Nebraska

Part of Real World Divorce: web edition | Kindle edition

We learned about Nebraska law from Susan Koenig, the founder of the Omaha-based Koenig|Dunne. She has been practicing in Nebraska for more than 30 years and does mediation, litigation, and coaching. She has taught "Women and the Law" at Creighton University School of Law and has served on the Domestic Violence Committee of the Omaha Bar Association. Koenig was president of the Omaha chapter of the National Organization for Women. With her partner Angela Dunne, she is the co-author of Divorce in Nebraska, intended for a lay audience and available from amazon.com See http://www.nebraskadivorce.com/ for more biographical data. Partner Dunne served on a 2014-2015 state commission developing new child support guidelines for Nebraska.

Koenig currently delegates most day-to-day representation of clients to her junior colleagues. Among those clients that she herself has represented, "slightly more" have been women than men. The Nebraska term for the person who initiates a divorce lawsuit is "plaintiff" and the person being sued is the "defendant." Consistent with published research, Koenig says "more women are plaintiffs for sure" in the cases that she has handled.

A divorce lawsuit filed today in Nebraska would be tried in 12-18 months, according to Koenig, who formerly had two or three such trials on her calendar each month. Nebraska offers "temporary orders" between one and three weeks after a case is filed. Koenig says that the typical hearing lasts 15 minutes and is decided on affidavits and attorney arguments, but "occasionally there will be an evidentiary hearing [one with witnesses testifying]." Historically judges would "pick one parent" and also "grant one party temporary possession of the house," said Koenig, "but there is a trend toward more 50/50 parenting time schedules [at the temporary order stage]." Is Nebraska like other states in that the temporary orders tend to become final? "Judges [at trial] will pay close attention to how temporary order has worked out when deciding what to do for the final order," responded Koenig. "If it has worked well the temporary order will have a strong influence on the final order. If hasn't worked out well it will have a different influence."

Given the quick availability of temporary orders, does that make Nebraskans less likely than divorce litigants in other states to make domestic violence allegations? "Our firm doesn't use the domestic violence system that way," said Koenig. What about other attorneys? "It is not rampant." How do the divorce and domestic violence systems dovetail? Dunne and Koenig's Divorce in Nebraska suggests, in response to a never-violent spouse whom a prospective plaintiff fears will become "really angry and upset", "if you are still concerned about your spouse's behavior, ask your attorney about a temporary restraining order (TRO) to be delivered to your spouse at the same time as the divorce complaint." How does a judge figure out whether or not a domestic violence allegation is true? Dunne and Koenig's Divorce in Nebraska notes that "Most domestic violence is not witnessed by others, and judges know this … your testimony is likely to be the most compelling evidence."

Child support in Nebraska runs until a child's 19th birthday and judges cannot order a parent to pay for college. Child support revenue, once established, is relatively secure. Koenig explained that there is "a two-prong test for modifying a schedule: (1) a material change in circumstances not foreseen by the parties [excludes growing older], (2) the child's best interest.  It is difficult to change a schedule that is in place and working." What would constitute evidence that it wasn't working? And would that be not working for a parent or not working for a child? "It has to be evidence that it wasn't working for child," said Koenig. "It could be a decline in school performance tied to the child's time with one parent or a correlation between behavior or emotional problems with the child's time with one parent." There is no fixed age at which a child's preference regarding a schedule or custody will be considered, but "older is more likely," according to Koenig. Judges can order a child support payor to purchase life insurance for the benefit of the custodial parent, but Koenig says "it is more common if the insurance is already in place."

Child support revenue in Nebraska is unlimited under the guidelines, but amounts over about $2,200 per month for a single child are discretionary. Nebraska's guidelines go up to a combined parental monthly after-tax income of $180,000 per year (roughly $287,500 pre-tax for a person filing single). Above that, the formula is 10 percent of net income for one to three children, 12 percent for four children, and 13 percent for five children. Note that it is difficult to understand how this can be in compliance with federal regulations that require child support guidelines to be developed in light of economic data on the cost of child rearing. There are no economic studies showing that three children cost the same as one child. When only one child is involved Nebraska's extrapolation percentage is more generous than Virginia's (2.6 percent of pre-tax income), similar to California's (11.52 percent of after-tax), and much less lucrative than Massachusetts (11 percent of pre-tax).

Consumers can calculate child support at the guidelines level using state-published materials, according to Koenig, but she notes that answering the question "What is income?" may not be straightforward. Section 4-204 of the Nebraska guidelines would seem to open up a rich field of litigation on the topic. "The court may consider overtime wages … if the overtime is a regular part of employment and the employee can actually expect to regularly earn a certain amount of income from working overtime" can lead to evidence and argument about what is "regular" and the employees "expectations." The Nebraska guidelines say that "This would include income that could be acquired by the parties through reasonable efforts. For instance, a court may consider as income the retained earnings in a closely-held corporation of which a party is a shareholder if the earnings appear excessive or inappropriate." Thus there can be litigation over what is a "reasonable effort," whether a corporation in which a defendant owns stock is "closely-held," and the extent to which the retained earnings of that corporation "appear excessive" to a judge who may have no experience in the world of business. Instead of using IRS 1040 income as the basis for a self-employed person's child support obligation, the Nebraska guidelines ask the attorneys and judges to recalculate depreciation for capital equipment and invite arguments about whether a capital asset is "ordinary and necessary."

