REAL ESTATE ISSUES IN DIVORCE

            When a couple divorces, frequently the biggest issue is how to handle the real estate.  Most couples own a home which in the divorce court is referred to as the marital home.  In many cases, the divorcing parties also own income property.   How the real estate is handled depends to a large extent on whether or not the real property has equity.  The options can be summarized as follows:  

MARITAL HOME WITH EQUITY

1.     Parties can sell the property and split the equity;

a)     Either the parties agree or the Court orders it;

2.     One party can re-finance and buy-out the other party;

b)     Either the parties agree or the Court orders it

3.     The parties can agree to sell when the children graduate high school;

c)     Generally, the Court will only order this if the children will be graduating in the next few years;

4.     The parties can agree to sell when the children graduate college

d)     Generally, the Court will only order this if the children will be graduating in the next few years.

5.     The parties or the Court can allocate the marital home to one party.

MARITAL HOME WITH NO EQUITY

1.     One party accepts ownership and refinances to remove the other from the deed;

2.     Parties can agree to sell;

3.     The Parties or one party can agree to retain the property and sell at a later time;

MARITAL HOME UNDER WATER

1.     Parties agree to a short sale;

a)     Court may order the sale so property is not foreclosed;

2.     One or both parties agree to pay arrears;

3.     Court can order one or both parties to pay arrears;

4.     One or both parties can apply for a loan modification;

5.     Parties cannot agree and property is foreclosed;

a)     This is not a good option.

INCOME PROPERTY

1.     All the sale, re-finance and buy-out, retention and/or allocation issues are available depending on equity;

2.     Income can be allocated to one party or split;

3.     Expenses can be allocated to one party or split;

4.     Income can be held in escrow by an attorney.

If you have any questions, call or e-mail Caren Z. Schindel at 508-651-1000 ext. 214 or Cschindel@mrmbw.com

                         BIGGEST DIVORCE SETTLEMENTS EVER


1.  Mel and Robyn Gibson- Robyn received $425 million
2.  Michael and Juanita Jordan- Juanita received $168 million
3.  Neil Diamond and Marcia Murphey- Marcia received $150 million
4.  Greg and Laura Norman- Laura received $105 million
5.  Tiger Woods and Elin Nordengren- Elin received $100 million
6. Steven Speilberg and Amy Irving.  Amy received $100 million
7. Madonna and Guy ritchie- Ritchie received $92 million
8.  Harrison Ford and Melissa Mathison- Melissa received $85 million
9.  Kevin Costner and Cindy Silva- Cindy received 80 million

10. James and Linda Cameron- Linda received $50 million

         The divorce laws that apply to celebrities are the same as the ones that apply to the rest of us.  Just like the real world, in 9 of 10 celebrity cases, the Husband paid a settlement to the Wife.  In one case (Madonna v. Ritchie), the Wife paid the Husband.  The celebrities fight about money and children just like the rest of us.    If you ever feel the laws and the Courts are not fair, just remember no one can escapes the divorce laws.  

                                   

                                           Governor Patrick signs long term care insurance bill

                        The Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA) today announces a legislative victory for seniors, as Governor Deval Patrick has signed into law a bill protecting individuals from losing their homes if they choose to use long-term care insurance for community-based care before entering a nursing home. Bill S.2359 grants an exemption from MassHealth estate recovery claims whether an individual uses their long-term care insurance for at-home or nursing home care. Prior to this bill, the MassHealth estate recovery exemption only applied when long-term care insurance policies were used for nursing home care.

Marriage and Divorce Agreements

MARRIAGE AND DIVORCE AGREEMENTS

Premarital Agreements – executed in contemplation of marriage

1.     Validity of Agreement

            -recognized in when signed

            -freedom to contract

            -permitting parties to arrange their financial affairs as they deem fit

            - agreement could so unreasonably encourage divorce as to be against

              public policy

2.     Judicial Review of Agreement

            -generally approved

            - parties are free to reject an unsatisfactory agreement

3.     Fraud and Coercion

            -not enforceable if tainted by fraud and coercion

            -party alleging fraud and coercion must prove it

            - parties are considered to be dealing at an arms’ length

            - were parties informed

            - was signature voluntary

4.     Disclosure of Assets

            -full and fair disclosure

            -informed decision

            -written statement

                        -significant assets with approximate value

                        - approximate annual income

                        -significant future acquisitions or changes in income

                        - disclosure need not be exact

5.     Waiver

            -meaningful choice

            - representation by counsel

            -adequacy of time to review agreement

            -party’s understanding of rights       

6.     Fair and Reasonable Terms

            -fair and reasonable when signed and when enforced

Postmarital Agreements- signed during marriage

1.     Validity of Agreement

            - recognized in now

2.  Judicial Review

            - carefully scrutinized

            -choices are different when spouse attempting to save a marriage

            -situation full of opportunity for one spouse to sue threat of dissolution to                           bargain themselves into a position of advantage

