President Biden signed the American Rescue Plan Act on March 11, 2021. In addition to the stimulus payment, this plan contains some tax credits that should be considered by parents divorcing this year.
The Child Tax Credit
• The plan increases the Child Tax Credit from $2,000 to $3,000 per child – $3,600 for any child under the age of 6 – for tax year 2021 only.
• The plan provides for children under the age of 18 at year-end – as opposed to 17 under the current plan – to qualify for the credit for tax year 2021.
• For 2021 only, the credit is fully refundable, even to those with no taxable income • The 2021 credit starts phasing out for single filers at $75,000, for head of household filers at $112,500, and for joint filers at $150,000.
• The American Rescue Plan Act requires that half of the Child Tax Credit be paid in advance, meaning that payments for 2021 should be paid between July and December 2021 with six monthly payments. Eligibility for the credit will, in the first instance, be based on 2020 tax returns.
• This credit can be taken by the parent … Keep reading
The Massachusetts Appeals Court recently issued another decision interpreting the Alimony Reform Act, which went into effect in 2012. In the March 2, 2021 decision of Dolan v. Dolan, the Appeals Court provides guidance on the meaning of General Law Chapter 208, section 53(c)(1), which states:
(c) When issuing an order for alimony, the court shall exclude from its income calculation:
(1) capital gains income and dividend and interest income which derive from assets equitably divided between the parties under section 34.
In Dolan, the husband sought a downward modification of his obligation to pay alimony to the wife under a 2016 Judgment of Divorce after he sold his business, leaving him with lower earned income. The husband was continuing to receive payments from the sale of the business. He argued that capital gain income from the sale could not be considered when determining his ongoing alimony obligation because the business was an asset assigned to him at the time of the divorce. The wife argued that modification of alimony is a two-step process: the judge must first determine that there has been a material change in circumstances and only after that threshold is met can the … Keep reading
When a bankruptcy petition is filed, an “automatic stay” is put in place, which stops creditors from proceeding with collection actions, foreclosure, eviction, and the like. Assets are frozen so that the bankruptcy court has the opportunity to determine what assets are owned by the petitioner and what debts are owed. Suppose a spouse files a bankruptcy petition while a divorce is pending (or a divorce is filed while a bankruptcy petition is pending). In that case, the Probate and Family Court will be unable to proceed with the division of assets in a divorce due to the automatic stay, essentially halting the divorce process until the bankruptcy matter is concluded.
When a bankruptcy petition is filed by a party after a divorce and seeks to discharge financial obligations contained in a judgment of divorce, anything in the nature of a “domestic support obligation” cannot be discharged. Whether an obligation in a judgment of divorce is a “domestic support obligation” is determined by federal bankruptcy law and not by the Probate and Family Court. According to 11 U.S.C. § 101(14A), a domestic support obligation is a debt that (1) is owed to a … Keep reading
This year has been filled with strange new and different ways of interacting (or rather not interacting) with family and friends. I was happy to see that one thing stayed the same – holiday photo cards. I have to admit that the new life December brings to my mailbox is something I look forward to every year. I genuinely enjoy the cards adorned with family photographs. Holiday cards that I have received over the years have included engagement photos, wedding pictures, birth announcements, images of trips to exotic places, and updates on the lives of friends who I don’t hear from often enough. The images evolve over the years as babies are born, move through childhood, then grow up and start families of their own.
There is one holiday card I received years ago that sticks out in my mind. On this card was a picture of a mother with her two sons. On the back was the tale of how dad had “left the family” and a difficult divorce was in progress. That Christmas card later became an exhibit at the divorce trial.
Divorce happens. When it happens, it can be truly painful. But a holiday card is … Keep reading
In every Massachusetts divorce matter, parties are required to file financial statements with the Court within 45 days of service of the summons and to update and file new financial statements for each court appearance at which financial relief is sought, as well as at the time of pre-trial and trial. A party who earns less than $75,000 per year will complete the short form financial statement. A party who earns more than $75,000 per year will complete the long-form financial statement. While only the long-form financial statement requires notarization of the party’s signature, both the short form and the long-form are signed under the penalties of perjury. A party signing a financial statement must certify that the information contained therein is true, accurate, and complete. A willful misrepresentation on a financial statement subjects the party to sanctions, including criminal penalties. While I have yet to see anyone criminally punished for information contained in or missing from a financial statement, I have seen litigants suffer the consequences of their failure to take the necessary time to accurately complete the financial statement – namely, losing credibility in front of the trial judge. If a trial judge determines a … Keep reading
Retirement accounts and benefits can be among the most valuable assets owned by parties who are divorcing. While parties can agree within their Separation Agreement to divide retirement assets between themselves in a particular way, the Separation Agreement itself is not a directive to the plan administrator (the person or company responsible for managing a retirement fund or pension plan on behalf of the participants) and will not suffice on its own to accomplish a division of retirement assets. Another separate order signed by the judge and sent to the plan administrator is necessary to effectuate the division of certain retirement benefits.
