Finances and Divorce

Griffin v. Kay: A Cautionary Tale in How Your Separation Agreement Is Worded

When spouses reach agreement on terms for a divorce, a written settlement document – commonly known as a Separation Agreement – is prepared. Parties then decide whether the agreement will either “merge” into the Judgment of Divorce or “survive” as an independent contract. When spouses reach agreement on terms for a divorce, a written settlement document – commonly known as a Separation Agreement – is prepared. Parties then decide whether the agreement will either “merge” into the Judgment of Divorce or “survive” as an independent contract. I have written about how your election impacts your ability to modify provisions in the future.

The recent decision in Griffin v. Kay is an excellent cautionary tale about making sure that the merger or survival language is clear and that both you and your spouse agree on what that language means.

Geraldine Griffin and Harry Kay divorced in 2004 and entered into an agreement calling for Harry to pay alimony of $90,000 per year until the death of either party or Geraldine’s remarriage. Their agreement provided as follows relative to merger or survival of the alimony provisions:

Notwithstanding the incorporation of this [a]greement in the [divorce judgment], it shall not be merged Keep reading

No Prenup? A 101 Guide to Postnups

More and more couples are electing to sign prenuptial agreements before their big wedding day, yet some can’t agree, don’t want to, or don’t have time to do one beforehand. After all, some people continue to believe that asking for a prenuptial agreement indicates that they expect the marriage to fail. Even if that is not the case, discussing a prenuptial agreement can be a difficult conversation to have during one of the happiest times of a relationship, making it problematic for some couples to agree on whether a prenuptial agreement makes sense for them.

Suppose you did not sign a prenuptial agreement before the wedding but wish to set forth financial rights and obligations between you and your spouse during your marriage or in the event of divorce or death. A postnuptial agreement may be an option for you to consider.

Below are some things to think about when considering a postnuptial agreement.

What is the difference between a prenuptial agreement and a postnuptial agreement?

A prenuptial agreement is a written contract signed between parties intending to marry. It outlines their financial rights and obligations if the marriage ends due to death or divorce.

People often enter into … Keep reading

Catherine Spanu, Burns & Levinson

Catherine Spanu, Burns & Levinson

When summer and school vacations approach, many divorcing spouses wonder: what happens with the children and the parenting plan? Do I get to take them for vacation, and sign them up for camps? What happens if my coparent refuses to let me take the children to my family reunion that only happens once every ten years?

Summers and school vacations can be stressful due to the changes in routine alone. That stress can be exacerbated by issues communicating with your coparent, or by uncertainty about vacation parenting plans and travel arrangements.

There are no hard and fast rules on these issues under Massachusetts law. However, to minimize stress and disruption for you and, most importantly, for your children, it is useful to know what is typical for coparenting and parenting plans during school and summer vacations, as well as how to address issues that may arise around vacations and coparenting.

A preliminary issue to consider is what is typically ordered by a judge, or agreed to between divorcing parents, as far as summer and school vacation parenting plans:

  • February/April Vacations: Massachusetts public schools typically have two week-long vacations, one in February and one in April. These vacations are
Keep reading
Catherine Spanu, Burns & Levinson

Catherine Spanu, Burns & Levinson

Many divorcing spouses worry about the possibility of their spouse selling assets during a divorce and leaving little or nothing to be divided. It can be particularly problematic if a spouse was financially controlling or secretive, or handled all the finances during the marriage with the other having a limited idea of the full financial picture. One could sell assets that the other doesn’t even know exists. Or, a spouse might transfer money or property to a family member to try to prevent it from being accessed by the other spouse, anticipating that the family member will transfer it back after the divorce is final.

But will the Court really allow a spouse to cause financial harm to the other by allowing assets to be sold or transferred in this way? Probably not, due to Supplemental Probate and Family Court Rule 411. This is sometimes referred to as the “Automatic Restraining Order” or “Rule 411.”

This article will discuss how Rule 411 works, and what Rule 411 does (and does not do) to protect marital assets for equitable division during the divorce process.

Rule 411 Goes Into Effect When a Complaint Is Filed or Served

Once the spouse who … Keep reading

Cryptocurrency, Digital Assets, and Divorce: How Do We Account for These Assets?

In recent years, cryptocurrency has sparked concern in some divorcing clients. We hear questions such as “I believe my spouse has cryptocurrency or other digital assets and we are going through a divorce. What can I expect?”

With the increase in popularity over the past decade of cryptocurrency and other digital asset holdings, including non-fungible tokens (NFTs), more divorcing couples are now fighting over those holdings. The difficulty in locating, tracking, and valuing cryptocurrency and other digital assets has added another layer of dispute in a divorce. Some divorcing spouses believe that they can underreport or hide funds in cryptocurrency wallets given it can be difficult to find or access information about those assets due to the built-in secretive nature of the holdings.

But digital assets are not untraceable. While the process for locating and tracking these assets can be a long, slow, step-by-step process, it is possible to follow the money and account for most, if not all, of the digital assets held by a spouse in the divorce process. with the guidance from an attorney knowledgeable in the area, and the assistance of a savvy expert/analyst.

While most cryptocurrency holders buy and sell on an online exchange, … Keep reading

What Happens to the Life Insurance After Divorce?

It depends on what was put into writing – or not! On January 10, 2022, the Massachusetts Supreme Judicial Court (SJC) ruled that where a former husband failed to change the beneficiary designation on his life insurance policy, the divorce operated to revoke the designation of his former wife as primary beneficiary.

In the case of American Family Life Assurance Company of Columbus v. Joann Parker, the SJC was asked to consider whether the Massachusetts Uniform Probate Code (UPC), which went into effect on March 31, 2012, applied retroactively to a policy of insurance purchased by Sean Parker in 2010.

When he purchased the life insurance policy in 2010, Sean named his then-wife, Dawn, as primary beneficiary and his mother, Joann, as the contingent beneficiary. Sean and Dawn divorced in 2016, but their Separation Agreement makes no mention of the life insurance policy. Rather, their Separation Agreement provides only that they divided their personal property to their satisfaction and that there were no agreements between them outside of the Separation Agreement.

Following the divorce, Dawn continued to pay the premiums on Sean’s insurance policy, because she claimed he had agreed that she remain the beneficiary of the policy. … Keep reading

Recovery Rebate Credits, Economic Impact Payments, and Divorce

On February 16, 2021, the IRS announced that all legally permitted first and second-round Economic Impact Payments (also known as “stimulus payments” or “stimulus checks”) have been issued. Beginning in April 2020, the IRS and Treasury Department began delivering the first round of Economic Impact Payments for qualifying individuals and families due to the economic crisis resulting from the coronavirus pandemic. According to the IRS, the second round of payments were to be made by January 15, 2021, although some second-round payments may still be in the mail. If individuals did not receive a payment, or receive the full amounts, they may still be eligible to claim the Recovery Rebate Credit (the first and second Economic Impact Payments are considered an advance of the credit), but must file a 2020 tax return in order to do so. While Economic Impact Payments were based on 2018 or 2019 tax year information, the Recovery Rebate Credit is based upon 2020 tax year information.

For married couples who are separated and no longer living together or who have initiated a divorce action since filing their 2019 income tax returns, a contested issue may be who is entitled to benefit from the Economic … Keep reading

Divorce and Bankruptcy

During divorce:

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.

After divorce:

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

Rule 401: The Financial Statement

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

Tax Time is Here

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