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.
As divorce attorneys, we often see litigation and settlement questions regarding individual retirement accounts (IRAs). A pension plan, IRA, or other type of account is considered marital property for purposes of distribution during a divorce.
New questions may arise, however, where unmarried persons engaged in a romantic partnership seek to designate each other as beneficiaries of an IRA. In a recent opinion, the Massachusetts Appeals Court addressed an issue concerning an IRA beneficiary who was the former romantic partner of the decedent, whose IRA account was in question.
In UBS Financial Services, Inc. v. Aliberti, three different IRA accounts were in question, in the amounts of $31,000, $18,000, and $276,000, respectively. The account holder originally designated his romantic partner (party to the suit) as beneficiary of all three accounts. In November 2013, the account holder expressed a desire to name additional beneficiaries, and he sent back completed and signed designation update forms for the two smaller accounts, but not the third one. The updated forms designated an additional primary beneficiary and two additional contingent beneficiaries, but they also indicated that each beneficiary should receive a 25% share of the account proceeds. UBS asked the account holder to clarify whether he meant to list each of the four as primary beneficiaries. The account holder did not respond and unexpectedly died the following month. The romantic partner then contacted the account administrator regarding each of the IRA accounts and requested that all funds be distributed to her as the sole beneficiary.
The administrator of the accounts happened to be the decedent’s former sister-in-law, who worked at UBS as a financial advisor. Although the beneficiary reached out to the administrator to check on the status of her claim, the administrator never provided a status update. Instead, she sent to the beneficiary several text messages with responses such as: “How big of a whore are you,” “You are the most worst piece of filth I have ever encountered,” and, “Are you so eager to grab the money. Did you even notice his death certificate is wrong? Oh no you were too busy ransacking.”
The Court agreed with the beneficiary that UBS unlawfully withheld from her the proceeds from the largest IRA account, for which the Court noted that UBS never received any documentation naming anyone other than the romantic partner as beneficiary. “ Considering the time value of money and the fact that no investment decisions were made regarding the largest IRA for over two and one-half years, the facts alleged in the pleadings support the inference that [the beneficiary] likely was damaged from the delay in distributing those funds,” the Appeals Court held. Accordingly, the Court held that the beneficiary properly pleaded her breach of contract claims.
Additionally, the Court held that the beneficiary also properly pleaded claims for breach of fiduciary duty, holding that a fiduciary relationship existed between the decedent and UBS. “As a fiduciary, UBS was obligated to administer the IRAs for the exclusive benefit of [the beneficiary] (assuming the truth of [her] allegation that she was the only proper beneficiary) while acting fairly and in her best interests,” the Court stated, holding that UBS was required to timely distribute the IRA proceeds to the beneficiary and to keep her otherwise informed of their status.
The Appeals Court then held that the beneficiary’s claims for infliction of emotional distress were not sufficient and should be dismissed. On the issue of violation of the Massachusetts consumer protection statutes, however, the Court again held for the beneficiary. “Based on the pleadings here, UBS … (1) denied Aliberti the funds to which she was entitled; (2) for multiple years; (3) without good reason; (4) until she was forced to take legal action and incur unnecessary costs and fees,” the Court noted, holding that those actions constituted a violation of Massachusetts General Laws chapter 93A.
If you have questions or concerns about issues involving family law, domestic relations, 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.
Increasingly in our global society, legal issues of an international scope arise in family law cases. A recent appellate case dealt with one. In Ravasizadeh v. Niakosari, the Massachusetts Appeals Court decided for the first time an issue regarding enforceability of a mahr, which is an Islamic marriage contract, in the Commonwealth’s courts.
The parties were married in 2000 in New York and separated in 2012, by which time they lived in Massachusetts. Before they married, they signed a marriage contract which provided that the wife would receive 700 gold coins from the husband in the event of a divorce. Under Iranian law, the wife was to receive only those gold coins and three months of alimony from the husband. The husband owned property in Iran, which he had inherited from his father. During the marriage, the parties enjoyed an upper-middle class lifestyle and owned property together.
