Montana

Part of Real World Divorce: web edition | Kindle edition

Of all the varieties of litigation in the United States, divorce is the most like the ancient wars chronicled in epic poetry from Homer and Virgil. Yet only one attorney that we interviewed is actually named after the Roman god of war: P. Mars Scott. We're going to take the liberty of referring to him as "Mars" in this chapter. Missoula-based Mars has been practicing in Montana since 1980, was a U.S. Naval Reserves Commander, has been recognized as a "Super Lawyer" and currently chairs the Family Law Section for the State Bar of Montana. Mars has been a prolific writer and teacher of younger attorneys. He has served on committees drafting legislation for Montana. See http://www.pmarsscott.com/ for a full biography.

A divorce lawsuit in Montana is started by a "petitioner" and defended against by a "respondent." Mars says that it takes "1-2 years" to get to trial and that he handles 6-8 "major trials" each year in family matters.

As in other states, people don't need to wait for the trial in order to obtain something that functions like a divorce. Via temporary motions it is possible to get orders for exclusive use of the house, a parenting plan, and a stream of cash flow ("temporary family support"). This happens faster than in most states: "When you file a Petition for Dissolution you must submit with your petition a proposed parenting plan. We got rid of the term 'custody' in 1997. The respondent has to file his response to that schedule and then the court will hold a hearing on an interim parenting plan roughly 10 days from the response," said Mars. Is that a 10- or 20-minute hearing like in California? An attorneys-talking hearing like in Massachusetts? "No," said Mars. "It will be 1-3 hours in duration with witnesses testifying and being cross-examined." Will judges force litigants to share a house if nobody shows up with a dramatic story about fearing physical violence? "No," says Mars. "Judges favor splitting up litigants, though in practice we don't run into too many disputes about the house because generally somebody will move out."

The financial implications of moving out in Missoula, where Zillow says the median house price is $239,900 and the median rent is $795 per month, are not as dire as they would be in San Francisco, Boston, or New York City. What about the implications for a continued role as a parent. Is it like other states where the person who clings to the house is in a better position to win custody of the children? "You're not prejudiced if you move out when it comes to parenting time," said Mars. "Montana has tried to disentangle keeping the house from keeping a parental role. That's part of dropping the term 'custody,' which was driving so many other issues in divorce cases in the wrong direction."

Is the decision at the temporary hearing effectively final, as attorneys in many other states told us? "No," said Mars. "One reason is that our population is small. We all know each other and that's made it easier to have a mutual educational process with the Bar and Judiciary about what's important to children. All the judges, starting with Chief Justice McGrath, are highly sensitive to what's in the best interest of children and want to make sure that things are done right for kids so that they get the best chance possible in life. We're able to do that because we're a small state." [In other words, if Mars is right then most children of divorce in America won't fare as well because statistically most children live in the most populous states.]

Montana assigns one judge to the case early on and that judge will stay with the case to hear all motions and the trial. What if a litigant believes that the judge is biased against people like him or her? "You have an absolute right to disqualify one judge within 10 days of assignment," said Mars.

Who else in the courthouse gets involved? "People are required to go to a settlement conference with a settlement master before getting a trial date," Mars explained. "Each side submits confidential settlement statements to the master who then evaluates the case with the benefit of knowing each side's position." Does it work? "There is a 93 percent settlement rate through all phases."

Child support flows in Montana until a child turns 18 or graduates from high school, with a fixed upper limit of 19 for slow learners. "There is no limit for disabled children," Mars noted. A Montana court cannot order a parent to pay college expenses absent an agreement between the parents.

Child support revenue in Montana is less secure than in other states due to the fact that a parenting plan can be changed at any time under a pure "best interest of the child" standard. There is no two-year waiting period as in some states. Montana used to require a "substantial change" for a judge to consider a parenting plan change request, but the legislature did away with that. "In theory, you could be back in court the day after a parenting plan is issued," said Mars. Once a child reaches the age of 14 courts are more likely to give weight to the child's expressed preference regarding a parenting schedule. This may result in an adjustment to the child support owed. The threshold at which child support is reduced is 110 days per year. "That 110th day ends up being heavily argued," said Mars.