ERISA qualified retirement plans
ERISA (Employee Retirement Income Security Act of 1974) is a federal law that sets standards and provides protection for people participating in retirement and health plans in private industry. ERISA covers both defined benefit plans (pensions) and defined contribution plans (401(k), certain deferred compensation plans, and profit-sharing plans) offered by private employers. When a private defined benefit plan or defined contribution plan is divided as part of a divorce, a Qualified Domestic Relations Order or QDRO is needed.
A QDRO is a specialized court order that directs the plan administrator to allocate all … Keep reading
I have written in the past about 209A Abuse Prevention Orders – the mechanism by which victims of family or household violence can obtain court orders of protection. Burns & Levinson partners Ronald Barriere and Cici Van Tine recently presented on the issue of divorcing an abusive spouse, which included discussion of the protections available. But what about someone who is being harassed or abused by someone who is not a spouse, family, or household member?
Under Chapter 258E of the Massachusetts General Laws, someone who is the victim of harassment can request an Order from the Superior Court, District Court, Boston Municipal Court, or Juvenile Court (for parties under age 17) to prevent harassment or abuse. Unlike when seeking a Chapter 209A Abuse Prevention Order, a party seeking a Chapter 258E Order is not required to show that the parties are related or have a history of any type of marital or dating relationship. Anyone can obtain a 258E Harassment Prevention Order upon a showing of harassment.
Harassment for purposes of obtaining a 258E Order is defined as (i) 3 or more acts of willful and malicious conduct aimed at a specific person committed with the intent … Keep reading
A diamond is forever. Unfortunately, sometimes marriage is not. So, what happens to the engagement ring?
An engagement ring is in the nature of a pledge, given on the implied condition that a marriage will take place. If the engagement is broken off before marriage, then the “contract to marry” is said to be terminated and the donor (the one who gave the ring) can recover the ring, provided the donor was without fault relative to the breakup. After marriage, however, things are different.
Under Massachusetts law, upon a divorce, marital property is divided equitably. A judge may divide all property to which a party holds title, “however, and whenever acquired.” This means that any property owned by either party at the time of the divorce is subject to being allocated between the parties – including the engagement ring. Further, “fault” in terms of the reason for divorce will not result in the exclusion of the ring from the divisible marital estate. A judge will consider what is equitable under the facts of each case and has the power to order the ring to be retained by either party or sold. While an engagement ring is most often retained … Keep reading
The deadline for filing 2019 federal and state income tax returns is right around the corner – July 15, 2020. If you were divorced in 2019, here are a few things to think about:
Filing Status – Your marital status as of December 31st controls whether you are considered married or single for purposes of filing your tax returns. Remember the Nisi period discussed in a prior post? Under Massachusetts law, a party is not considered divorced until the Nisi period expires. This means that even if the Judgment of Divorce is dated December 1, 2019, due to the Nisi period, you remained married for another 90 days. If you were still married as of December 31, 2019, you can file your 2019 tax returns as married filing jointly or married filing separately. There are risks and benefits to either filing option, so consult with your attorney. There is also an option to file as head of household where you are “considered unmarried” due to living apart from your spouse for six months or more during the tax year. To qualify as head of household, you must also have paid more than half the cost of maintaining your … Keep reading
One of the most frequent questions I am asked by parents involved in custody disputes is: “when is my child old enough to decide to live with me?” The answer – that children under age 18 in Massachusetts do not get to make decisions around parenting plans – often comes as a surprise.
M.G.L. c. 208, sec. 28 provides:
Upon a judgment for divorce, the court may make such judgment as it considers expedient relative to the care, custody and maintenance of the minor children of the parties and may determine with which of the parents the children or any of them shall remain or may award their custody to some third person if it seems expedient or for the benefit of the children….Upon a complaint after a divorce, filed by either parent or by a next friend on behalf of the children after notice to both parents, the court may make a judgment modifying its earlier judgment as to the care and custody of the minor children of the parties provided that the court finds that a material and substantial change in the circumstances of the parties has occurred and the judgment of modification is necessary in the … Keep reading