At trial, the judge entered orders regarding custody and child support, and also ordered that the parties’ property be sold and the proceeds be split equally. The judge included in his calculations the property of the husband in Iran. In light of the equitable division, and finding that the wife could continue enjoying the lifestyle to which the parties were accustomed, the judge declined to award any alimony.
During the pendency of the litigation, the wife also filed a case in the appropriate Iranian court to enforce the mahr. The court found in the wife’s favor. The husband appealed to the Iranian court of appeals, which also found for the wife. The husband appealed to the Supreme Court of Iran, and that action was still pending during the Massachusetts litigation.
Back in the Massachusetts court, in addition to the division of property above, the trial judge also held that the 700 gold coins were the property of the wife. He ordered the husband to pay into the court in Iran the value of the gold coins in order to satisfy the judgment. Finally, the judge also ordered that even if the Supreme Court of Iran were to reverse and find for the husband, the husband must pay an amount equal to one-half of the money to the wife in order to satisfy liability.
The husband appealed, claiming that the judge had no authority over the marital contract, especially as the marriage contract was already being litigated in the Iranian courts. The husband also argued that the judge’s calculation created a disproportionate division of marital assets in favor of the wife.
The Court affirmed the lower court’s decision in part and reversed in part, holding that the portion of the decision enforcing the marital contract should be reversed, while the judge’s order dividing the rest of the property should stand. The Court noted that the trial judge properly used all of the factors involved in dividing property equitably, that the judge had broad discretion to make property decisions, and that the judge’s rationale and findings provided a detailed explanation for the conclusions he reached.
However, the Court held that jurisdiction over the marital contract laid with the Iranian courts. It explained and enforced the doctrine of comity, which allows the Massachusetts courts to recognize and enforce valid judgments rendered by a foreign court.
“It was error, therefore, to order the husband to pay the mahr to the wife in the event that the Supreme Court of Iran finds in his favor; in the alternative, it was error to order the wife to split with the husband any judgment that she receives, if the Supreme Court of Iran affirms the earlier judgment in her favor. That is to say, if the Supreme Court of Iran does not enforce the mahr, the Probate and Family Court is without jurisdiction to do so; if the Supreme Court of Iran does enforce it, the Probate and Family Court is without jurisdiction to dispose of it differently,” the Court stated.
If you have questions or concerns about issues involving family law, alimony, custody, child support, and more, 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.
If you are beginning the divorce process, there are many questions you may have for your divorce attorney regarding your finances. You many find yourself in a situation where you could be paying your former spouse alimony, or you could be the individual receiving alimony from your ex-spouse. In 2017, the GOP-run legislature enacted new tax laws that will greatly impact alimony payments and separation agreements. This article will explain to you some of the impacts the bill will have on your divorce and the financial implications you may face.
First, it is important to understand the fundamentals of alimony. When divorcing, a former spouse can ask for alimony, a form of financial maintenance to assist the other spouse in becoming financially stable once the marriage has ended. There are many factors that are considering in order to determine alimony payments. These include the length of the marriage, health of the parties, socioeconomic status of the ex-spouses, financial contributions to the marriage, age, education, profession, and a variety of other factors. Depending on the situation, alimony payments can last for a certain duration or an extended period of time. According to an IRS report, in 2015, over $12 billion dollars of alimony was paid in the United States.
First–and the most important thing to know–is that alimony payments will no longer be tax deductible for any separation or divorce agreement signed after 2018. As the alimony will be treated like child support for new alimony recipients, these payments will not be reported as income. However, if alimony payments are already being made prior to the end of 2018, there will still be tax deductions for these payments.
Also, if these payments are already in effect, you will not be affected by any of the new tax laws to be enacted in 2019. Any prior divorce agreements will remain valid, and the IRS will uphold prior alimony agreements. However, if agreements are modified in the future, they must comply with the new tax code.
The new tax bill likely will impact both you and your ex, as alimony payments are generally given to those in a different socioeconomic status than their ex-spouse. For example, let’s assume you are the payor, and you are now receiving a tax deduction for your payments to your ex-spouse in a lower tax bracket than you are. If you were to divorce in 2019, as the payor, you may have a better chance of no longer paying as much, since there would be no tax deduction. Due to the lack of deductions, monthly payments would inevitably be more expensive. These deductions have been so important because if a former spouse is having difficulty with payments, they were given a bit of a break due to the deduction. If tax relief is given to the payor as part of the divorce agreement, this could be one option to alleviate some of the stress that these new tax laws bring.
