New Case Law: Marital Estate and Business Value, Pension Plans, and Inheritances

Marital property is often at the center of contention in a divorce case. Among the many types of property that may be considered part of the marital estate are retirement accounts and pension plans, business assets, and inheritance assets—and these assets are often litigated in a seriously contentious manner.

A recent Massachusetts appellate case, Dilanian v. Dilanian, addressed the issues of business assets, inheritances, and pension plans as part of the marital estate. In that case, the parties were married for thirty-one years, living a comfortably upper-middle-class lifestyle. The wife stayed home, while the husband ran a successful business, which he originally started with his father, but of which he was the sole owner by the time of the divorce proceedings. The parties filed for divorce, and while they amicably resolved issues regarding some of the marital property, including the marital home, much of the trial centered around the value of the husband’s business and the husband’s share in various assets, including pension plans.

The trial judge reviewed the husband’s income from his business, noting that in order to avoid double taxation, the husband paid himself a salary and a year-end bonus each year, leaving little funds in the company’s account as retained earnings. The husband’s financial statement reported significant income increases between 2008 and 2010, but his income was drastically reduced in 2011 and 2012, after the divorce proceedings started—yet at the same time, the amount of cash left in the business accounts increased by over $294,000, contrary to the husband’s prior practice.

The judge found that the husband had artificially lowered his income, and that the husband’s real annual income was approximately $325,000, ordering alimony to be paid to the wife in the amount of $2,000 per week. In valuing the marital estate, the judge did accept the husband’s valuation of the business, only adding in the amount of a promissory note payable to the husband for a personal loan made to the company. The husband was allowed to keep the business.

At issue were also two pension plans that the husband had contributed to during the marriage, along with an inheritance from his father, which occurred very late in the course of the marriage. The judge found that the inheritance was received so late as not to be “woven into the fabric of the marriage” and belonged to the husband. However, the judge also ordered the husband to transfer 60% of both pension plans to the wife.

The husband appealed, claiming that the trial judge abused discretion in both the judge’s valuation of the business and in giving the wife 60% of the pension plan benefits. He argued that the company’s defined contribution plan belonged partially to his now-deceased father, and thus to his sister, who received part of the father’s estate after the father died.

The Appeals Court disagreed. The Court explained: “contrary to the husband’s argument, the judge’s order will not adversely affect the interests of third persons. The plan documents establish that the beneficiaries of any portion of the defined contribution plan that belonged to the husband’s father are the husband and his sister, in equal shares. The sister, as coexecutor of the estate, signed an estate tax return taking the position that $663,961 of the plan belonged to the father. Accordingly, half of that amount ($331,981) could be claimed by the sister. Once sixty per cent of the plan is transferred to the wife, the remaining amount will be well in excess of the amount the sister claimed in the estate tax return and appears able to claim.”

The Appeals Court also found no issue with the trial judge’s valuation of the business as part of the marital estate, holding that there was nothing unreasonable in considering the $150,000 note payable to the husband part of the value of the company. The Court also disagreed with the husband on his assertions that the income imputed by the judge to the husband at trial was incorrect. “[C]ontrary to the husband’s assertion, the evidence supported the finding that the husband’s reported income was increasing until he filed for divorce in 2011, and that the husband intentionally reduced his own salary while amassing corporate earnings usually directed toward his personal income,” the Court held. “Given this evidence and the husband’s furtive financial disclosures, including his failure to prepare a 2012 financial statement for [the company], the trial judge could reasonably conclude the husband artificially reduced his income to alter his financial condition in light of the impending divorce.”

It is important to hire a competent family law lawyer to handle your unique case or answer your personal questions. If you have any questions about property distribution, alimony, divorce, or family law issues, please call our offices at 978-225-9030 during business hours or complete a contact form on our website. We will respond to your phone call or submission with prompt attention.

Reimbursement Alimony in Massachusetts

In Massachusetts, judges of the Probate and Family Court may award alimony to one of the spouses during the divorce process. Alimony is payment by one former spouse towards the maintenance of the other spouse. Under the Massachusetts alimony law, there are four types of alimony: (1) general term; (2) rehabilitative; (3) reimbursement; and, (4) transitional. One form of alimony is called reimbursement alimony. The aim of reimbursement alimony is to pay one spouse back for the support (financial or otherwise) that spouse provided during the marriage.

