Finances and Divorce

Newly separated and divorcing clients almost always come to us with preconceived ideas of what they hope/expect might happen in their cases. All too often, these preconceived ideas are based on a client’s own sense of equity and justice, but are incorrect as a matter of law. Here are five of the most common misconceptions, and reality checks for each.

1. My spouse almost never spent time with the kids while we were together, so he/she should not have significant parenting time with them now that we are separated.

Reality: Everything is subject to change post-divorce, including a parent’s active involvement in the day-to-day caretaking of the children. Gone are the days when it was presumed that the children would remain primarily with one parent after a divorce, spending every other weekend and perhaps a weekday dinner visit with the other parent. Courts are increasingly defaulting to shared-custody arrangements, even in situations where one parent’s involvement pre-divorce was fairly minimal. Every parent will be given the opportunity to be significantly involved in their children’s lives.

2. My spouse cheated on me, so I’m going to take him/her to the cleaners in this divorce.

Reality: As our fearless leader Nancy … Keep reading

Retroactive Application of Durational Limits is Constitutional

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

divorce and lottery

divorce and lottery
The odds of this being you in the next Powerball drawing are 1 in 292,000,000+

As people scramble to purchase Powerball tickets for a chance (however small) at the 1.3 billion dollar jackpot, the largest in U.S. history, I couldn’t help but think about the practical considerations that come into play when dealing with divorce and lottery winnings, especially for those who are divorcing, or already divorced. Sure, it’s nice to fantasize about buying a second (or third, or fourth) home in the most exotic of locales, or giving thousands of dollars to charities and every person you’ve ever met, but lottery winnings could also affect property division in a divorce, or a child support and/or alimony obligation.

Can my former spouse claim any of my lottery winnings?

Keep reading
How Are You Going to Pay for College?

piggy bank break the bank
Poor little guy never saw it coming…

Separated or divorced parents face unique challenges regarding the financial impact of preparing for and paying for their children to attend college. Luckily, there are ways to handle the situation without breaking the bank!

Next week my firm is hosting a complimentary lunch event called College Smarts: Understand Your Options to Help Protect Your Family’s Financial Future, and I’m writing to extend the invitation.… Keep reading

Cost-Benefit Analysis of Experts in the Divorce Process

Hi there,

From start to finish there is no question that divorce is expensive. Sometimes it is a juggling act; do you spend the money for  the expensive expert or do you agree on a shared one? Or do you skip an expert altogether (which can be dangerous)? The most commonly needed experts, outside of parenting matters, are residential real estate appraisers, business valuation experts, commercial real estate appraisers, defined benefit pension valuation experts, and forensic accountants.

If money is tight – and no matter how much you have, money is tight when you are in the process of divorcing – maybe you can share the costs of a joint expert. This is often a plausible idea for residential real estate because there is a common sense way to reality-check the results. Most folks have a reasonable idea of their residential real estate values, thanks to Zillow.com and your town assessor’s office.

It also makes economic sense to share the cost of the actuary doing the defined benefit pension valuation. There generally will be some form of information from the pension provider which also will provide a good reality check.

But, if it is at all possible, you should … Keep reading

Valuation and Division of (Unusual) Property in Divorce

Hi there,

That handsome fellow on the right is a jackalope. He was given to one of my paralegals by a client in gratitude for her work dividing an extensive collection of very unusual stuff, which did indeed include another jackalope.

Many of you, if you divorce, will have extensive property to value and then divide, including stock options, retirement accounts, real estate, deferred compensation, and business interests. All of these will require some form of valuation. They also will require consideration as to whether they will be divided immediately, usual for retirement accounts, or one party will keep the asset and then pay the other, which is usual for real estate and business interests.

Sometimes divorce can be used to prevent divestment of an asset, as in the case of the unlovely Sterlings.

