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
By: Attorney Jeni Landers, Esquire
Disclaimer: This post is meant to give you some general information about child support 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, either parent can be ordered to pay child support. Usually, if one parent has primary physical custody (the custodial parent), the non-custodial parent is ordered to pay the custodial parent. Sometimes, though, parents share physical custody and one parent is still ordered to pay based on a disparity in income. If the parents were married, the support order will be part of the divorce proceedings. If the parents were not married, either parent can file a complaint to establish paternity, custody, child support, and parenting time.
The actual amount of child support is calculated using guidelines and a calculator created by the Massachusetts Department of Revenue (DOR). You can either use the worksheet from DOR or use the online calculator. http://www.mass.gov/dor/child-support/guidelines.html The basic information that goes into the calculator is both parties’ gross (that’s before tax and other deductions or expenses) income, health care costs paid by either party, child care costs paid by either party, and the number of children. The amount calculated using that formula is then known as the “guidelines” amount and is typically the amount that a party is ordered to pay.
In some cases, there are reasons for deviating from the guidelines. When entering into a Separation Agreement (as explained in my June 2014 post) the parties can agree to deviate from the guidelines (either up or down) and put their reasoning and the agreed upon amount in the Agreement which they sign and are then bound by. When parties cannot agree on the amount and put the issue before a judge, the judge can order either the guidelines amount or a deviation from it if the judge feels the situation warrants. The guidelines do not apply if the payor’s income exceeds $250,000.00 annually. The minimum support order in Massachusetts for a payor claiming zero income is $80.00 a month.
Child support can and should be modified when either party experiences a material change in circumstance such as job loss or change, substantial loss or gain in income, disability status, etc. Complaints for Modification are available online (http://barnstablecountypfc.com/index.htm) and at the clerk’s office. If you are a recipient of child support and the payor is behind, you may file a Complaint for Contempt which is also available online or in the clerk’s office. Both modifications and contempts require hearings where both parties may testify and present evidence in addition to the court required financial statement.
Child support can be paid in a variety of manners. Some people write checks to the other party or arrange for direct deposit into the other’s account. If you choose to pay or receive child support in cash, make sure both parties sign a receipt of some sort in case there is disagreement later. The Department of Revenue can also collect and disburse child support. If you wish to have DOR handle the money, sign up to be a DOR “customer” and they can deduct support directly from the paycheck of the payor and distribute it to the recipient. http://www.mass.gov/dor/child-support/apply-for-services/ Some advantages of using DOR are that they keep detailed records of payments made, they can make additional deductions from paychecks to cover arrearages, request court modifications or orders, and they can take enforcement action for non-payment.
Child support calculation can be complicated by factors such as disability payments, unemployment, government assistance program payments, self-employment, seasonal employment, and support orders for other children. Child support is based on income essentially, and is not based on parenting time (fka visitation); one may not be exchanged or withheld for the other. The recipient is expected to use the child support for its intended purpose of housing, feeding, clothing, and otherwise caring for the child, but is not required to submit receipts or statements unless otherwise ordered or agreed to. Child support generally ends when the child is emancipated which can mean, among other things, that the child turns 18 and is not a full time student, gets married, or joins the military.
Jeni A. Landers, Esquire
Wynn & Wynn, P.C.
300 Barnstable Rd.
Hyannis, MA 02601
By: Attorney Jeni Landers, Esquire
Although I do help clients during some very happy moments in their lives such as purchasing a home or starting a new business, much of my work is of course helping people get through very difficult times such as divorce, injury, and deaths of family members. Sometimes just having information and getting a sense of where they stand can help people feel stronger and certainly more prepared to take the next steps.
Disclaimer: This post is meant to give you some general information about the divorce process in Massachusetts. It is NOT all inclusive and is NOT meant to be a step-by-step guide for a DIY divorce. The laws on divorce, custody, 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 a divorce action. You may not rely on nor cite this blog post in any action for divorce.
Divorce actions come in all shapes and sizes and the first thing to remember is that there’s no “winning” in a divorce. Divorces are handled in the Probate and Family Court here in Massachusetts and generally you would file for divorce in the county in which you live. A divorce action is meant to resolve all the issues between the parties including but not limited to child custody (legal and physical) and support, parenting time (aka visitation), alimony, asset and debt division, health insurance, life insurance, and taxes. When making decisions that affect children, the court using the “best interest of the child” standard which is extremely fact specific and may create what appears to be opposite results sometimes; each case is different. The standard for property division is “equitable distribution.” Remember, equitable doesn’t mean EQUAL. The distribution is fact specific and based on multiple factors to be discussed another day.