It is likely that many will not be able to afford as much in alimony, as these new tax laws are a deterrent to paying as much alimony as possible. Many have assumed that divorce proceedings will increase this year, as some people attempt to get ahead of the new tax laws. If both parties agree on these modifications, their old alimony agreement can be updated to conform with the new tax code. Since there will be no further tax deductions due to alimony, many payers will be rushing to divorce attorneys to deal with these agreements as soon as possible. It is inevitable that finances in a divorce could become a lot more cumbersome and messy.
If you are going through a divorce and are concerned about how the new tax laws will impact your current or future alimony payments, please contact a family law attorney to discuss your options. If you need more information about family law or this issue specifically, please feel free to schedule a free consultation with our office. Call 978-225-9030 during regular business hours or complete a contact form and we will respond to your phone call or submission promptly.
As many studies have shown, couples in which one spouse is an entrepreneur have a high rate of divorce. Whether it’s because the business encompasses much of entrepreneurs’ time, or because the non-entrepreneur spouse feels neglected, divorce is common.
While divorce is already a complicated process, generally, entrepreneurs have a special set of considerations when divorcing. As such, it is important to consult your family law attorney regarding the special financial concerns you may assume as an entrepreneur or the spouse of an entrepreneur.
For starters, as Massachusetts looks at property division in divorce under an equitable distribution standard, marital property and separate property are equally considered. Regardless of whether a business was started before a marriage, during a marriage, or even with an ex-spouse, it is important to know what rights you have in your company, and what your company is worth.
When divorcing, family law attorneys will ask their client to bring forth all assets, so that property can be distributed equitably. For entrepreneurs, your business may be your biggest asset. If this is the case, there is a good chance your former spouse would like a portion of your business during settlement. When the divorce proceedings begin, it is important to know exactly what your business is worth. While estimating this number is helpful, disclosing the actual figure can help divorce proceedings run more smoothly.
Before having your business appraised, it is in your best interest to have a third party, who is not connected with you or the business to perform this type of unbiased work. If you are being represented by a lawyer, ask your family law attorney if they know of any accountants or business appraisers who could assist in these efforts. An appraiser will be able to effectively run through all of your invoices, books, company property, and other assets in order to arrive at the correct figure for the worth of your business.
If you are the ex-spouse of an entrepreneur, it is important that you make certain your business owner ex-spouse is not concealing assets, hiding contracts, or bringing forth a fraudulent appraisal. Is it possible that your ex could be swindling you out of hundreds, thousands, or even millions of dollars? Consult with an attorney to confirm that any appraisal and valuation of the business is valid.
The next step for entrepreneurs is to consider what comes next for their business. As this is likely a valuable divorce asset, a business owner spouse is forced with the decision on whether to sell, retain or split the assets with their soon-to-be ex-spouse. If a business was established prior to marriage, there is more uncertainty about how much money your ex will receive. However, it is very likely that if the business began during the marriage, both spouses will have rights to it. In an equitable distribution state, a court considers many factors such as length of marriage, educational background, profession, and financial responsibility among other things.
Additionally, if this entrepreneurial venture is a partnership or a closed corporation, it may be necessary to consult the partnership agreement and/or by-laws. It is possible that these contractual agreements may disclose information pertinent to what occurs if one partner gets divorced. There could be further cases where a person may want to buy their former spouse out of a business. If you find yourself in this situation, it may be possible to give your former spouse a promissory note, so that he or she is financially satisfied after being bought out of the business.
Also, if you and your ex-spouse were in business together, it is possible that a prenuptial agreement or partnership agreement could disclose what business assets are disclosed to what spouse. If this arose in a prenuptial agreement, either spouse can challenge, potentially, the validity of the agreement. A prenuptial agreement may be invalid if a spouse did not have proper time to consult with their own individual attorney when the agreement was signed, or if the agreement was signed under duress, among other possible reasons.