Couples embarking on the divorce process in Massachusetts should hire competent legal counsel for this process. Divorcing couples must understand the various forms of alimony that a spouse in a divorce could receive from the payor spouse. The type of alimony that a Massachusetts judge awards to a person is based upon various factors and the length of the marriage.

For example, suppose that Jessica and Tim met during college. Soon after their graduation from school, they were married. Jessica worked as an entry-level technical writer, on a track to eventually be promoted to a senior-level technical writer or director of technical writing, with a dream of going to law school to become an attorney. Tim was an entry-level financial analyst. Jessica earned more than Tim. After one year of marriage, Tim and Jessica decided that Tim would attend graduate school for business. The two-year business program was intensive, but Jessica supported her husband’s dream to become a business mogul. During their discussions about whether Tim should attend business school, the couple decided that Jessica would wait to pursue her dreams of law school until her husband finished his two-year business program. Additionally, Jessica would not work while he was in graduate school, so that she could support him. After his graduation, Tim found a job that offered a significant pay increase, and Jessica continued to support Tim as a homemaker. She never went to law school, so she did not have the chance to pursue a law degree and eventually a wonderful and arduous career as an attorney. A few months later, Tim asked Jessica for a divorce. Jessica has many questions for her attorney: first, is she entitled to reimbursement alimony?

Reimbursement alimony is intended for marriages that are shorter in length of time, five years or less. The purpose of reimbursement alimony is to compensate the payee, or recipient, spouse for all that the spouse did to support his or her spouse. The payee spouse receives reimbursement alimony to compensate for time, money, and effort spent in enhancing the other spouse’s earning capacity.

Jessica would likely be the person in the marriage entitled to alimony, because Tim earned more money and because Jessica would need to be compensated for all that she did to support Tim. Because their marriage was shorter in length–less than five years–the form of alimony that a justice would likely award to Jessica would be reimbursement alimony. A Massachusetts Probate and Family Court judge may decide to award Jessica reimbursement alimony to compensate her for her time, money, and effort in enhancing Tim’s earning capacity. The spouses had decided that Tim would pursue an education to support his career. Because of this, Jessica was unable to advance in her career. This decision boosted Tim’s earning capacity and not Jessica’s as an individual. Because of this, a Massachusetts judge would award Jessica an alimony amount to reimburse her for all that she did to support Tim as a spouse, such as her staying at home to support Tim as a homemaker and also her foregoing her dreams to support his.

Suppose that Tim and Jessica had been married for longer than five years. Could Jessica receive alimony? The answer is that Jessica could receive alimony, but not reimbursement alimony, because reimbursement alimony is for marriages that lasted five years or less. A Massachusetts judge would likely award Jessica one of the other forms of alimony, such as general term alimony, to make her whole and comfortable as she was during the marriage. Reimbursement alimony is not designed to support longer marriages.

It is important to hire a competent family law lawyer to handle your unique case or answer your personal questions. If you have any questions about reimbursement or other forms of alimony, divorce, or family law issues, please call our offices at 978-225-9030 during business hours or complete a contact form on our website. We will respond to your phone call or submission with prompt attention.

New Case Law Addresses Ex Parte Protective Order

A protective order, sometimes also referred to as a restraining order, serves to protect a victim of domestic abuse which is perpetrated by a member or former member of the victim’s household. It may also serve to protect a victim from abuse or violence perpetrated by someone the victim is or was dating.

The recent case of G.B. v. C.A. involved veracious protective order requests against a defendant who was a Boston police officer. In that case, the parties were in a dating relationship for three years. The day after the relationship ended, the defendant appeared at the plaintiff’s workplace and attempted to return ceramic flowers to her. A struggle ensued, and the video of the struggle was captured by surveillance cameras from two different angles. The video showed that the plaintiff threw the flowers in the trash; the defendant retrieved them; and the plaintiff then lunged at the defendant, pointing long fingernails at his face. As the parties struggled, they went off camera for some time, and the plaintiff eventually landed on the ground and injured her face and lip.

The plaintiff attempted to call the police, and the defendant tried to take her cell phone away from her, boxing her into a corner. When a 911 operator called back, the defendant answered the plaintiff’s phone. He then walked across the street to a police station, and officers came on the scene and transported the plaintiff to a hospital for treatment.