On the other hand, child support revenue is secure against the death of the paying parent. "A judge can order a defendant to buy life insurance in a heartbeat," said Mars, "and child support can be collected from an estate."

How much is child support? Mars told us that consumers generally would have a tough time calculating the amount. "There is a commercial computer program sponsored by the State of Montana that includes a calculation of tax liability and accounts for the self-support reserve," said Mars. Do people have to buy this program if they want to see what their exposure or potential profits are? "No," said Mars. "Public libraries have it." We pulled the 2012 guidelines from the Montana Department of Public Health and Human Services to see if we could understand them. If one parent has substantially all of the income and the other parent can win primary parenthood, it actually is pretty simple. Montana works from after-tax income. A loser parent is allowed to spend $15,171 on him or herself. Then the next $4,551 (one child) or $7586 (two children) of after-tax income belongs to the winner parent, plus payments for health insurance, unreimbursed medical expenses, and child care costs. After that, the winner parent collects 14 percent (1 child), 21 percent (2 children), 27 percent (3 children), etc. (up to a maximum of 47 percent) of the loser parent's additional after-tax income. If a hedge fund manager earning $200 million per year after taxes goes skiing, hunting, or fishing in Montana, for example, and a child results from a one-night encounter, the child support payments will be approximately $28 million per year. Will that actually be ordered by a Montana judge? "That's a good question," said Mars. "Certainly the formula will kick out $1 million per month if you put in a high enough income. The only real guidance for this kind of a situation comes from an appeals court case in the 1990s. An award of $84,000 per year for a single child was upheld." [That's about $131,000 in 2014 dollars or $2.36 million over 18 years.]

Among states that offer unlimited child support, this 14 percent single-child rate on after-tax income makes Montana more generous than Virginia (2.6 percent of pre-tax income) and California (11.52 percent of after-tax income). I.e., a child yields more revenue in Butte, Montana (median house price under $100,000) than in Fairfax, Virginia (median house price $500,000) or Santa Monica, California (median house price $1.1 million). On the other hand, Montana is less generous with defendants' income than Illinois (20 percent of after-tax income), Massachusetts (11 percent pre-tax), or Wisconsin (17 percent pre-tax). Due to New York's cap on the income that can be considered for child support, a child in Ted Kaczynski's old cabin in Lincoln, Montana could yield more child support than a child on Park Avenue in Manhattan.

Are appeals on custody, child support, and alimony determinations impractical, as attorneys in other states have told us? "I would generally agree that appeals on these issues are not useful," said Mars. "The Montana Supreme Court never wants to substitute their discretion for the trial court's."

Mar said that a "walk-away" prenuptial agreement, in which parties kept separate property separate and waived alimony, would be valid in Montana (assuming adequate disclosure and representation at the time of signing).

State background

The average hourly wage in Montana is $18.29 per hour. Census 2014 show that median income for a 22-36-year-old college-educated woman working full time is $28,000 per year ($21,806 after taxes). The corresponding man earns $40,000 per year ($30,368 after taxes). Attending University of Montana for four years will cost $75,280. Montana collects 8.7 percent of residents' income to run state and local government (compare to a national average of 9.9 percent; source: Tax Foundation).

The average annual cost of child care is $8,307 for an infant and $7,285 for a four-year-old. The total cost of child care from age 0 through 12 is about $52,495 in commercial settings or $46,408 in a family care setting.

The male college graduate will have an after-tax spending power of $349,872 after 14 years of working (14 years of income minus taxes and the cost of college). After adjusting for USDA-estimated costs of caring for a child, he would have a greater personal spending power collecting child support when that support is $2,370 per month ($28,440 per year) or more. Using our simplified child support equation, this is obtainable from a mother who earns $185,807 after taxes (subtract $15,171 for self-support, subtract $4,551 for the basic payment, then multiplying the remainder by 14 percent and add back in the $4,551). With two children from two different mothers, however, he could have an after-tax spending power larger than from going to college and work if each mother paid $1,560 per month, which is possible when each mother earns $116,378 per year.

