Boston Property Division Attorney – Massachusetts’ Best Divorce Property Division Guide
Property division in a divorce case can be a difficult concept for most family court litigants who face the dissolution of their marriage. How is property divided at divorce? Who gets the house? What factors are considered by the court when dividing or assigning property? How does the court deal with property that was fraudulently transferred? Does alimony effect property division? Does the fact that my spouse had an affair effect property division? How are pensions divided? How are other retirement accounts divided? Will the court ever assign separate property to the other spouse? Our attorneys are standing by to answer any questions you have, and we are conveniently located in Boston, Hingham, and New Bedford, MA.
The answers to these questions and more can be found in this guide to Massachusetts Property Division. The subject matter of this page includes:
Statutory structure for property division at divorce
How the conduct of parties during marriage can effect property division
The differences between spousal support (alimony) and property division
How alimony works with property division
How the court values lost, hidden or dissipated assets at divorce
Orders for transfers of property instead of alimony
Division of pension and other retirement accounts
How the length of marriage effects property division
When separate property can be assigned to the other spouse
How the marital house is divided
How property is divided in divorce
The trial court is empowered by M.G.L.A. c. 208, § 34 to assign estates of the parties at the time of divorce, or anytime after the judgment of divorce has been entered by the court assuming the court retained jurisdiction. The courts are charged with dividing property in a fair and equitable manner and these statutes are closely linked with the spousal support and alimony statutes. Our Massachusetts property division attorneys can help give you the edge.
MGL Chapter 208, Section 34 sets forth a number of factors that the court must consider when provided the task of dividing property, as well as other factors that the court may consider. The court must set out specific findings of fact to support its conclusions. These are the same factors that the court considers when ordering alimony. Because the law now prefers to award property as opposed to permanent spousal support, the court considers all the factors for equitable property division along with alimony.
The mandatory and discretionary factors that the court weighs for property division include:
- Length of marriage
- Conduct of the parties during marriage
- Age, health, station, occupation, amount and sources of income
- Vocational skills
- Needs of each party
- Opportunity for each party for future acquisition of assets and income
- Present and future needs of children
- Contribution of each party to the acquisition, preservation, or appreciation in value of the estates of each party
- Contribution of each party as a homemaker to the family unit
The division of estates of the parties upon divorce is supposed to entail a final assignment of their property, not subject to modification.
During a divorce proceeding, it is essential that a party concentrate on portraying information to the judge that addresses each of the factors listed above. It is important to paint a picture applicable to the goals of that party in the divorce, such as showing evidence that a party enhanced the estate of the other party, for example, or that a spouse has sufficient assets to be received in the divorce sufficient to negate the need for alimony.
What does Equitable Division of Property mean in Massachusetts?
Massachusetts is an “equitable property division” state, which means that the family court judge in each case is required to fairly divide property. This concept is different than other states that are called “community property” states, which has defined rules for what constitutes “marital” property and what constitutes “separate” property. If you live in Hingham, Cohasset, Wellesley, Boston, New Bedford, or anywhere else in Massachusetts and property division is an issue in your case, call us today.
How a Party’s Conduct During Marriage may Affect Property Division at Divorce
One of the mandatory factors that the court considers in a divorce case when dividing and assigning property is the conduct of the parties during marriage. The conduct of the parties is relevant not only to property division but also to spousal support.
The law requires the court to consider the conduct of the parties when dividing assets upon divorce – it is not a “discretionary” factor. (M.G.L.A. c. 208, § 34) Many divorce litigants wonder what kinds of things the court might consider in this analysis. Here are some examples of circumstances where the divorce judge may consider these kinds of conduct in making orders assigning property:
- One spouse’s failure to take care of marital assets;
- A spouse’s transfer of property to a third person in the anticipation of divorce;
- A spouse’s using cash from a self-employment business without reporting same;
- A spouse’s failure to contribute anything to the marriage;
- One spouse’s use of marital assets to support another person;
- Gambling habits;
- A spouse causing additional liability.
These are just some more common examples of conduct by a spouse during marriage that may have an effect on the division and assignment of property. Of course, the code does not specifically state that the conduct has to relate to finances to be considered; however, it is common that the bad conduct by one party would have had to necessarily negatively affect the parties’ assets to be held against that party upon divorce.