Overall, if you and your former spouse are amicable, working through a divorce for entrepreneurs can be as simple as coming together and negotiating this specific property division. As this would be a simpler, less expensive to get what you want out of a divorce agreement, attempt negotiation before going to court.
If you need more information about entrepreneurship and divorce or about family law generally, you may schedule a free consultation with our office. Call 978-225-9030 during regular business hours or complete a contact form and we will respond to your phone call or submission promptly.
Robert and Mary, a Massachusetts couple, have been married for ten years and now want to proceed with obtaining a divorce. During the marriage, Robert worked and Mary took care of the home. They had no children. Because Robert has a pension plan, the question comes up: how does a court handle Social Security benefits and pension/retirement plans in property division and alimony?
In Massachusetts, the property in a divorce is subject to an “equitable division.” This does not mean that each party to the marriage receives an equal share of property in the marriage. Rather, each party to a marriage receives fair and equitable amounts of property, so that each party can experience a similar lifestyle to which he or she grew accustomed during the marriage.
A pension earned during the marriage is generally considered to be a joint asset of both parties, and would likely be equitably divided via a qualified domestic relations order. This is an order that is filed with the Massachusetts Family Court and if approved is given to the administrator of the pension, so that the pension maybe divided between the parties. The division of a pension may be a complex issue because pensions, also including IRA or 401(k) accounts, are not always equal in a dollar for dollar manner, as there may be penalties and taxes associated with them. A family law attorney can help evaluate and value the numerical amounts to handle this complexity on your behalf.
Retirement accounts are also considered to be marital assets in a divorce. As such, retirement accounts would be divided on an equitable basis. This issue becomes complex, however, because the parties must look to the length of the marriage. For example, in the case above, Robert and Mary were married for ten years. Suppose, therefore, that Robert continues to work for another 30 years. His payment to Mary would be one half of the quarter of the account, because his payment is one half of his working life during the marriage.
Alimony is different from property division in a divorce. Alimony is court-ordered support from one spouse to another and is separate from the equitable division of property. In Massachusetts, there are four types of alimony: (1) General Term alimony (provides regular support for a length of time based on the length of the marriage); (2) Rehabilitative alimony (provides regular support until the ex-spouse is able to be self-sustaining); (3) Reimbursement alimony (provides regular or one-time support for a shorter marriage to make up for costs that the ex-spouse paid in supporting the other spouse); and (4) Transitional alimony (provides regular or one-time support).
If a judge decides to award alimony under the common General Term alimony standard, then he or she will review the following factors when deciding whether or not to award alimony or for how much the alimony award should be assigned: the length of the marriage; age of the parties; health of the parties; income, employment and employability of both parties, including employability through reasonable diligence and additional training, if necessary; economic and non-economic contribution of both parties to the marriage; marital lifestyle; ability of each party to maintain the marital lifestyle; lost economic opportunity as a result of the marriage, and other factors the court considers relevant and material.
Robert and Mary were married for ten years, and the facts indicate that Robert was the sole working person in their family unit. As such, alimony payments would likely be awarded to Mary from Robert. Depending on the type of alimony that the Court determines that Mary would receive, Mary would likely be able to receive alimony payments until Robert’s retirement age. The Massachusetts family court may review several factors in awarding alimony payments to Mary, such as her health and disability (if she has issues such as these), marital lifestyle (she was able to stay at home), and her contribution to the family unit (lost opportunity to work, for example).
If a Massachusetts Justice decides to use this equitable factors approach under General Term Alimony, then the Justice would likely order that Mary receive alimony for seven years, unless Mary remarries or if Robert passes away or if Robert reaches full retirement age. If Mary cohabitates with someone else and has maintained a common household with another person, then Mary’s alimony payments could be ordered to be ceased. It is important that a payor spouse, like Robert, not arbitrarily discontinue payments without the approval from a Massachusetts Justice.
If you are seeking a competent family, pension, retirement, or alimony law lawyer or domestic relations attorney, please contact our offices by phone at 978-225-9030 during business hours or complete a contact form on our website. We will respond to your phone call or submission promptly, and you may schedule a free consultation with us.