                        - parties not at an arms length

                        -knowing and explicit agreement to waive the right to equitable division

            3.  Fraud and coercion

                        -burden shifting analysis

                        -intensity of negotiations

            4.  Disclosure of Assets

                        - duty of absolute fidelity

                        -confidential relationship

                        -fiduciaries without the safeguard of divorce obligations and court-ordered                           disclosure

            5.  Waiver

                        -knowing and voluntary relinquishment

            6.  Fair and Reasonable Terms

                        - context of agreement

                        -purpose of agreement

                        -disparity of income and assets

                        -may not be equal bargaining power

                        - consideration of divorce factors

Separation/Divorce Agreement- signed in anticipation of divorce judgment

1.     Validity of Agreement

            -recognized since 1976

2.     Judicial Review

            -parties have full protection of divorce laws

            - Court will review every term

            -considered in light of your Judge’s experiences

3.      Fraud and coercion

4.     Disclosure of Assets

            -required by statute

            - more than approximate values

5.     Waiver

6.     Fair and Reasonable Terms

            -influenced by views of your Judge

CHILD SUPPORT GUIDELINES REVISED IN 2009

                   CHILD SUPPORT GUIDELINES REVISED IN 2009

Clients who pay or receive child support should be aware of the revised Child Support Guidelines that became effective January 1, 2009. If you have not reviewed your support payment in the past 3 or 4 years, you should look at the new rules.  These revised guidelines adopt significant, broad-based changes intended to make the rules simpler, more comprehensive and consistent with economic and societal changes over the last two decades.  The following is a list of some of the most significant changes:

1.       The revised guidelines apply up to a combined parental income of $250,000.00;

2.       Child support may be modified if the existing order is at least three years old;

3.       Child support increases for additional children;

4.       Health insurance costs are deducted from gross income in arriving at income available to pay child support;

5.       The revised guidelines apply in shared physical custody cases;

6.       The revised guidelines provide a formula for determining child support in shared custody cases;

7.       The list of included sources of income is more inclusive;

8.       Expense reimbursement, in-kind payments and personal use of business property and payment of personal expenses by a business may be included in income if they reduce personal living expenses. 

For further information on the new Child Support Guidelines, please go to http://www.mass.gov/courts/childsupport/

Old                                                                  New

Based on traditional custody                           Primary residence with one parent and one-

and visitation                                                  third of time with other

Did not apply in shared custody

arrangement                                                     Specifies how child support should be

                                                                        calculated in shared custody arrangement

Second job or overtime income

considered                                                      second job and overtime income not counted

Courts look at whether part-time                    Courts look at history of income and

jobs and overtime are regular                          expectation that income will continue to be

source of income when family                        available and the impact on the parenting

intact                                                               plan

Increased support when oldest

child reaches 13                                              No adjustment at 13

Support for children over 18

at Court’s discretion                                       Does not apply to children over 18

Payor is credited for one half

of health insurance if it covers

children                                                           Entire cost of health insurance is deducted

                                                                        from the salary of payor or recipient regard-

                                                                        less of who covers the children

Custodial parent’s income

reduced by $20,000.00                                   Both parties’ income treated equally

Custodial parent pays first $100.00               Custodial parent is responsible for first

Per child per year of uninsured                      $250.00 of uninsured medical, dental,

medicals                                                         vision expenses

Attribution of income does not apply                        Attribution of income can apply to either

to custodial parent with children                   party if unemployed or underemployed

who are under the age of 6 

                                         THE DIVORCE PROCESS

           There are three ways to file for divorce in Massachusetts, and the procedures for each are slightly different.

            Section 1A-unconstested

            This process requires filing a Separation Agreement (actually the divorce agreement), financial statement and affidavit of irretrievable breakdown with the divorce petition.   If the divorce involves children, the parents must take the parenting course and file the certificates with the court.  The Separation Agreement must include provisions governing all of the issues in the divorce, and both parties must sign it in front of a notary.   The court will schedule a hearing date 4-6 weeks after the parties file the papers.  The actual hearing involves about 3 minutes of questions and answers.  A Section 1A divorce becomes final 4 months after the hearing date.

            Section 1B- contested

            One spouse initiates a “1B” divorce by filing a complaint for divorce on the grounds of irretrievable breakdown.  In this type of action, the parties acknowledge that the marriage is irretrievably broken down but they are unable to reach an agreement on property, custody or support.  By statute, the court will not hear or try the divorce for six months from the date of filing.  During that six- month period, the attorneys will generally conduct “discovery” and try to reach an agreement.   If there are children, both parents must take the parenting course.