There are basically two ways to get divorced in Massachusetts. The first is referred to as a 1A (Mass General Laws c. 208, § 1 A) or “uncontested” divorce. In an uncontested divorce the parties file a joint petition for divorce and a “Separation Agreement” that they have negotiated and drafted either themselves or with help from an attorney or mediator. If there are minor children involved, each party must also attend a parenting class and present the certificate of completion to the court. The court will also require additional documents including but not limited to a financial statement completed by each party (under oath), a certified copy of the marriage certificate, and affidavits from both parties that the marriage is “irretrievably broken” and cannot be fixed.
The Separation Agreement should resolve all issues between the parties including custody, support, property division, etc. Once the Court has all the required documents, a hearing will be scheduled. Both parties must appear (with or without counsel) unless a party files an affidavit in lieu of appearance. At that hearing the parties are sworn in, the Judge asks each party questions about the Separation Agreement and the financial statements, and if there are no outstanding issues or problems with the Agreement, the Judge orders the divorce. Although this is meant to be a “final” outcome, decisions relating to children (and possibly other issues depending on how the agreement is drafted) are modifiable by the court upon the filing of a Complaint for Modification by either party in the future.
The other type of divorce is a 1B or “contested” divorce. This type of divorce action resembles traditional litigation. One party files a petition for divorce which can be based on a variety of grounds, including the very general “irretrievable breakdown.” That party then becomes the Plaintiff and serves a summons and copy of the petition (or “Complaint”) on the other party. The second party becomes known as the Defendant and must file an “Answer” to that Complaint. Unless one or both parties file motions for temporary orders (such as asking for a certain custody arrangement pending the trial), the first time the parties go to court is the Pretrial Conference. Prior to that conference, the parties must, among other things, exchange certain financial documentation, complete their financial statements, meet (with or without counsel) to try to resolve the issues, and draft Pretrial Memorandum to be submitted to the court. At the Pretrial Conference the Judge will listen to the parties (or their attorneys) and usually then schedule the trial. Sometimes the case will need another Pretrial Conference. And occasionally the Judge hears enough (in cases with limited issues) to decide the issues and order the divorce that day.
A divorce trial is like any other trial and involves substantial preparation, the calling of witnesses to testify, the submission of exhibits and other evidence to the court, and opening and closing statements. Some people represent themselves, but it can be very difficult to do so since “pro se” (self-representing) parties are still expected to follow the rules of evidence and procedure. After the trial the Judge will issue a decision on all of the issues including custody, support, property division, etc. As with a 1A divorce, decisions made by the Judge that affect children are later modifiable based on a change in circumstance.
To further confuse matters, sometimes you start working on a separation agreement with the hopes of filing a 1A/uncontested divorce, but negotiations break down and you end up heading to a trial. On the other hand, sometimes one party files a 1B/contested divorce and it looks like you’re headed for a trial, but you’re able to negotiate an agreement on your own or through your attorneys and you can present that agreement to the court and avoid a trial.
What I’ve just described are typical scenarios, but cases often take different and more complicated directions based on the issues. Most days in Barnstable Probate Court there is a “Lawyer of the Day” who can provide you with free, limited advice. If neither party has an attorney, the Judge will most likely send the parties to speak with someone in Family Services/Probation to see if an agreement can be reached on all or some of the issues. There is also a law library in Barnstable District Court and the librarians can direct you to useful information on divorce.
Jeni A. Landers, Esquire
Wynn & Wynn, P.C.
300 Barnstable Rd.
Hyannis, MA 02601
By: Gary M. DellaPosta, CPA
If you are considering divorce, it is vital to plan for the dissolution of the financial partnership in your marriage. Such dissolution involves dividing financial assets accumulated during the marriage. Further, if children are involved, future financial support for the custodial parent must be planned for.
While it may not be at the top of your to-do list, taking time to prepare financially during divorce pays off in the long run. Here are some steps you can take to get started.
Take Stock Of Your Situation
Assessing your financial situation helps you in two ways:
Related Guide: For a system that makes it easy to organize and locate your records, please see the Financial Guide:DOCUMENT LOCATOR SYSTEM: A Handy Aid For Keeping Track Of Your Records
Estimate Your Post-Divorce Living Expenses
Figure out how much it will cost you to live after the divorce. This is especially important for the spouse who is planning to remain in the family home with the children; it may be determined that the estimated living expenses are not manageable.
To estimate these expenses, add up all of your monthly debts and living expenses, including rent or mortgage. Then total your after-tax monthly income from all sources. The amount left over is your disposable income.
Related Guide: Please see the Financial Guide: BUDGETING: How To Prepare A Workable Plan
Cancel All Joint Accounts
It is important to cancel all joint accounts immediately once you know you are going to obtain a divorce because creditors have the right to seek payment from either party on a joint credit card or other credit account, no matter which party actually incurred the bill. If you allow your name to remain on joint accounts with your ex-spouse, you are also responsible for the bills.
