Archive for August, 2011

How The Massachusetts Courts Interpret An Equitable Distribution Of Marital Property Upon Divorce

Wednesday, August 24th, 2011

Introduction

Upon divorce, the parties expect closure as to the division of the marital property. All clients ask: how will this be accomplished and how can they position themselves for a desirable outcome? This article highlights the basic structure of a Massachusetts property division. The court is charged with the responsibility of providing an equitable division of marital property if and when the parties cannot agree on such a division themselves.

This article offers generalized insight as to how the parties and the court may interpret the meaning of an “equitable” distribution. Please note than unlike matters affecting support or custody as may be revisited as substantial and material changes in circumstances warrant, nearly all marital property divisions are final, once ordered.  In Massachusetts we turn our attention to the statute, Mass. Gen. Laws Ch. 208 § 34.

 

In General

What is “equitable” distribution?

That which the Court finds to be fair and reasonable under the circumstances. Note that equitable may well be something other than a 50/50 split; thus “equitable” is not necessarily “equal.” The court considers the length of the marriage, the conduct of the parties during the marriage, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of the parties and the opportunity of each for future acquisition of capital assets and income.

 

What is the scope of divisible assets?

Let us look at the statutory language:

“Upon divorce, court may assign all or any part of the estate of the other.” The use of the word ‘estate’ is important for two reasons: first,  the property subject to division is not limited to property acquired during the marriage, rather, it includes ALL property whenever and however acquired. (Rice v. Rice, 372 Mass. at 400); secondly, “estate” includes, but is not limited to all vested and nonvested benefits, rights and funds accrued during the marriage, extending to anything and everything of value.

Massachusetts courts apply an expansive view of divisible assets, both as to time and title. This means that the Court may award the property brought into the marriage by Spouse A, to Spouse B, if it finds that doing so is “equitable”.

 

Pre-Marital Assets

Examples where premarital property was awarded to the other spouse:

Baccanti v. Morton, 434 Mass. 787, 792 (2001): Upon a showing that both spouses made equal contributions to the marital partnership, including equal contributions to the assets owned by the husband prior to the marriage, the court made a 50/50 split of the husband’s premarital assets.

Moriarty v. Stone, 41 Mass. App. Ct. 151 (1996): The appeals court held that the parties’ respective contributions to the accumulation, preservation and appreciation of various premarital assets during 10 years of premarital cohabitation were a factor. Here, despite the fact that the premarital assets were held in the husband’s name only, the court looked to the parties contributions during premarital cohabitation. This case is especially compelling for same same sex couples unable to marry prior to Goodridge v. Dep’t. of Public Health, 440 Mass. 309 (2003).

 

What can we learn from this?

All the facts are needed, i.e., is there a pre-nuptial agreement? What are the premarital assets a client brings to the marriage? In a short-term marriage, the most likely outcome is the spouse bringing them to the marriage will retain those premarital assets. In a mid to long-term marriage, premarital assets kept segregated from the marital estate could be divided between both parties under the law.

 

Valuation Dates

As of what date are assets identified and valued for purposes of equitable distribution?

Generally, as of the date of divorce. However, other dates may be more suitable. Davidson v. Davidson, 19 Mass. App. Ct. 364, 370 (1985) specifically left it open to argue other dates should control.

In Savides v. Savides, 400 Mass. 250 (1987), husband’s estate increased dramatically post-separation (1974-1985), divorce in 1985. As the wife did not contribute to this increase in value, she had no claim to the increase.

Similarly, short-term, childless marriages are compelling arguments for the date of separation, not the date of divorce.

 

How to Prevent the Sale, Transfer, Removal or Concealment of Marital Property by the Other Spouse

Upon filing a divorce, Supplementary Probate Court Rule 411 prohibits the other party from disposing of assets subject to division prior to a final Court resolution.

 

What a party may NOT do, while the case is pending:

A party may NOT sell, transfer, encumber, conceal, assign, remove or dispose of property except: 1) in the ordinary course of business or investing, or 2) for attorney fees, absent a court order or written assignment of the parties. Neither party may incur new debt, change life insurance or retirement beneficiary designations or remove the other party or the children from any insurance policy.

 

What else can be done to secure marital assets while the case is pending?

In egregious cases, Counsel may bring an attachment (per Mass. Dom. Rel. P. 4.1) on real estate and tangible items, or, trustee process (per Mass. Dom. Rel. P. 4.2) on bank accounts, brokerage accounts, and retirement accounts – – when there is significant fear that the other party will transfer or secret marital assets despite the Rule 411 automatic restraining order.

 

Legal Services at the Law Offices of Gary M. Horwitz

We earn the privilege of your business in everything we do. We understand that property division becomes permanent, and that every case comes with its own set of unique circumstances. We promptly answer our client’s questions so they may make their most informed decision on all relevant matters. Please call our Chelmsford office today for a free consultation, (978) 250-4646