Importantly, the “conduct” considered by the court need not be “bad” at all. The court often considers the good conduct of a spouse when awarding assets in divorce cases. Think of the example where one spouse prudently invests and takes extraordinary efforts to increase the marital property and the other spouse makes no similar contribution.
ANALYZING THE DIFFERENCE BETWEEN SPOUSAL SUPPORT AND PROPERTY DIVISION AT DIVORCE
While M.G.L.A. c. 208, § 34 provides the same factors for alimony (spousal support) and property division at divorce or in a separate support action, the attorney’s planning must go far beyond a simple analysis.
The trial court is allowed to order one party to provide part of his or her estate to the other party; the court is allowed to order alimony; and the court is allowed to assign certain property to each spouse; and the court is allowed to order both spousal support and assignments of property. As a result, the court must receive a comprehensive and equitable proposal for the division of property and for the support of the spouse in need.
Some important considerations that go beyond a simple analysis include:
- While spousal support orders are subject to review and modification, property division orders are final and cannot be modified.
- Spousal support orders terminate at a date defined in the future based on the length of marriage (so long as the marriage is under 20 years; if the marriage is more than 20 years then spousal support may continue forever).
- If a supported spouse remarries, any spousal support order would terminate. As a result, a party may want to consider that if they provide spousal support rather than property, there is a chance the spousal support obligation could terminate prematurely.
- Spousal support rights terminate at the death of either party. Property is final and is included in the estate of the deceased.
- A parties’ filing of bankruptcy could be an important consideration.
- There may be different tax consequences involved. For example, receipt of alimony may be taxable income to the recipient and tax-deductible for the person that pays (likely only on the state level, recent federal tax law changes do not allow deduction). Property may be divided upon divorce as a “non-taxable” event.
- The present value of future earning potential is not a “current asset” that the court will divide in divorce.
- The court’s analysis differs with respect to alimony (which focuses on needs and income) and property division (which focuses on financial and non-financial contributions during marriage).
HOW DOES ALIMONY AND PROPERTY ASSIGNMENT RELATE IN DIVORCE CASES?
Many family law divorce litigants wonder how the court will order spousal support in their case and how the court will divide and assign property. They also wonder if these issues are related. The answer is yes. When a court considers the issues of spousal support and assignment of property the analysis overlaps. The court looks at the parties’ income, assets, income derived from those assets, whether the assets were acquired during marriage, among other similar issues.
In fact, the applicable code section for spousal support and for the assignment of property in divorce cases is the same statute, M.G.L.A. c. 208, § 34. The trend in Massachusetts for judges in the Probate and Family Court is to focus more on an equitable division of property and less on alimony. Providing property and assets to a spouse might be better for the supported spouse in the long run in many circumstances. In long term marriages of twenty years or more, spousal support is still vibrantly relevant.
The factors for equitable property division and alimony are the same, and include the length of 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 each party and the opportunity of each for future acquisition of capital assets and income. Also, the present and future needs of minor children are a factor the court must consider.
The important difference between alimony and property division is that alimony is subject to modification when changed circumstances occur, whereas property assignment is final and cannot be changed after judgment is entered.
WHAT HAPPENS IF A SPOUSE IN A DIVORCE CASE DISSIPATES OR INTENTIONALLY DEVALUES PROPERTY?
In divorce cases, it is not an uncommon occurrence for a spouse to fraudulently transfer property in the anticipation of divorce. Many spouses also intentionally fail to ensure assets are kept in the same valuable condition as when the parties were married.
Here is an example. Jack is about to divorce Jill. Before he files a complaint for divorce, he transfers title to his ranch in Rochester, MA to Doug, who agrees to hold the title to the property until Jack’s divorce is final. Jack also transfers certain Apple stocks to Doug’s name to hold until the divorce is final. Jill thereafter finds out about Jack’s transfer to Doug of the ranch and Apple stock. Jill can introduce evidence during the divorce case to show the value of the ranch and Apple stock and ask the court to grant Jill her interest in the monetary value of those assets.
Likewise, in another example, John and Betty are married and Betty lives in the parties’ family residence. During the pending divorce case, Betty fails to fix leaky water pipes, fails to pay the mortgage and property taxes, fails to clean out the pool and hot tub, and fails to insulate the pipes in winter, and so on, causing thousands of dollars in damage. John can introduce evidence at trial showing what the value of the house would have been except for Betty’s failure to take care of the parties’ asset.
