What else do I need to know about Minnesota Spousal Maintenance, so I don’t screw this up?

A. Buyout of Spousal Maintenance claim & just be done with each other

Instead of having one spouse pay ongoing spousal maintenance payments over time, the parties might agree to a one-time lump sum payment that “buys out” or replaces those future payments. To figure out a fair lump sum amount, you calculate the present value of the maintenance award — essentially, how much all those future payments are worth in today’s dollars.

B. Life Insurance, in case the Payor doesn’t live forever

There is the risk that the paying spouse will predecease the recipient spouse, leaving that spouse without spousal maintenance. The court has discretion to require the paying spouse to name the receiving spouse as a beneficiary of life insurance on the paying spouse’s life. Duffey v. Duffey, 432 N.W.2d 473 (Minn. Ct. App. 1988). Typically, this is reserved for situations warranting indefinite spousal maintenance. O’Brien v. O’Brien, 343 N.W.2d 850 (Minn. 1984); Walker v. Walker, 553 N.W.2d 90 (Minn. Ct. App. 1996).

C. Taxes, of course, Taxes

1. There is a need to consider net incomes of the parties. The appellate courts have made clear that if evidence is presented to show a payor or recipient’s net income after taxes, that evidence must be taken into consideration when determining the need for spousal maintenance. See Schmidt v. Schmidt, 964 N.W.2d 221 (Minn. Ct. App. 2021), Walker v. Walker, No. A20-1009, 2021 WL 2520663 (Minn. Ct. App June 21, 2021).

2. Used to be tax-deductible, unless grandfathered with a decree dated before January 1, 2019 (modifications to pre-2019 spousal maintenance awards made after January 2019 can retain the tax deductibility).

D. There are Incentives for Settlement

Courts have a significant amount of judicial discretion on the issue of spousal maintenance, and the standard for reversal on appeal is an abuse of discretion. Prahl v. Prahl, 627 N.W.2d 698 (Minn. Ct. App. 2001). The statute is permissive: “the court may grant” an award. Minn. Stat. § 518.552, subd. 1. The amount and duration of spousal maintenance awarded can vary widely depending on the county and the judicial officer, but that should lessen now that the statute has provided more guidance on duration. Still, you can only have a Karon waiver through settlement.

E. The Legendary “Karon” waiver

1. In the Karon case, the Minnesota Supreme Court held that parties may stipulate to the parties’ contractual divestiture of the court’s jurisdiction to modify maintenance awards. 

> Karon v. Karon, 435 N.W.2d 501 (Minn. 1989).
Karon was codified in Minn. Stat. § 518.552, subd. 5.

2. Even with a Karon waiver, spousal maintenance ends on death or remarriage. If the award is to continue beyond remarriage, that must be explicitly stated in the Decree.

3. A stipulation that divests the court of jurisdiction to modify a maintenance award, or some part thereof, is commonly known as a “Karon waiver.” In order for a Karon waiver to be enforceable, there must be specific findings in the stipulated judgment and decree on each of the factors below. The waiver must:

a) Be fair and equitable;

b) Be supported by consideration described in the findings;

c) Be reached after full disclosure of each party’s financial circumstances;

d) Contain an express and immediate contractual waiver of the right to modify spousal maintenance;

e) Include a voluntary and intentional waiver; and

f) Immediately and expressly divest the court of jurisdiction. Butt v. Schmidt, 747 N.W.2d 566, 573 (Minn. 2008); Loo v. Loo, 520 N.W.2d 740, 745-6 (Minn. 1994).

4. There are many pitfalls that will render a Karon waiver improper or ineffective, so be very careful.