The female college graduate will have an after-tax spending power of $230,004 over the same time period. She would be better off collecting child support when that exceeds $1,815 per month. This would require finding a father earning more $138,235 after taxes. If she is suing two fathers, however, she is financially better off compared to the college/work case when she can get $1,282 per month from each one. This should be possible within the guidelines if each defendant earns at least $95,592 per year after tax.

Among Montanans surveyed by the Census Bureau in March 2014, 89 percent of those collecting child support were women.

The Scenarios

Scenario 1: Professional Wife and Slacker Husband

A 35-year-old female hand surgeon earning $325,000 per year marries a 33-year-old photographer. She sets up her husband with a photo studio and $100,000 of equipment, but he works just a few hours per week. They have a one-year-old child who is cared for by a nanny. The father is often home with the baby and nanny, but he spends most of his at-home time watching TV and surfing the Internet, leaving the child-rearing chores to the nanny. With the mom at work and/or taking care of the baby, the dad begins an affair with a young fashion model. After two years of marriage, the mom sues for divorce, custody, and child support.

Mars explained that the parents will share decision-making, corresponding to "legal custody" in other states: "The premise is that you're still mom and dad and will co-parent the children."

What about what other states would call physical custody? "The court will look at some parenting time for the father, even though he is a slacker, if he has a positive relationship with the child. In Missoula County the district court judges have put together parenting plan guidelines based on a child's developmental age. Consistency and continuity of care are the most important considerations, with the nanny here being an important factor." Where does Montana stand on the issue of overnights for infants? "Children must wake up in the same crib every morning until 6 months of age," said Mars.

We looked at the "Montana Fourth Judicial District Parenting Guidelines." The litigants are divided into "primary caretaker" and "secondary caretaker." For a child of one year who is being breastfed, the recommended schedule is "Three two-hour visits per week, with one weekend day for six hours". An alternate recommendation is "Three two-hour visits per week, with one overnight on a weekend for no longer than a twelve hour period, if the child is not breast feeding and the secondary caretaker is capable of providing primary care." The published guidelines implicitly disfavor 50/50 parenting arrangements. There is no mention of a 50/50 schedule, e.g., week-on, week-off, or 5-5-2-2. The assumption is that there will always be a primary and a secondary parent, e.g., for children six to twelve years of there will be "several visits each week" with the "secondary caretaker."

Who will be designated secondary parent and child support payor in this scenario? Mars predicted that "Dad will be the secondary caretaker and probably end up with the three two-hour visits and one weekend day schedule." How will his child support obligation to the doctor be calculated, given that his photography business is not profitable? "A court will impute at least minimum wage," Mars said, "or his income from a previous job. A vocational expert could be used by the wife in this case as well."

As the child gets older, was it realistic for the father to hope for 50/50 custody? "Yes," said Mars. "It is a pure best interest of the child standard for a modification." [i.e., he does not have to demonstrate a "substantial and material change in circumstances" as in some states]

With 50/50 parenting, the father could collect $15,180 per year ($258,060 over 17 years), rising to $30,168 per year ($512,856 over 17 years) if he could win primary custody. If the higher-income mother is the primary parent, she won't collect anything unless the father's after-tax income rises above about $15,000 per year.

Mars predicted that, at his $175 per hour rate, this case would cost $20,000 to $30,000 to handle through trial on one side. How is the father going to afford this kind of money? "Based on the income disparity he can get the judge to order her to pay his fees," said Mars. "The statute says a court can advance assets out of the marital estate for professional fees as well."