The following day, the parties appeared in court, each seeking a protective order against the other. The judge viewed the video recording of the struggle between the parties and declined to grant either party’s request. Subsequently, the matter was investigated by Boston Police Department’s domestic violence unit, which eventually filed criminal charges against the plaintiff. The defendant was not charged, though the matter was also referred to the BPD’s Internal Affairs division.

About six weeks later, the plaintiff filed for another protective order against the defendant, alleging that he followed her in his car, intimidated her, and had a friend call her and threaten her not to go to court. The following month, a clerk magistrate heard the criminal charges against the plaintiff. The clerk held the application “in abeyance” for sixty days, told the parties to stay away from each other, and noted and that, if there were no further incidents, the criminal complaint would be dismissed.

Subsequently, the plaintiff filed for another protective order, alleging that the defendant followed her, carried a gun, and drove by her work, that he had contacted her on an Internet application called “WhatsApp,” and that he “went to Housing to try to tell lies.” A third judge denied the request.

The plaintiff filed for a protective order for the fourth time, about a month later. This time, because the plaintiff had moved, she was referred to a different court for her filing. The plaintiff recounted the original altercation, indicating that the defendant grabbed her, struck her in the face, pushed her, and slammed her against the ground. She also stated that she was “tired of being afraid” of the defendant and claimed that two different judges on two different dates ordered the defendant to stay away from her, not to drive by her job, and not to contact her in any way, and that he had violated those orders on five separate dates.

The fourth judge granted the protective order ex parte, then scheduled the matter for further hearing. Another judge heard the matter and extended the protective order for a year. The defendant appealed, claiming that the judge abused his discretion in granting the order. The defendant argued that the plaintiff failed to prove, by a preponderance of the evidence, that she suffered abuse, and that the only “new” evidence presented by the plaintiff in support of the request was an incident where the defendant drove by the plaintiff’s workplace.

The Appeals Court disagreed with the defendant, holding that the trial judge was within his discretion to find for the plaintiff, based on the totality of the circumstances. The court explained that “it was ultimately up to the judge to determine the credibility of the witnesses. He could have believed her version of events, or not. Indeed, he would have been within his discretion in finding that the plaintiff was the initial aggressor in the December, 2015, incident, or that it involved mutual combat. Neither finding, however, would negate the further discretion afforded the judge to consider this incident in the totality of the circumstances surrounding the request for the 209A order at issue in this case.”

If you need assistance with a restraining order or have any questions about divorce or family law issues, you may schedule a free consultation with our experienced attorneys. Call 978-225-9030 during regular business hours or complete our online contact form, and we will respond to your phone call or submission promptly.

Financial Errors During a Divorce Proceeding

Divorce can inevitably become a very stressful period in a person’s life. As emotions run high and become all-consuming, many parties do not realize that financial mistakes can be made during a divorce. This article will discuss some of the financial errors your divorce attorney can help you avoid during this high-stress time.

It is likely you and your spouse share many financial commitments—credit cards, a mortgage, health insurance, and variety of monthly bills are just a few examples. Separating these commitments is incredibly difficult, and our divorce attorneys are aware of the emotional toll this reality can take on your life.

The biggest asset you will likely have trouble separating is the marital home. As a first practical point, it is imperative that if you or your spouse stay in possession of the home, you are able to afford to do so. Our attorneys are aware that there are many memories and emotional attachments that are rooted in this home. In the moment, you may just want to keep this home since it means a lot to you, but you must ensure that you can afford to upkeep the property, as well as pay the mortgage and taxes on the property independently. If you think you would be unable to meet these obligations, we advise you not to make the financial errors of relying upon your former spouse to pay for your marital home.

While you may want to avoid dealing with separating your assets from your spouses, this is essential in a divorce proceeding. Leaving financial accounts and obligations as joint ones can create a number of devastating situations—for instance, your former spouse running up debt on credit cards or refusing to separate joint bank accounts. These situations can lead to long-term financial hardships, so our divorce attorneys strongly recommend moving forward with this difficult, but necessary step.

