DISTRIBUTION OF MARITAL ASSETS
By: Attorney Jeni Landers, Esquire
Disclaimer: This post is meant to give you some general information about divorce in Massachusetts. It is NOT all inclusive and is NOT meant to be a step-by-step guide. The laws on divorce, custody, support, alimony, and property division are complex and you should retain counsel if possible. By providing you this information I am not in any way undertaking representation of you, creating an attorney-client relationship with you, providing you with specific advice on your situation, or guaranteeing you any particular result in your case. You may not rely on nor cite this blog post in any court pleadings.
In Massachusetts, marital assets are subject to equitable distribution. If you are not able to come to an agreement with your spouse as to the division of your marital estate, the court will decide for you after trial or hearing.
Equitable does not mean “equal” or 50/50. The court will use its discretion to divide up the marital assets based on a list of factors set out in Massachusetts Law (MGL C. 208 Sec. 34). The court “shall consider thelength of the marriage, the conduct of the parties during the marriage, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties, the opportunity of each for future acquisition of capital assets and income, and the amount and duration of alimony, if any, ... In fixing the nature and value of the property to be so assigned, the court shall also consider the present and future needs of the dependent children of the marriage. The court may also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates and the contribution of each of the parties as a homemaker to the family unit.”
You might first ask, what are marital assets? Although certain property might be excluded from the marital estate by a pre-nuptial agreement, almost all property acquired during the marriage or commingled with marital assets can be subject to the equitable distribution. Sometimes in short term marriages the court may exclude property brought into the marriage by one party. And in long term marriages one party might argue that he/she is entitled to credit for the property he/she brought in. Neither are guaranteed, however. The court, upon reviewing the factors, has wide discretion to include or exclude property and how to divide it. Assets may include real estate, personal property, vehicles, bank accounts, retirement accounts, investments, collectibles, antiques, businesses or business assets owned by either party, and anything else of value. Don’t forget that debts are also divided!
Just because your name is on an account, such as an IRA or 401K, or because the deposits to that account all came from your paycheck, does not mean this asset is yours alone. Both parties are seen as contributing to the overall marital estate. For instance although your paycheck may have been used to pay for the house, your spouse probably still has a right to a share of that house because his/her paycheck was used to light the house, put gas in the car, or food on the table. Likewise, just because your spouse is the only one with an IRA or 401K in his/her name does not necessarily mean you aren’t entitled to some retirement money. Maybe the money you would have put into retirement was used to pay joint credit card bills; neither party should benefit from nor be damaged by that arrangement.
If, as part of the distribution, a retirement account is to be divided, most institutions will require something called a Qualified Domestic Relations Order (QDRO – pronounced “quadro”) which will allow the account to be split into two or a portion to be transferred to another existing account without tax penalties. If you are agreeing to split a retirement account, make sure your separation agreement takes into account which party will be responsible for obtaining and paying for the preparation of the QDRO which the court will sign. Not all family law attorneys draft QDROs.
One of the most difficult assets to deal with is, of course, the marital home. Whether it was brought into the marriage by one party or not, people have great sentimental attachments to their homes and the places they raise their children. Unfortunately, it is often impossible to keep the marital home post-divorce, especially if it is heavily mortgaged and/or the parties do not have substantial income. The fact of the matter is that you are one household becoming two and you must now find a way to financially support those two separate households. There is a lot to consider: Is there sufficient equity in the home to sell and share the proceeds so that both parties can start fresh? Is one party financially capable of taking over the mortgage either now or 2, 3, 4 years from now? Can one party continue to the pay the mortgage and rent/mortgage somewhere else at least until the kids are all out of the house? There is no magic answer, no black and white. With stricter lending regulations than in the past, it can be very difficult for one party to obtain a mortgage or refinance an existing mortgage on his/her income alone. If you are considering divorce you should start looking at your financial situation, including the value of your home, the mortgage balance, and even consider speaking to a lender about options you might have.
Assets can also be difficult to value, such as a business which is solely owned and operated by one of the parties, something with great sentimental value but potentially little cash value, or something which can be valued different ways such as an antique car or a collection. If you cannot agree on a value, you may both present witnesses and evidence at trial as to the value.
As noted above, if you cannot divide your assets (and debts!) in a separation agreement, you will need to present evidence of both to the judge and let him/her analyze the factors and order a distribution.
Jeni A. Landers, Esquire
Wynn & Wynn, P.C.
300 Barnstable Rd.
Hyannis, MA 02601
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