As you know from my prior posts, I appreciate the interplay between divorce and estate planning. I enjoy working on cases where both worlds collide, and have been fortunate to be involved in some very interesting cases, which have involved irrevocable trusts.
A common misconception relating to irrevocable trusts is that they can’t be altered. This is not actually the case in many circumstances, and is important to remember, especially when family circumstances change, such as when a divorce arises.
A trust is irrevocable because either the donor (the person who established the trust) has died, or because the trust’s terms make it irrevocable. Changing an irrevocable trust can sometimes be done through a process known as decanting. When a trust is decanted, it is replaced by a new trust and the assets of the original trust are transferred to a new trust.
The Rhode Island decanting law lays out some specific requirements for an irrevocable trust to be decanted. Some of those requirements include the following. First, the terms of the original trust must allow for the trustee to make principal payments to one or more beneficiaries. Second, the trustee must exercise the power to decant via a … Keep reading
Ah, home sweet home. Home is your happy place where you can rest and unwind. It is the place you selected to start your family and where you and your family make memories. There is justifiably so much sentimental value tied up in the marital home, which is why deciding on the final disposition of the home is one of the most daunting, but important decisions to make during the divorce process.
If you’ve owned a home in Massachusetts for more than a few days, chances are that it has gone up in value since you purchased it. Massachusetts has seen its median sale price for homes skyrocket by over twenty percent in the past five years, with total appreciation rates of nearly thirty percent during that same period. So, in addition to that sentimental value, it is also likely that your home has a lot of market value, which can be both a gift and a curse in the context of a divorce proceeding. Sure, more money is great, particularly when each party is (in)voluntarily reducing her/his total net worth by roughly half in the divorce, but these high values of real estate often dwarf the rest of … Keep reading
The federal estate tax (sometimes called the death tax) is a one-time tax that is imposed at death. If you die with a certain dollar amount of assets, an estate tax return may be required and a tax may be due. If a return is required, it is due 9 months after the date of death.
Sometimes clients confuse the estate tax with an income tax, but it is not a tax on income. It is a transfer tax. Essentially, it is a tax on the wealthy imposed at death.
When does it apply?
In 2019, a federal estate tax is due for all estates with assets of $11,400,000 or more. If you die with a gross estate under $11,400,000, no estate tax is due. If your gross estate is over $11,400,000, you pay a tax on the overage. In general, the tax rate is between 18% and 40%, but it gets to 40% pretty quickly.
The large exemption amount is due to the recent changes in the tax laws that took effect in 2018. The federal estate tax amount used to be $5 million adjusted for inflation. It is now $11 million adjust for inflation so it increases … Keep reading
In addition to irretrievable breakdown the marriage, which I explored in my last post, a party seeking a divorce in Massachusetts can do so under one or more of the fault grounds, which require proof of specific facts to warrant a divorce.
The fault grounds under M.G.L. c. 208, sec. 1 and 2 are:
- Cruel and abusive treatment – To be granted a divorce on the grounds of cruel and abusive treatment, a spouse must prove that the other party acted with such cruelty as to cause injury to life, limb or health, or to create a danger of such injury, or to create a reasonable apprehension of such danger. Cruel and abusive treatment can be found based solely on the use of cruel and abusive words if those words create a reasonable apprehension of violence, or tend to wound feelings to such a degree as to affect the health of party, or create a reasonable apprehension that a party’s health might be affected. Cruel and abusive treatment is an often cited ground for divorce.
- Adultery – Unlike cruel and abusive treatment, seeking a divorce on the grounds of adultery is not seen often. The reason is that
… Keep reading
As we enter the “dog days of summer” and New England braces for a serious heat wave over the next few days, I can’t help but think about the importance of summer parenting plans. Summer is when most parents try to maximize the time they spend with their children. Free from the demands of school, homework, and most extracurricular activities, summer is an optimum time to enjoy quality time with children, especially school aged children. I recently saw a quote that said “there are only eighteen summers in childhood . . . How will you make this one count?”
As summer time with children is so fleeting and precious, summer parenting time can become a hot button issue in a divorce. When crafting a summer parenting plan, the best interest of the children should be at the forefront in setting the parenting schedule, and this generally entails maximizing the children’s time with both parents.
Summer parenting plans can take on many different forms. Some parents share time equally in the summer with their children. Some parents continue to observe the school year parenting plan with slight tweaks to allow for long weekends or vacation weeks. There are a myriad … Keep reading
To the recent high school graduates from the class of 2019, congratulations! For the parents (particularly divorced or divorcing parents) of the recent high school graduates from the class of 2019, I hope you’ve saved some money.