Your divorce agreement may specify which one of you pays the bills. However, as far as the creditor is concerned both you and your spouse remain responsible if joint accounts remain open. The creditor will try to collect the bill from whoever it thinks may be able to pay while at the same time reporting the late payments to credit bureaus under both names. Your credit history could be damaged because of the co-signer's irresponsibility.
Some credit contracts require that you immediately pay the outstanding balance in full if you close an account. If this is the case, then try to get the creditor to have the balance transferred to separate accounts.
If Your Spouse's Poor Credit Affects You
If your spouse's poor credit hurts your credit record, you may be able to separate yourself from the spouse's information on your credit report. The Equal Credit Opportunity Act requires a creditor to take into account any information showing that the credit history being considered does not reflect your own. If for instance, you can show that accounts you shared with your spouse were opened by him or her before your marriage, and that he or she paid the bills, you may be able to convince the creditor that the harmful information relates to your spouse's credit record, not yours.
In practice, it is difficult to prove that the credit history under consideration does not reflect your own, and you may have to be persistent.
For Women: Maintain Your Own Credit Before You Need It
If a woman divorces, and changes her name on an account, lenders may review her application or credit file to see whether her qualifications alone meet their credit standards. They may ask her to reapply even though the account remains open.
Maintaining credit in your own name is the best way to avoid this inconvenience. It also makes it easier to preserve your own, separate, credit history. Further, should you need credit in an emergency it will be available when you need it.
Do not use only your husband's name (for example, Mrs. John Wilson) for credit purposes.
Tip: Check your credit report if you have not done so recently. Make sure the accounts you share are reported in your name as well as your spouse's name. If not, and you want to use your spouse's credit history to build your own credit, write to the creditor and request that the account be reported in both names.
Also, carefully review your credit report to determine whether there is any inaccurate or incomplete information. If there is, write to the credit bureau and ask them to correct it. The credit bureau must confirm the data within a reasonable time period, and let you know when they have corrected the mistake.
Related Guide: Please see the Financial Guide: CREDIT REPORTS: What You Should Know-And Do-About Yours.
If you have been sharing your husband's accounts, building a credit history in your name should be fairly easy. Call a major credit bureau and request a copy of your report. Contact the issuers of the cards you share with your husband and ask them to report the accounts in your name as well.
If you used the accounts, but never co-signed for them, ask to be added on as jointly liable for some of the major credit cards. Once you have several accounts listed as references on your credit record, apply for a department store card, or even a Visa or MasterCard, in your own name.
If you held accounts jointly and they were opened before 1977 (in which case they may have been reported only in your husband's name), point them out and tell the creditor to consider them as your credit history also. The creditor cannot require your spouse's or former spouse's signature to access his credit file if you are using his information to qualify for credit.
Tip: If you do not have a credit history, a secured credit card is a fairly quick and easy way to get a major credit card. Secured credit cards look and are used like regular Visa or MasterCard's, but they require a savings or money market deposit of several hundred dollars that the lender holds in case you default. In most cases, the creditor will report your payment record on these accounts just like a regular bankcard, allowing you to build a good credit record if you pay your bills promptly.
Consider the Legal Issues
The best way to plan for the legal issues involved in a divorce including child custody, division of property, and alimony or support payments is to come to an agreement with your spouse. If you can reach an agreement, the time and money you will have to expend in coming up with a legal solution--either one worked out between the two attorneys or one worked out by a court--will be drastically reduced.
Here are some general tips for handling the legal aspects of a divorce:
Division of Property
The laws governing division of property between ex-spouses vary from state to state. Further, matrimonial judges have a great deal of latitude in applying those laws.
Here is a list of items you should be sure to take care of, regardless of whether you are represented by an attorney.
How To Prepare Financially For Re-Marriage When considering remarriage, it is important to plan for the following:
As for the estate planning aspects of providing for children from a previous marriage, trusts and/or life insurance are the vehicles most often used to do this.
Tip: Be sure to update your will before you remarry to ensure that your assets will be divided among your heirs after your death in the manner and proportions you desire.
Government and Non-Profit Agencies
Gary DellaPosta is a CPA and founder of the firm: Gary M DellaPosta, CPA's & Business Advisors. A graduate of Bryant University, he is a member of the American Institute of CPA's as well as the Massachusetts Society of CPA's. In addition to providing accounting, tax and advisory services to individuals and businesses, he also provides litigation support to attorneys and has been recognized as an expert in numerous Massachusetts' courts. Mr. DellaPosta serves on the Board of the Barnstable County Mutual Insurance Co., where he serves on the audit, investment and employee benefit committees. He also serves as the Treasurer of the Community Health Center of Cape Cod, is a Director at The Cooperative Bank of Cape Cod and is a former director of Eastern Bank and Plymouth Savings Bank.
Cape Cod Moms