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
With wedding season just around the corner, here is a primer on what a pre-nuptial agreement can and cannot do for you:
What a prenup is:
A prenuptial agreement is a private agreement between a couple signed before they get married which sets forth the division of their assets in the event of divorce and death. Each state has its own laws regarding the enforcement and validity of prenuptial agreements. Which state’s law to apply depends on where the marriage will take place, where the couple will live during the marriage, and what state law the agreement says to apply.
In most states, the agreement has to be fair, the parties have to fully disclose their assets, and each party needs to have their own attorney.
The idea of fairness depends on the unique facts and circumstances surrounding each couple. Would it be fair if after 20 years of marriage, the “poorer” spouse walked away with only the small amount of cash she brought into the marriage and no alimony? Probably not, particularly if she was a stay at home parent raising the children. It is to the “wealthier” spouse’s advantage to give the agreement … Keep reading
“We have been together for so long, it is as if we are married.” In a small number of jurisdictions, including nearby Rhode Island, a couple can be legally recognized as being married, without any formal registration of a civil or religious marriage. This legal concept is often referred to as a common law marriage. Massachusetts is one of a majority of states in which common law marriage is not available. Nevertheless, some of the principles of common law marriage can be applied in Massachusetts divorce cases, particularly those in which alimony is at issue. For example, when considering the length of the marriage in a divorce case, Massachusetts courts have the authority, under limited circumstances, to include months or even years prior to a legal marriage as part of the overall length of the marriage. The effect of this artificial extension to the marriage length can be significant: the longer the marriage, the longer the potential duration of alimony.
The Massachusetts Alimony Reform Act of 2011 provided in its definition of “length of the marriage” that the marriage length shall be calculated as the number of months from the date of the legal marriage to the date of … Keep reading
Prior divorces and divorces with agreements completed in 2018 will not be affected. But most divorces take longer than a year to complete, and thus, many folks filing in 2018 will be impacted by the changes.
The new federal law eliminates the deduction for alimony in divorces occurring after December 2018. Every previous settlement contract (and judicial divorce decision) was negotiated with consideration of the alimony deduction. It enabled the parties to save some of the money that would otherwise have gone to the government in taxes.
The Massachusetts Alimony Reform Act was written with these tax implications in mind. The percentages of alimony to be paid (30% to 35%) reflect the deduction to the payor, and are, therefore, higher than the child support calculation.
Both of these are laws, and the federal supersedes the state. As a result, real inequities to the payor spouses will exist if the legislature does not find a way to make … Keep reading
The alimony statute in Massachusetts provides that the amount of general alimony shall generally not exceed the recipient’s need or 30 to 35 percent of the difference between the parties’ gross incomes. It has long been the rule that the standard of need is measured by the “station” of the parties — by what is required to maintain a standard of living comparable to the one enjoyed during the marriage. The Supreme Judicial Court has provided further guidance in the decision of Young v. Young.
Derek and Joy Young had been married for 24 years when Mr. Young filed a Complaint for Divorce. Mr. Young worked as an executive, and his compensation consisted of base salary, cash bonus, stock options, investor equity units, share plans, and opportunities to purchase common stock at a discount. Mr. Young earned a substantial income, but the amount varied widely year to year. The parties enjoyed an affluent, upper-class standard of living during their marriage, which included an eight-bedroom residence, luxury vehicles, a summer home, and expensive vacations. After trial, the Court ordered Mr. Young to pay alimony to Mrs.Young of 33% of his gross annual income. The trial judge determined it was … Keep reading
New child support guidelines have been issued by Chief Justice Paula Carey, which go into effect on September 15, 2017. The new guidelines apply to all child support orders issued after that date. Substantive changes from the current guidelines in effect include the following:
Consideration of parenting time where one party has more than one-third but less than fifty percent of the parenting time was eliminated. The child support task force felt that allowing for an alternative calculation of support based on this type of parenting plan increased litigation and acrimony between parents.
The child support worksheet now contains adjustments for childcare and health insurance expenses in two steps. First, the parent who pays the childcare and/or health insurance deducts the cost from his/her gross income. Second, the parties share the total cost of child care and health insurance in proportion to their available income for support. However, because the adjustment for sharing the expense is capped at 15% of the child support order, the benefit to the party paying the costs may not be significant.
Child support for children between the ages of 18 and 23 remains at the discretion of the Court. However, the new guidelines provide
In the highly awaited decision of Van Arsdale v. Van Arsdale, the Supreme Judicial Court has ruled that application of the durational limits contained within the Alimony Reform Act to alimony agreements predating the Act is not unconstitutionally retroactive.
William and Susan married in 1979 and divorced 18 years later in 1997. At the time of the divorce, alimony in Massachusetts had no durational limits. And so, William and Susan agreed at the time of the divorce that William would pay alimony to Susan until Susan remarried or until one of them died. They also agreed to review the amount of alimony when the children emancipated and when William retired. In 2015, after the enactment of the Alimony Reform Act, William asked the court to terminate his alimony obligation based upon the durational limits contained in the Act and because he had retired from full time employment. For a marriage of 18 years, the Act provides that alimony shall continue for not longer than 80% of the number of months of the marriage. Susan argued that applying the durational limits retroactively to her agreement with William, which was entered into before the law went into effect, was unconstitutional.… Keep reading
If you know me, you know I’m a fervent pet lover. We have dogs, cats, horses, goats, and are related to someone with a bearded dragon. I know, viscerally, how pets can feel like family members. As a result, they can be incredibly important to someone in the middle of a divorce. I also know, as does anyone who has befriended an animal, that animals have needs, wants and opinions of their own. However, the law has been pretty clear that pets are considered property, like a chair or lamp, during a divorce.
The ownership (homing) of a pet can be a hot-button issue in high conflict divorce cases. I’ve had many cases through the years where pets were at issue. If there are kids, it often makes sense for the pet to stay with the children. As we come to a more egalitarian parenting world, where kids are splitting time almost equally, this decision is not going to be as simple. In cases where there are no kids or the kids are grown, companionship of the critters can loom larger. Judges … Keep reading
The Supreme Judicial Court’s recent decision of George v. George provides guidance in applying the durational limits contained in the Alimony Reform Act.
The Alimony Reform Act, which went into effect in March 2012, provides that all alimony awards that predate the Act are deemed “general term alimony.” Under G.L. c. 208, §49(b), general term alimony awards end on a date certain based upon the length of the marriage, except upon a written finding by the court that deviation beyond the time limits is required “in the interests of justice.” Many alimony payors who file complaints to terminate alimony based on the durational limit are met with the defense that it is in the interests of justice for alimony to continue beyond the durational limits. In the November 28, 2016 decision of George v. George, the Supreme Judicial Court (SJC) sets forth guidelines for how a judge of the Probate and Family Court should apply the “interests of justice” standard.… Keep reading
Pending Federal legislation could have a huge impact on how judges will divide military pensions during a divorce. In a previous post, I discussed at length how military pension plans currently could be divided in the context of a Massachusetts divorce matter. Massachusetts Probate and Family Court judges generally have the discretion to either divide a pension as an asset or to divide the income resulting from the plan “if, as, and when” it entered pay status.
If the parties agree to (or if the Family Court Judge elects) the “if, as and when” approach, the service member’s pension pay would be divided between the service member and the former spouse based on the rank and years of service of the service member at the time of retirement. However, the pending federal legislation proposed by Representative Steve Russell would instead direct state judges to divide military pensions based on the rank and years of service at the time of the divorce. The enactment of such a bill would hugely influence the retirement pension payments of both retired service members and their former spouses.… Keep reading