information, visit our website at http://www.nkmfamilylaw.com.

 

 

Tax Reform Bill May Have Significant Impact on Divorce Issues

 

The Tax Reform Bill that is currently before Congress includes a provision to eliminate the ability to take a tax deduction for alimony, or maintenance, payments.  If passed, this provision could become effective as early as January 1, 2018. This means that a divorce, legal separation, or modification orders entered into after December 31, 2017, would fall under the new guidelines of the Tax Reform Bill. Currently, the spouse who pays maintenance, or alimony, pursuant to a Court Order, can deduct those payments from his or her income. It is also important to remember that the proposed Tax Reform Bill may be subject to revisions, and must be passed into law, so these changes are not guaranteed at this time.  However, many people are concerned about the effects the new tax reform bill

will have on them, particularly if they are paying or receiving maintenance (alimony) or may in the future.  Therefore, we believe it is important to begin discussions of these possible changes as soon as possible.

The current tax law may allow for more money to be available to the parties for maintenance purposes as the higher income party may not be taxed at a higher income rate because he/she is paying a portion of that income to the lower income party, who will claim that maintenance as income at a lower income bracket. Because the proposed Tax Reform Bill will  no longer allow the higher income party the ability to deduct those maintenance payments on his/her tax return, he/she may be taxed at the higher income rate, and there will be less income available to the parties when calculating support. In effect, the proposed Tax Reform Bill increases the amount of taxes paid by a divorced couple then what they would have paid previously because the tax bracket of the payor does not change.

This tax proposal has a far reaching effect to any case in the U.S., includingWisconsin, that requires one party to pay maintenance to the other party, regardless of when the final divorce order is entered.  While an order to pay maintenance may exist before January 1, 2018, it will still be subject to modification in the future. Therefore, if either party requests that maintenance be modified, it will then be subject to the new provisions of the Tax Reform Bill.  As a result, the paying spouse will then no longer be able to deduct maintenance on his/her income taxes.

There may be other aspects of the proposed Tax Reform Bill that could help off-set the effect of these changes to the tax code for divorce couples, such as the proposed increase of the child and family tax credit, and the proposed change in the tax brackets for all filers. However, it is difficult to say what else may effect parties who are divorcing, or are divorced, as it is not clear what the final bill will include, and how some of those provisions may effect divorcing parties.

These examples show why it is important to consider the proposed tax changes and resulting consequences related to support at the time of divorce, or when considering a modification of support.  If you believe that you will need to address maintenance issues in your matter, whether it is before the date of divorce or in determining a modification of maintenance after divorce, call us at (414) 258-1644 to schedule a free initial consultation to discuss your case.