What kind of alimony can he hope for? "This is a short-term marriage and the court is inclined to put the parties back to where they were. That means it would be difficult for him to get alimony or a lucrative property division." Are her premarital savings then unreachable? "He can get a share in their appreciation especially if he can argue that he somehow made a contribution to that appreciation." What if the couple married during a period of high inflation and therefore her investment portfolio simply appreciated due to inflation? "That would be considered a 'market force' and he would not be entitled to share in the appreciation," said Mars.

Scenario 2: 14-year marriage of equals

A 22-year-old woman marries her 22-year-old college sweetheart. After 14 years of marriage, they have four children, ages 3, 7, 9, 13. Both parents are public school teachers earning approximately $65,000 per year.  They have shared child care duties roughly equally over the years. Now they can't stand to be in the same room together. He accuses her of having an affair. She accuses him of being verbally and emotionally abusive to her, but not to the kids. After a stormy argument in the kitchen, he moves in with a friend and she files for divorce, requesting sole custody and child support. The father answers the Complaint by requesting sole custody, but no child support. Both parents agree that the marital assets can be split 50/50. Both parents prefer as little post-divorce contact with the other as possible.

What if both parents storm into court demanding to be designated primary? "The court has the power to order 50/50 parenting against the wills of both parties," said Mars. Can a parent who has the upper hand for primary caretaker designation forestall shared parenting by generating and then asserting conflict? "I have seen people generate conflict so that it is tough for the other parent to participate," said Mars, "but I would still predict that the outcome of this case would be a 50/50 schedule with exchanges at school."

Minimal child support would be owed, due to the equal incomes, with a 50/50 schedule. The parent who becomes primary will receive $13,272 per year from the secondary parent, which will result in a $26,544 difference in after-tax spending power for the two households, though both will presumably have to maintain five-bedroom houses.

Scenario 3: 10-year marriage with kids 2 and 5

An 18-year-old woman marries a medical resident. She spends the first four years of the marriage as a college undergraduate, earning a bachelor's degree, and then becomes a stay-at-home mother to two children. She files for divorce after 10 years of marriage. The kids are 5 and 2 years old at the time the divorce commences. The plaintiff does not allege any misdeeds on the part of the father, only that they drifted apart in the time that she aged from 18 to 28. The mother has very obviously been the primary caregiver. The father has now completed his medical training and is earning $275,000 per year. The family has home equity of $300,000 and additional savings of $200,000.

Is the father here locked into the breadwinner role that he voluntarily picked? Yes and no, said Mars. The father could cut back to four days per week of work, to earn $225,000 per year and be able to assume 50/50 parenting responsibilities, but he would have to pay alimony and child support as though he were still earning $275,000 per year. Would he pay less in child support because of the 50/50 parenting? "The court has discretion to give her 100 percent child support despite the 50/50 parenting," said Mars.

Can she get alimony, Connecticut-style, until the youngest child turns 18? "No," said Mars. "Maybe until she earns another degree. The longest maintenance awards that I've seen in the last ten years have been for no more than five years and that was after a 20-year marriage." If other states would award permanent alimony after a 10- or 20-year marriage and call it "fair," doesn't that make Montana "unfair"? "Baby Boomers are deciding to get divorced when they're 60," said Mars, "and that's a new phenomenon. Courts will start looking at lifetime maintenance awards."

For however long it lasts, how much would her alimony be? "It depends on her standard of living and financial needs," said Mars. Since she knew that she would be filing the lawsuit and he didn't, doesn't that give her an incentive to pump up her lifestyle in the year prior to divorce? "Pre-divorce planning certainly goes on," said Mars, "and she could lease a new car, get the family to move into a larger house. If her needs are modest alimony probably won't be more than one third of his income. After alimony is awarded, child support is calculated using the alimony number as her income."

Without alimony, and the children spending fewer than 109 overnights per year with the father, the mother's entitlement to child support would be $39,276 per year. At 50/50 parenting it would slip to $19,932 per year.

Can she ask for 90 percent of the property given that her earning potential is lower? "She can get an unequal property division," said Mars, "but the most extreme that I've seen is 65/35. 60/40 or 55/45 would be more typical."