Then there are collections; I find these fascinating. I’ve had to find experts to value everything from fine art (easy) to circus memorabilia (not so easy), to jewelry, and once, designer handbags. The evolution of internet sales has made valuation of individual items a bit easier (Hermes handbags, for example, are now fairly easy to value). Also, the sheer size … Keep reading

Hi there,

It’s spring and college acceptance letters are in the mail. It’s that time of year when parents start looking at how to pay for college. As you might expect, this is an area of frequent concern in divorce, as this article by my colleague Ron Barriere points out.

Best,

Nancy 

Ronald P. Barriere

As attorneys, we frequently get text messages and emails referring us to sensational stories related to our practice area.  Last week was no exception, as our inboxes were flooded with links to various articles concerning the New Jersey teen, Rachel Canning, who sued her parents after a falling out over a boyfriend and household rules.  (Three particularly good articles about the story can be found on Yahoo, the ABA Journal and the New York Post.)

The most common question we receive when a story such as this appears in the zeitgeist is “Can someone really sue over this?”  Usually, the answer is yes.  In the Canning case, the identity of the litigants is what makes the case novel:  It is rare that parents are unified in opposition to the child in a dispute about education costs.  The facts, however, are … Keep reading

Hi there,

Here’s the second half of the excellent piece on taxes and health insurance by my colleagues Ron Barriere and Jen Green. Just in time for tax season, too.

Best,

Nancy

 

Ronald Barriere Attorney
Ronald Barriere
Jennifer Green Attorney
Jennifer Green

With most Massachusetts health insurance plans, provided he/she has not yet remarried, an employee with at least one dependent child can add a former spouse to the coverage for no additional cost, so there is no additional cost to the employer either. In these situations, one would presume that no income should be imputed to the employee because the employer is not required to pay the insurer any additional premium for the benefit of continuing coverage of a former spouse. Unfortunately, not all human resource departments share this view. Some human resource departments are deciding that the former spouse is receiving a benefit that is equal to the value of the employee’s own individual coverage and, thus, are imputing the fair market value of that coverage to the employee on his/her Form W-2.… Keep reading

Another Tax Trap: Imputed Income and Health Insurance in Divorce Settlements, Part 1

Hi there,

April 15th is creeping up on us. I find doing my taxes while its snowing, AGAIN, a real insult.

This week and next week’s post were written by my terrific colleagues, Ron Barriere and Jen Green. They highlight a tricky complexity in the new health insurance laws for divorcing couples.

Best,

Nancy

Jennifer Green
Ronald Barriere

Divorcing spouses have many issues to consider in negotiating the terms of a divorce agreement. One of the seemingly “easier” issues for divorcing spouses and their counsel is health insurance. While the issue of health insurance coverage is typically included within the divorce agreement, the federal tax implications are often overlooked. Recent interpretations of federal tax law underscore the need for divorcing spouses to use skilled divorce counsel and tax practitioners in negotiating the terms of their divorce agreements.

It is commonplace for a divorce agreement to contemplate one spouse continuing to provide health care coverage through his/her employment for an ex-spouse. Under the Affordable Care Act (ACA or “Obamacare”), the IRS will require reporting by the employer of the cost of such coverage of employer-sponsored insurance. In some instances, the reporting requirement may facilitate the apportionment of the cost … Keep reading

Hi there,

With all the government kerfuffle in the news lately I have been thinking about how government programs and regulations affect family choices. Health insurance and Social Security are two of the ways the choice to remarry, or in some cases marry, are economically affected.

If you are divorced and receiving Social Security benefits based on your ex-spouse’s income, you may very well lose those benefits when you remarry. This is a very good post on creators.com as to exactly how Social Security works after remarriage (the piece about divorce is half way down in the article). For many folks, losing that Social Security income would be a real disincentive to remarry. My advice here is to be absolutely sure what will happen with those benefits before you say “I do.”

The next problem lies with the Affordable Care Act, also known as “ObamaCare.” The concept is admirable, but as with all large concepts, the devil is in the details. I am not indulging in political commentary here, but this presents a potentially huge problem for folks with kids who are looking to remarry. Again, my advice is to do your homework and be absolutely certain of … Keep reading