In other cases, parties hide assets like fur, jewelry, electronics and so forth. The court may accept evidence as to the existence and value of these assets for purposes of division.
ORDERS FOR DIVISION OF PROPERTY IN LIEU OF SPOUSAL SUPPORT (ALIMONY)
Pursuant to M.G.L.A. c. 208 § 34 and 34A, the probate court is allowed to order the division of property instead or in lieu of all or part of spousal support. This statute is in line with the 2012 reforms concerning permanent spousal support in Massachusetts and the Uniform Marriage and Divorce Act.
The probate court judge is allowed to review the financial circumstances of both parties to the divorce case and order that a spouse is to be provided for by his or her property rather than monthly financial support.
If the judge orders real estate to be conveyed or released to the other party, such a judgment operates to vest title in the party entitled to the property when the divorce judgment becomes absolute (i.e. after the “nisi” period has run). This is an important concept to remember. While property division judgments are final, if the court grants alimony those judgments are generally modifiable based on a changed circumstance and may end upon the paying spouse reaching his or her retirement age.
DIVISION OF PENSIONS AND OTHER RETIREMENT BENEFITS AT DIVORCE
During divorce cases it has been common knowledge among family and divorce lawyers that pensions and other employment benefits, such as stock and stock options or profit sharing plans, are property that is divisible or assignable.
The courts have recognized that the non-employee spouse deserves a share of a pension where there has been a long term marriage and where the non-employee spouse has dedicated time to raising children, especially. Divorce litigants should recognize the general “rule of thumb” that retirement assets that are acquired over the course of marriage are divided equally.
The courts must consider the tax consequences of dividing or assigning a pension interest.
The next step, after the court has determined that a pension should be divided, is to determine and effectuate the method of division. Most often pensions are paid out at a future date. As such, one method is to assign presently a percentage of the present value of the future pension. This is the preferred method but often a difficult task since the pension must be presently valued. The second method is to postpone division until the employee spouse actually receives the pension benefit.
Pensions and most other retirement assets are divided pursuant to a QDRO, which stands for Qualified Domestic Relations Order. This is a document which the judge signs that orders the division of a retirement asset. Most often, the QDRO allows for direct payment of a portion of the account to the non-employee spouse.
DOES THE LENGTH OF MARRIAGE MATTER WHEN THE DIVORCE COURT ASSIGNS PROPERTY?
Many divorce litigants wonder whether the Probate and Family Court (Divorce Court) judge considers the length of marriage when dividing and assigning property in a divorce case. The answer is YES – the judge is bound to consider the length of marriage as one of the mandatory factors the trial court must consider in assigning property under M.G.L.A. c. 208, § 34.
The purpose behind the requirement that the divorce judge consider the length of marriage is that marriages are considered a partnership between spouses. Since the length of marriage requirement is one of the first enumerated mandatory factors the divorce court must consider in assigning property, it is widely believed it is therefore one of the most important factors (i.e. that the judge should give more weight to that factor as compared to other factors).
There are many cases that describe the divorce judge’s reasoning for dividing and assigning assets based on the divorcing parties’ length of marriage. Of course, every case is different and thus the court official must look at not only the length of marriage in terms of whether the marriage was short, intermediate in length, or a long term marriage, but also what occurred between the parties during the marriage.
SEPARATE PROPERTY AND DIVISION OF PROPERTY AT DIVORCE
The court in divorce cases has the power to divide and assign the separate property of one spouse. Separate property is property acquired before marriage or by inheritance, gift, bequest or devise.
The court should endeavor to assign separate property to the owner spouse. However, the statute that authorizes the court to assign separate property belonging to one spouse to the other spouse is M.G.L.A. c. 208, § 34 and is appropriate in cases where the property assigned is in lieu of or in addition to spousal support.
Inheritance and gift property that is not received is only a mere expectancy and is not property subject to division (more on this issue directly below).
Does a Beneficiary Interest Constitute Marital Property?
In a recently decided case by the Massachusetts Supreme Court, the Court had to decide if a present value of a discretionary trust could be included in the division of marital property. A “beneficial interest” is the right to receive benefits on assets held or owned by another person. Beneficial interest is often referred to in matters concerning trusts. For example, most beneficial interest arrangements are in the form of trusts, whereby one has a vested interest in the trust’s assets. The beneficiary receives (or may receive in the future) income from the trust’s holdings, but the beneficiary may or may not own the holdings.