Scenario 4: 1.75-year marriage with 8-month-old child

A 25-year-old woman marries a 40-year-old never-married medical doctor earning $275,000 per year. She had been earning $50,000 per year working as a receptionist in a medical office. She has a child after a year of marriage, quitting her job during the 7th month of pregnancy due to fatigue. She files for divorce when the child is 8 months old (after 1.75 years of marriage), alleging that the father did not participate in the infant's care, e.g., he did not change diapers or get up in the middle of the night to soothe the baby. The mother will allege that the father was verbally demanding and abusive, though there won't be any witnesses to corroborate. The father had savings of $2 million that he accumulated prior to the marriage but there was no significant accumulation of assets during the less-than-two-year marriage. The mother seeks a division of assets as well as alimony.

Montana operates a de facto "tender years" system by developing and using guidelines that provide for no overnights with the secondary parent (almost always the father) until a child turns 18 months and also for favoring a breastfeeding parent with a more or less guaranteed 100 percent share of overnights. (An attorney in another state said "I keep telling my defendants that they need to learn to breastfeed, but so far none of the guys have managed.")

What's the financial consequence of the tender years system here? "He pays her full child support [$26,100 per year] because the schedule [0 overnights] is less than 110 overnights."

How does the schedule evolve over time? "The court would order a graduated parenting plan," said Mars, "with overnights for the father as the child gets older. However, he will have to come back to the court if he wants to ask for 50/50." Note that the difference between 109 overnights for the father and 183 overnights would be $220,320 over 17 years.

What is the impact of his $2 million in premarital savings? "She can't get it via property division," Mars said, "but it might factor into the father's ability to pay alimony and might help her get 75 percent of the marital assets." What kind of alimony will there be after less than two years of marriage? "One of the factors is her having to take care of the child and therefore not being able to work," said Mars. "Courts can definitely award 4-5 years of maintenance after a 2-year marriage." [Another attorney summarized this kind of situation as follows: "not only does the father lose his bid for 50-percent parenting but he has to pay the person who sued him to be the hands-on parent that he tried and failed to become."]

What is the impact of the income on the $2 million? "It gets factored into child support and alimony," said Mars. What if the money has been invested in stocks that pay very low dividends. Can she argue that income should be imputed to the money? "Yes," said Mars, "but she may not succeed." As in other states, the wife's best hope here is for rampant inflation. If the $2 million starts earning 20 percent after-tax interest because the inflation rate goes back to its June 1981 peak of 20 percent, she can collect 14 percent of that (i.e., an extra $56,000 per year despite the fact that the doctor's savings are not growing in real terms).

Scenario 5: 18 year old free spirit/music lover; no marriage

An 18-year-old woman goes to a music festival and meets a 38-year-old medical doctor earning $275,000 per year. Things get a little crazy and a few months later she calls him up to say "I am going to have a baby." The 18-year-old does not go to college, quits her $12/hour job during the pregnancy, and does not wish to return to work.

Unlike in some other states, she can go to a state agency to get a child support order only if she is on public assistance. Otherwise she will have to hire a private attorney and seek reimbursement of fees from the father. In all cases the father will have to hire a private attorney if he wants to get visitation with the child. "He's not prejudiced in terms of getting parenting time because he did not live with the child," said Mars.

The mother can collect $469,800 over 18 years under the Montana guidelines.

If doesn't tell the father about the child's existence, how far back can the woman go for retroactive child support? "It depends on the judge," said Mars, "and if the father has registered a 'Putative Father' form with the Department of Health and Human Services she is only entitled to back support if she has informed the father regarding the birth." [According to Wikipedia, a total of 33 states operate such registries.] We pulled the form from the state's web site. The form notes that "You may file with the registry even though you have no actual knowledge that a pregnancy has occurred or a child has been born" and has a line for "Location and date of possible conception of child." There is an area at the bottom where the form can be notarized. In the ideal world of the people who developed this form, to protect his legal rights, every time an unmarried man has sex he would (a) get the partner's Social Security number, full legal name, and mailing address, and (b) go to a notary and then mail or fax this form to the state agency.