            “Temporary orders” may be appropriate if the spouses cannot agree on what will happen during the divorce process.  Temporary orders may be your first experience with the judge and the probate court system.  Temporary orders generally involve custody, visitation, child support, alimony and health insurance as well as use and occupancy of the marital home. Ordinarily, the parties first meet with a family service officer who will help mediate the issues.  If a mediated agreement is not possible, a judge will hear the matter and render a decision.   Temporary orders generally remain in effect while the divorce is pending. 

            Discovery is a legal technique for gathering information.  Some discovery is mandatory, and other discovery is optional.  Discovery can be formal or informal. Within the first 45 days of filing a complaint for divorce, the parties must supply each other with copies of various documents called mandatory discovery.  I am including a copy of Rule 410 of the Supplemental Rules of the Probate Court so you will have the list of documents that you must provide to your spouse.  Either party may send a written list of questions called interrogatories to the other party who must answer them under oath within approximately 30 days.  Either party may send the other a request for production of documents, which is a list of additional documents that the other party must produce.  Typically, these documents are financial records including tax returns, credit card statements, account statements and copies of checks and check registers.  In addition, either party’s attorney may take the other party’s deposition.  At the deposition, the attorney will ask questions of the other party and a stenographer transcribes the parties’ response and produces a written transcript. 

            At some point during the process, the court will schedule a pre-trial conference.  The courts require that the parties and their attorneys meet prior to the pre-trial conference.  This is a good opportunity to negotiate a settlement agreement.  If the parties are unable to reach agreement at the conference, they will appear in court with their attorneys and present to the judge the facts and issues as assembled to date.  The judge will then give the parties his or her impression of the case and an indication of what the result might be if the case went to trial.  This input from the judge often results in a negotiated settlement on the day of the pre-trial conference or shortly after the pre-trial conference.  If a settlement occurs, the judge will enter an order divorcing the parties under Section1B and the divorce will be final in 3 months.

            If the case does not settle at the pre-trial conference, the judge will schedule a trial date.  Over 90% of divorces in Massachusetts settle prior to trial by agreement of the spouses.  Should your case go to trial, which is unlikely, you and I will spend a good deal of time preparing for it so you will know what to expect long before the trial date.

            Fault Divorce    

                        In addition to irretrievable breakdown as grounds for divorce, there seven fault grounds in Massachusetts.  They are:

            1.  cruel and abusive treatment;

            2.  desertion;

            3.  adultery;

            4.   impotency;

            5.  gross and confirmed habits of intoxication (including drug abuse);

            6.  prison sentence, and

            7.  nonsupport.

            The process for a fault divorce is identical to the process for a no- fault divorce.  With respect to alimony, custody or property division, the relative fault of the parties are seldom decisive and play little role in the ultimate resolution of a divorce case.  Very few parties request a fault divorce.

            

            

Alimony Reform in Massachusetts

                         ALIMONY REFORM IN MASSACHUSETTS

                                                                (effective March 1, 2012)

                What is alimony?

·         The payment of support from a spouse who has the ability to pay to a spouse in need of support for a reasonable length of time, under a court order

                Are there different types of alimony?

·         General term alimony

                Periodic payments to an economically dependent spouse

·         Rehabilitative alimony

                Periodic payment for a predicted amount of time

·         Reimbursement alimony

                Reimbursement in a marriage 5 years or less

·         Transitional alimony

                Transition to an adjusted lifestyle in a marriage of 5 years or less

                How long does alimony last?

·         Terminates upon death of either spouse

·         Terminates upon remarriage of recipient

·         Marriage 5 years or less- 50% of # of months of marriage

·         Marriage 5-10 years- 60 % of # of months of marriage

·         Marriage 10-15 years - 70% of # of months of marriage

·         Marriage 15-20 years- 80% of # of months of marriage

·         Marriage of 20 years or more- indefinite

·         Cohabitation prior to marriage may be considered

·         Alimony suspended or reduced upon cohabitation

·         Until retirement of payor

                How is the amount of alimony calculated?

·         Generally not more than recipient’s need or 30-35% of the difference in incomes

·         May be unallocated child support and alimony- tax benefit

                May a judge deviate from these rules?

·         Length of marriage

·         Age of the parties

·         Health of the parties

·         Income of the parties

·         Employment and employability

·         Economic and non-economic contributions

·         Marital lifestyle

·         Ability of parties to maintain marital lifestyle

·         Lost economic opportunity as a result of marriage

·         Other relevant factors

                Modifications

·         If existing order exceeds the durational limits

·         Married 5 years of less- on or after March 1, 2013

·         Married 5-10 years- on or after March 1, 2014

·         Married 10-15 years- on or after March 1, 2015

·         Married 15-20 years- on or after September 1, 2015