In Massachusetts and other equitable division states, there is no requirement of equal division of assets, but an “equitable” division which may very well be equal. Massachusetts includes all property, wherever and however acquired. Trust property is included in Massachusetts. Even if parties don’t want to divide Trust property, they must disclose it on court filed financial statements. Undisclosed property carries a risk of redistribution based on fraud.
Unequal Property Divisions
- Short-term marriages
- Special needs cases
- Second marriages
- Gifted and inherited property cases
- Court and parties have broad discretion to divide. Courts often divide inherited property equally, especially in long-term marriages. Courts may make unequal divisions based on source.
- Low contribution cases
- These tend to involve short, often childless marriages. Low contribution includes cases where there is a negative contribution from the less-wealthy spouse, for example, excessive spending habits, long periods of unemployment without contribution equalizing homemaker responsibilities and gambling. Contribution is a better way to analyze these cases than ‘conduct’
- Prenuptial agreement cases
- Generally parties should have counsel independently review prenuptial agreements and opine on enforceability. Enforceability requirements are: the agreement was fair and reasonable when executed; full (and detailed) disclosure was made before execution; agreement is fair and reasonable at time of enforcement; and lack of duress.
- Enforceable prenuptial agreements may be flexible, providing increased entitlement for the less wealthy spouse as marriage grows longer or children are born.
- Characteristics of an enforceable agreement include:
- Representation by independent counsel
- Reasonable length of time between execution and wedding
- Statements of intent that provide rationale for the provisions
- Standards of Enforcement for Prenuptial Agreements Osborne v Osborne 384, Mass.591 (1981)
Timing of Asset Values
In general, assets are valued at, or as near as practicable, to the time of divorce in Massachusetts. However, assets may be valued at date of separation, at the time of the drafting of the divorce agreement, on the day of the court hearing, or at Divorce Absolute.
- Judges tend to make such decisions based on evidence “that there is still a continuing marital enterprise” like raising of children.
- With a long separation and most assets accumulated in separation years, without continuing contribution of both parties, could value assets at date of separation.
Duration and Amount of Support
Spousal support is a matter of NEEDS plus ABILITY TO PAY. The general goal is to maintain as nearly as possible both parties’ standard of living as it was during the marriage, which is usually not possible.
Courts are starting to look at post-marital parity instead of minimum needs especially in long-term marriages. Court looks at many factors in determining amounts:
- Standard of living for both parties after divorce.
- Entire financial arrangement including both property division and support.
- Will property division generate income?
- Property division can be traded for support.
- All equitable division factors of MGL Sec.34 must be considered: length of the marriage, conduct of the parties during the marriage, the age, health, situation, occupation, amount and sources of income; vocational skills, employability, estate, liabilities and needs of each of the parties, and the opportunity of each for future acquisition of capital assets.
Employability of both spouses and attribution of income as well as actual income.
- Tax advantages of alimony vs. child support.
The Massachusetts Legislature enacted a statute reforming Alimony in the Commonwealth: MGL 20848-54 effective March 1, 2012.
Alimony now has definite terms regarding termination:
- If the length of the marriage is 5 years or less, alimony shall continue for not longer than one-half the number of months of the marriage.
- If the length of the marriage is 10 years or less, but more than 5 years, alimony shall continue for not longer than 60 percent of the number of months of the marriage.
- If the length of the marriage is 15 years or less, but more than 10 years, alimony shall continue for not longer than 70 percent of the number of months of the marriage.
- If the length of the marriage is 20 years or less, but more than 15 years, alimony shall continue for not longer than 80 percent of the number of months of the marriage.
- For a marriage of longer than 20 years, the Court may order an indefinite period up to the Payor’s entitlement to full social security payments (Age 65-67 depending on the year of birth of Payor).
- Alimony shall be terminated upon the death of Payor or Payee or the remarriage of Payee.
- Alimony may also be suspended, reduced, or terminated upon the cohabitation of the Payee for more than 90 days.
Failure to reference either alimony or alimony waivers can leave parties open to later complaint for alimony.
To qualify for alimony tax treatment, there must be a written instrument. The instrument can be: a judicial decree; judgment or order; or a written Separation Agreement.
Other requirements are:
- Payments must be cash;
- Instrument must not designate payments as some other purpose (for example, child support or property division);
- Spouses must not live together;
- Payments must end at death of recipient;
- Payments must not be child support;
- Alimony ending or reduced coincident with event in a child’s life (such as graduation from high school or college) may be “recaptured” by IRS.
- Payments reduced within six months before or after child’s 18th, 21st or local age of majority birthday are presumed not to be alimony.
Payments reduced on two or more occasions within one year of two different children’s birthdays between ages 18 and 24 are presumed not to be alimony.
Alimony decreased over and within three calendar years of date of divorce may also be subject to recapture as non alimony under IRS rules.
Emancipation language for end of child support should track statute. MGL Chapter 208, Sec. 28 provides that court may order support for children:
- Under age 18;
- Between age 18 and 21, if domiciled with and principally economically dependent on a parent (whether or not a student);
- Between 21 and 23, if domiciled with and principally dependent on a parent due to enrollment in an educational program (whether or not full-time).
The Child Support Guidelines shall apply for calculation of child support when the combined gross income of the parties is $250,000 or less. Additional child support for families whose combined income exceeds $250,000 is by Agreement or at the discretion of the Court. However, the calculation form has to be filed at the Court with every case.
In cases of true equally split physical custody it is helpful to calculate the support guidelines once as if Mom were full time custodial parent and once as if Dad were full time custodial parent. The difference in the calculations shall be paid to the parent with the lower income. The important concept here is that both homes should be equally able to offer economic advantages to the children.
In cases where the guidelines are not strictly applicable it is helpful to analyze the current pattern of living of the parties and what level of extras of activities, memberships, lessons and standard of living the children have been provided heretofore.
Relocation of Children
Most states require court approval or approval of the other parent before a child can be relocated out of the state. Relocation statutes and the standards of review vary state-to-state. Different states have different applications of the “best interest of the child” standard. Massachusetts is very liberal and only requires that the move be a “real advantage” to the family unit when the parent seeking removal does so to improve job or family ties.
Jurisdictional issues may arise if children are relocated. Generally, federal law governs relocation issues.
PKPA (Parental Kidnapping Prevention Act) is federal law that governs jurisdiction over child custody and visitation.
UCCJA (Uniform Child Custody Jurisdiction Act) is state law that governs jurisdiction over child custody and jurisdiction. The general principle is that “home state” (Wherever child has lawfully lived for at least the last six months) has exclusive jurisdiction.
UEFSA (Uniform Enforcement of Family Support Act) is state law that governs interstate child support orders.