High school graduates are going off to college at increasingly high rates. Unfortunately for parents and students, the cost of tuition, room, and board for colleges and universities has skyrocketed within the past decade. Some schools are now topping out at a whopping $70,000 per year for these costs. I apologize in advance to our readers who expected a quip about the recent college bribery scandal; as a proud alum of the University of Southern California (was not on the crew team), I will limit this discussion to the publicized retail cost of colleges and universities. Go Trojans!
For family law attorneys, the issue of college costs is invariably at the forefront of our minds when dealing with any case involving children of college age and younger. Even divorce agreements in which a child is only a toddler will often mention at least some aspirational language regarding the parents’ mutual desire. Such as for little Jimmy to “have the opportunity to attend … Keep reading
General Laws c. 208, § 1A and G. L. c. 208, § 1B comprise the two Massachusetts no-fault divorce statutes, which allow for divorce on the ground of “irretrievable breakdown” of the marriage. In order to obtain a divorce in Massachusetts, the spouses must join together in a joint petition for divorce, or one party initiates the case by the filing of a complaint. With a joint petition, both parties must attest via a notarized affidavit that the marriage has suffered an irretrievable breakdown. With a complaint, the moving party must set forth a ground for the divorce, which can include the no-fault ground of irretrievable breakdown.
What is an irretrievable breakdown?
There is no test to be met to prove an irretrievable breakdown of the marriage. All that is required is for one spouse to feel, subjectively, that the marriage is over. Neither G.L. c. 208 §1A nor §1B contain a requirement that a spouse enumerate any objective factors that would lead a court to the conclusion that a marriage is irretrievably broken. Rather, a party (or both) can simply attest that the relationship has ended with no hope of reconciliation. In adopting no-fault divorce grounds in 1975, … Keep reading
If you have been divorced, you may be excited and yet anxious when your child decides to marry. You may be happy that she has found love, but you may also be painfully aware of the difficulties she may encounter if the marriage ends in divorce. How to protect your child from a possible divorce while still showing excitement for the marriage and welcoming her fiancé into your family can be a difficult balance.
Raising the issue of a prenuptial agreement is not an easy discussion, and should not be had right after the engagement is announced. Ideally the discussion was had many years ago. By the time the happy couple decides to wed, your child should already know that she needs a prenuptial agreement.
I tell my clients to talk to your kids about prenups around the time they start dating, or when they start to get serious with someone. The earlier you talk to kids about prenups, the better. If you wait until the wedding plans are announced, your child may be reluctant and the fiancé may be offended. It may cause your relationship with your daughter or son-in-law to start out on a sour note.
Talking … Keep reading
As a divorce lawyer who also does some probate litigation and trusts and estate work, I have always been interested in the interplay between divorce and trusts and estates. Recently, the issue of whether gifts are considered income for purposes of calculating child support came across my desk.
Now in talking about gifts, I don’t mean the ugly reindeer sweater grandma sends you for Christmas every year. When speaking of gifts, I am referring to a specific estate planning strategy where wealth is transferred to others via use of a gift tax exclusion. Gift tax exclusion, sounds scary, but it is actually a pretty simple concept. A gift tax exclusion is the amount of money, or other assets, one person can give to another person in any given year without incurring a gift tax (simply put, how much dough grandma can give you before it has to be reported to taxing authorities).
For 2019, the annual gift tax exclusion is $15,000, which means any one person can give another person cash or assets totaling $15,000 in 2019 without triggering a gift tax. It is common in families where there is money to spare for parents to gift children, spouses, … Keep reading
Part 1 of this two-part series covered a basic overview of virtual or “crypto” currencies, such as Bitcoin, and the rise and significance of the currency as an asset, subject to division, within the divorce context. In this installment, we will explore the tools divorcing spouses and attorneys can utilize to discover these virtual currencies during the divorce process.
Let’s imagine that, during a divorce proceeding, you suspect or learn that your spouse has a “digital wallet” as large as George Costanza’s infamous wallet in Seinfeld. What should you do? Well, despite the recent creation of these virtual currencies (more recent than the Seinfeld reference), many of the established techniques to gather information and documentation during a divorce proceeding can be effective in learning more about a spouse’s virtual currency portfolio.
Per the Supplemental Probate and Family Court Rules, within 45 days of the commencement of a contested divorce in Massachusetts, each spouse is supposed to provide the other with a Rule 401 Financial Statement completely and accurately declaring all of her/his income, expenses, assets, and liabilities, as well as an initial exchange of relevant financial documentation, commonly known as Rule 410 documents. This initial information and documentation can … Keep reading