Another oversight that can lead to financial errors in a divorce is failing to remove your former spouse from a will or trust. During a marriage, many people will name a spouse the beneficiary of a will or trust. As it is likely that you do not want any money or property going to your former spouse after the divorce settles, it is encouraged to change your will or trust as soon as possible. Doing this simultaneously along with separating assets will avoid any mishap in the future which would give your former spouse the inheritance you wanted him or her to have while your marriage was thriving.

Taxes are another financial area that you may forget about during a divorce proceeding. In the Commonwealth of Massachusetts, it is important to know the difference between spousal support and child support payments. While you may be aware that child support may only be used for your children, and alimony may be used as spousal support, you may not be aware that alimony payments are taxable, while child support payments are not.

Also, do not forget that these payments often eventually end, and it is important that you are financially self-sufficient. For instance, child support payments may stop when a child turns 18 years old, or when a child completes their college education. Additionally, based on the type of alimony you receive, payments may end if you remarry or cohabitate with a new partner, or when you become financially stable. In the moment, you may forget that these support payments have an inevitable end date, so please be sure you are not fully reliant on these support payments.

Lastly, do not rely on your ex-spouse to help you with any of these payments. Even if your ex says he or she is going to be helpful with credit card payments, car loans, or other bills, remember that your name is on them and put yourself first. If your former spouse does not hold up his or her commitment, these costly financial errors can negatively affect your future.

If you have questions or concerns about issues involving finances, family law, or other legal issues, you should contact a competent attorney. Our divorce, family, and domestic relations attorneys may be able to work on your behalf to handle your case. Contact our offices by phone at 978-225-9030 during business hours to schedule a free consultation. We will respond to you as soon as possible.

Emancipation of Children and ROTC: New Massachusetts Case Law

When it comes to emancipation of children for purposes of child support, does joining the Reserve Officer Training Corps (ROTC) in college equate to joining the Armed Forces? This was the issue addressed by the Massachusetts Appeals Court in a recent decision.

In Bobblis v. Costa, the parties were divorced in in 2000. The mother retained custody of the parties’ children, and the father agreed to pay child support. The separation agreement between the parties provided that the father would continue paying child support until the child reached the age of emancipation, which in this case would be 23 in the event the child was enrolled in a college or post-secondary program. The agreement further provided that the father would cease to pay child support in the event that the child entered the Armed Forces.

In August of 2012, one of the parties’ children enrolled in a college program. He later also joined the ROTC on campus, having been offered a scholarship beginning in his junior year. The child signed two documents: a cadet contract, which governed his conduct as an ROTC member during college, and an enlistment document, which governed his enlistment after college. After graduation, in 2016, he joined the Army as an officer.

Subsequently, the father claimed that the child joining ROTC was equivalent to the child to joining the Armed Forces, which served as an event of emancipation. The father filed for retroactive modification, seeking to end his child-support payments as of the child’s junior year of college, when he first enrolled. The probate and family court judge rejected the father’s argument, and the father appealed.

The Massachusetts Appeals Court looked closely at the two documents signed by the child, ultimately finding that they did not serve as an event of emancipation. The Court held that the documents did not indicate that the child entered the Armed Forces as a junior, but rather after he graduated.

“The contractual provisions of the enlistment document and cadet contract, as well as the statutory authority governing the ROTC program, demonstrate a clear distinction between participation in an ROTC program and military service under the ROTC program’s terms,” the Court noted. “As the trial judge noted, “[an] ROTC cadet is simply a scholarship student who receives some special training and has an obligation to perform military service or repay the funds received after participation in the program.” Importantly, the cadet contract and 10 U.S.C. §§ 2101 et seq. contemplate the possibility that a cadet may never enter active duty, for a number of reasons, and in such circumstances require the cadet to repay the Army for the scholarship.”

The Court also looked to other federal statutory and decisional law in contrasting ROTC from military service. As some examples, the Court explained, federal law specifically distinguishes between ROTC and armed services in providing life insurance and death benefits. The Court affirmed the decision to deny a retroactive modification of child support payments.

If you have questions or concerns about issues involving child support, modification, family law, or other legal issues, you should contact a competent attorney. Our divorce, family, and domestic relations attorneys may be able to work on your behalf to handle your case. Contact our offices by phone at 978-225-9030 during business hours to schedule a free consultation. We will respond to you as soon as possible.