What about other costs? "She can get medical expenses and legal fees from the father," said Mars. "If I'm representing him I would advise him to immediately send check for half the medical expenses because that is a factor in allocating parenting time."

What if she marries a billionaire when the child is 5? "There will be no reduction in his child support obligation," said Mars.

Removal/Relocation

Montana calls it a "Relocation Action" when a parent wants to move. "It is based on a child's best interest," said Mars, "but cases are all over the board. At the district court level it will depend on the judge. It is much easier if you're the primary caretaker than if there is 50/50 shared parenting." What should a primary parent expect from a typical district court judge? "More than half of our judges think that there is no better place to raise a child than the state of Montana," Mars noted, "and there is a huge burden with them. It helps if the moving parent offers to pay all of the travel expenses that are associated with the move."

Quirks

Montana assigns different cash entitlements to children from the same co-parent. The first person to sue a single defendant gets child support calculated based on that defendant's entire income. The second person to sue gets child support based on the income minus the previous child support order. The third person to sue gets child support based on the income minus the two previous orders.

Children of an intact marriage have almost no entitlement to cash compared to children of extramarital encounters. Montana's guidelines allow a deduction of $2,276 per year from pre-tax income for the defendant who has a spouse and child at home. Depending on the tax bracket, this might correspond to approximately $1,400 per year after tax. By contrast, a guidelines-based child support order for the parent of an extramarital child might be $100,000 per year or more.

Montana provides financial incentives to have children with multiple co-parents. Rule 16 of the guidelines has factors for "Standard of Living Adjustment" against which a defendant's income is multiplied. The factor for a single child is 0.14 while the standard for three children is 0.27. As a practical matter, in a case where $300,000 of income is available each year from a co-parent, over 18 years three children from one co-parent will yield $1.46 million in tax-free revenue while three children from three co-parents will yield $2.27 million.

Changes on the Horizon

Mars didn't see or want to see any changes to Montana statutes and customs. "There were dramatic changes in 1997," he noted, "and just removing the term 'custody' reduced the number of appeals by 90 percent. The affirmative duty to disclose assets and liabilities also streamlined cases."

Why isn't he complaining, as do lawyers in some other states, about the unevenness of outcomes based on which judge is selected? "Judges here are elected and have to run for reelection every six years," Mars responded. "That tends to put some pressure on judges to refrain from ruling based on personal bias. I think it is on balance good to have elected rather than appointed judges."

Our Summary

Based on what we were told by Mars and what we have learned from attorneys in other jurisdictions, here is our (the authors') interpretation of some of the implications of the Montana system.

By offering litigants the option to disqualify a judge Montana greatly increases citizens' perception of fairness in the system. By requiring judges to stand for reelection periodically Montana further limits how far a judge can go in the direction of personal prejudice.

Montana's guidelines for parenting plans likely reduce the amount of litigation regarding a child's schedule, but not to the extent that the statutory schedule in Texas would. On the other hand, Montana's tying of parenting days to dollars received encourages schedule-related litigation.

Montana's child support guideline formula, using a straight percentage of a parent's income, ignores the available research on what parents, absent court orders, actually spend. The data, which in theory federal law requires Montana to use, show that parents spend a declining fraction of their income on children as income rises. I.e., if an intact family with $100,000 per year in income spends $14,000 per year on a child, it cannot be inferred that an intact family with $1 billion in income spends $140 million per year on their single child.

Montana's combination of relatively low incomes and relatively high and unlimited child support means that some of its highest-income citizens are going to be those who managed to gain custody of a child whose co-parent is a successful earner out of state. Mars confirmed this anecdotally: "We had a beautifully dressed lady come into our office and when we asked about her occupation she said 'I don't have to work; I have child support.' She was collecting from a man who earned his money out of state."

A Montana citizen whose spouse hires P. Mars Scott is in trouble!

More: read the rest of Real World Divorce: web edition | Kindle edition