"Care expenses for the child for whom the support is being set, which are due to employment of either parent or to allow the parent to obtain training or education necessary to obtain a job or enhance earning potential … shall be added to the basic support obligation computed under these guidelines." (Section 4-214) "The increased cost to the parent for health insurance for the child(ren) of the parent shall be prorated between the parents." (Section 4-215) In a situation where one parent has substantially all of the combined income, day care and health insurance will be paid for by that parent on top of the basic child support guideline numbers.

Nebraska runs a "days for dollars" system that most attorneys nationwide say leads to litigation regarding a child's schedule. Koenig's Divorce in Nebraska says "An award of joint (shared) physical custody can result in a substantial reduction in child support." How substantial? When there is "joint physical custody," defined as "142 days per year," total child costs are considered to go up by 50 percent but then be allocated to the parents in proportion to the amount of time that the children spend with each parent. In a situation where there is 50/50 custody and one parent has all of the income, the child support payments would be 75 percent of the payments in a sole custody situation (.5 * 1.5 * (table amount)).

What about a "walk-away" prenuptial agreement in which parties keep pre-marital property separate and waive alimony. Could that be valid in Nebraska? "Yes," said Koenig, "but the court will still examine a pre-nup. Pre-nups are uncommon."

As in most other states, appeals are of little practice value. Most of the decisions that might upset a divorce litigants are decisions of fact rather than law and therefore not reviewable by an appeals court. Koenig says "appeals are very difficult to win" and, in any case, a victory at the appeals court may simply result in the case going back to the same trial judge who can make the same decision with a different rationale.

Unlike in some nearby states, a Nebraska litigant does not have an automatic right to disqualify a judge from his or her case.

State background

The average hourly wage in Nebraska is $19.00 per hour. Census 2014 data show that median income for a 22-36-year-old college-educated woman working full time is $36,000 per year ($27,737 after taxes) and $50,000 for a corresponding man ($37,018 after taxes). Attending University of Nebraska, Lincoln for four years will cost $85,800. Nebraska collects 9.2 percent of state residents' income to run state and local government, slightly below the national average of 9.9 percent (source: Tax Foundation).

The average annual cost of child care is $7,639 for an infant and $6,386 for a four-year-old. The total cost of child care from age 0 through 12 is about $46,551 in commercial settings or $39,351 in a family care setting.

The male college graduate will have an after-tax spending power of $469,456 after 15 years of working (15 years of income minus taxes and the cost of college). After adjusting for the USDA-estimated costs of caring for a child, he would have a larger personal spending power by collecting child support when that support is $2,809 per month or more. This would be obtainable from a mother who earns $252,960 per year, after taxes. 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 $1,740 per month, which is possible when each mother has an after-tax salary of $129,000 per year.

The female college graduate will have an after-tax spending power of $330,241 over the same time period. She would be better off collecting child support when that exceeds $2,198 per month. This would require finding a father earning just under $180,000 per year, after tax. If she is suing two fathers, however, she is financially better off compared to the college/work case when she can get $1,474 per month from each one. This should be possible within the guidelines if each defendant earns at least $102,000 per year.

Taking care of one's own child in Nebraska is much more lucrative than taking care of someone else's. The state pays foster parents only about $3,869 per year.

In "Payment reductions proposed for Nebraska child support guidelines" (Omaha World-Herald, January 13, 2015), Joe Duggan noted that "Noncustodial parents currently get an average of five days of visitation per month — or about 16 percent of the parenting time — according to a 10-year analysis of Nebraska court decisions released last year." Among Nebraskans surveyed by the U.S. Census Bureau in March 2014, 95 percent of those collecting child support were women, i.e., suggesting that approximately 95 percent of the noncustodial parents ("loser parents") were men.

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.

What some other states refer to as "decision making" is in Nebraska called "legal custody" and joint legal custody "would not be automatic," according to Koenig. "It depends on the parents' ability to cooperate."

Koenig described our hypothetical couple as "good candidates for joint physical custody." What would the actual schedule look like? "It varies widely with the judge," she responded. "It would not be week-on week-off with a child of this age. It could be three or four days with one parent and then flip." Would a judge order a schedule that changed as the child got older? "You seldom see a progressive plan," Koenig answered.

How would child support be calculated given that Nebraska is an income shares state and the father's income is currently zero due to the unprofitability of his photography business? "His earning capacity would be established based on his education, employment history, and the employment opportunities available. Vocational experts may come in to testify," said Koenig.

If the father could somehow get primary custody he could collect a minimum of $2,201 per month in child support, about $475,416 over 18 years (until the child turns 19). If the mother could get primary custody, she would avoid paying this sum and also receive at least some amount of child support from the father. Thus the financial stakes in the custody fight are over $500,000 after taxes. In a 50/50 situation, if minimal income is imputed to him, he would receive 75 percent of the $475,416, or $356,562 (i.e., the mother has a roughly $400,000 incentive to seek a schedule involving fewer than 142 overnights per year with the father).

What would the legal fees look like on each side of this case, assuming everything was disputed through trial? "She could spend $75,000," said Koenig. Given that the father has no income, how can he afford his costs of defense? "He will always ask and can probably get the court to order some portion of his fees to be paid by the wife."

What kind of property division and alimony can the father hope to obtain? "Half of the marital estate and at best a short term of temporary alimony, basically just from the time of the temporary hearing through the trial," said Koenig. What would the amount of alimony be? "There is no formula," she responded. "Judges are all different."

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.

Even if both parents ask for sole physical custody, Koenig said that a judge could impose a 50/50 arrangement on the litigants. She notes that "it is likely that one of them would be named sole legal custodian because of the level of conflict."

Could a parent who planned to file a lawsuit take on more child-related tasks in the year prior so as to be set up to win sole physical custody and the child support cash that accompanies it? "People can and do this," said Koenig, noting that it doesn't work as well as in some other states due to judges being more forward-looking than backward-looking. She added "We need to change child support laws so that people are incentivized to behave well.

The financial stakes here can be computed by looking at the combined parental after tax income of about $3,846 from the parent who files singly and $4,218 for the parent who files as head of household with four dependent children. That's a total of $8,064 per month and results in child support from the table of $2,710 per month. The parent who wins sole custody could then expect to be paid approximately $1,292 per month ($15,510 per year), resulting in a $31,000 per year difference in after-tax spending power between the households. With shared parenting there would be essentially no child support paid due to the equal incomes.

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.

Koenig says that the mother here has a good chance of becoming the primary custodial parent due to the young ages of the children. What if the father says that he can cut back to working four days per week in order to handle 50/50 shared parenting? "He gets a good reception if he says that," she responded, "but he would have to bring in someone from his practice group to testify that he actually can and will do it."

Unlike in some states that would want to help the mother remain at home until the youngest child graduates from high school, Koenig says that alimony in Nebraska for this hypothetical wife would last between 5 and 7 years. There is no formula for the amount; "it depends on her need and how much she is getting for child support." Child support at the top of the guidelines for two children is $35,604 per year (roughly equivalent to the median household income for Nebraska, when the tax-free nature of child support is accounted for). In a 50/50 situation the mother would receive only $26,703 per year, thus giving her a roughly $150,000 incentive to fight against shared parenting.

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.

Koenig predicts sole physical custody to the mother here, with the child spending every other weekend plus one night during the week with the children. What does a "weekend" mean in Nebraska? "It varies with the judge," responded Koenig, "and could be Friday afternoon to Sunday or Friday afternoon to Monday morning."

The income on the father's premarital savings would factor into alimony and child support calculations, but the principal cannot be obtained via property division "unless the assets were commingled." As in nearly every other state, inflation is helpful to the child support and alimony recipient because it would increase the nominal return on the $2 million.

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.

"We have paternity cases every day," said Koenig. Does the mother here need to hire an attorney? "No," responded Koenig, "she can get paternity established and a child support order from a state agency." Can she wait until the child is 17 years and 364 days old to ask for child support retroactive to the birth? Nebraska Statute 43-1402 has an annotation noting that "A child born out of wedlock is entitled to child support retroactively to the date of birth because it is upon the child's birth that the parental duty of support commences." Statute 43-1411 says that the mother has to file within four years after the child's birth, but the state can pursue child support (to reimburse welfare payments) up to 18 years from the child's birth.

Removal/Relocation

Nebraska calls it "removal" when a parent wants to move with a child. Koenig says "the best interest test for the child is very challenging. The court looks at all ties that the child has to the community. It is an uphill battle [for the parent who wants to move]."

Quirks

Nebraska provides financial incentives to have children with multiple co-parents. At the top of the guidelines, three children with the same co-parent will yield $751,120 in payments over 19 years. Three children with three co-parents would yield $1.5 million.

Nebraska assigns a different cash value to children of the same co-parent. Section 4-205 of the Nebraska guidelines provides that "Child support previously ordered for other children" will be deducted from net income when calculating a new child support order. Thus each successive child support plaintiff receives a smaller amount if all are suing the same defendant. By design, the last plaintiffs to sue receive almost nothing (about $600 per year), because the defendant's net income has been reduced by previous awards to below $12,000 per year.

Changes on the Horizon

Koenig was actively working on an improved mechanism for expense-sharing in joint physical custody situations: "Parents shouldn't be exchanging receipts. It is a huge source of conflict."

What did she want to see? "I would like to see more awards of attorney's fees. Courts neglect to look at the true disparity [between divorce litigants]," Koenig said. "There should be more education of judges regarding domestic violence."

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