In this recent case (Marriage of Pfannenstiehl, No. SJC-12031, Westlaw cite 2016 WL 4131248, Aug. 4, 2016), Curt married Diane in 2000 and during the marriage they had a daughter and son. In 2010, Curt filed for divorce. During the marriage Curt was the primary earner working for his father’s company, several part-time jobs, support from his father, and distributions from a trust account allowing his family to live an upper-middle class life style. Diane worked for 18 years in the army reserves but retired two years before she was able to earn a pension, which resulted from pressure from Curt and his family to stay home to take care of the children. During the marriage Diane worked one day a week as a ultrasound technician.
The trust account in issue was established by Curt’s father in 2004 to benefit Curt’s father’s heirs which were described as “lawful blood decedents” in any degree, allowing it to be an open group. The distribution of the money was made by trustees, Curt’s brother and an attorney who was not a beneficiary. The total value of the trust was $24 million dollars and 11 individuals were beneficiaries, meaning that at the time of the divorce Curt’s “interest” in the trust was $2.25 million.
From 2008 to August 2010, Curt received payouts from the trust in the amount of $800,000. The payouts were not always consistent and often Curt did not receive anything in some months, and in others the trust lost money. The trustees stop paying out money to Curt in September as they believed it too risky to the trust to continue the payouts during the divorce. During the trial the judge awarded 60% of Curt’s “present interest” in the trust to in 24 payments with 3% interest to Diane in the amount of $1.16 Million.
Curt appealed saying the judge abused her discretion by including the trust account in the marital property and the appellate court confirmed. The Supreme Court was required to determine if the interest in the trust was fixed and enforceable. It has been determined in past cases that interests that are “speculative” are not assignable to the marital estate. However the argument that the payouts from the trust created a standard of living that should be taken into consideration. This is not the case here because the trust is open to beneficiaries that qualify. If however, the trust was closed or Curt was the sole beneficiary the court would be able to have more control to consider it marital property for the control that Curt would have on it. Furthermore, Diane cannot force Curt to compel distributions in her favor, when he does not otherwise have a right to compel distributions. Lastly, the only way the trust could be dissolved is by the selling of the stocks that fund the trust, which the trustees had no intention of doing.
For the above stated reasons the trust was considered an expectancy in future acquisitions of capital assets and income in determining what disposition to make of the property that is subject to division and was not considered to part of the marital estate.
AT WHAT POINT IN TIME IS PROPERTY IN A DIVORCE CASE VALUED?
Many litigants going through divorce ask the question, “When are assets in a Massachusetts divorce case valued?” Of course, the court is obligated to assign property to each party during a divorce case. State law throughout the country varies on this issue. Some states assign property to one spouse based on the value as of the date the parties’ separated from each other. Some states value property as of the date the divorce case is filed. In other states, property is valued at the time of trial.
There is no set date of valuation rule in Massachusetts. The court is allowed wide discretion to determine what date assets should be valued based on the specific facts of a case and the assets involved. In many cases, assets may fluctuate significantly between the date of separation and the date of trial. In fact, the Court of Appeals has indicated specifically that M.G.L.A. c. 208, § 34 does not set any hard rule for the date of valuation and the Court prefers to ensure that trial court judges are given discretion to determine a valuation date for property differently for different cases. Notwithstanding the above, in most circumstances property is valued as of the time of trial. The Savides (400 Mass. 250) case allows the Court to consider an alternate date.
The court may even value different assets in one divorce case as of different dates.
When there is a long separation period before a divorce trial, courts have held that it is not error to value an asset at the date of separation because only one spouse contributed to the asset’s increase in value after the date of separation.
How is the Marital Home Divided in Divorce?
We prepared a very detailed page to deal with this issue. Our detailed marital home division page discusses how the court looks at the division of this “special” asset, deferred sales and the reality of how the marital home is divided in most cases. Click here for our detailed marital home division page, “Who gets the House in Divorce?”
Our Boston property division attorneys offer a free, private consultation to discuss divorce, alimony and the division of property as it may relate to your potential case. Call or email us today for a free, initial consultation. We also have an office in New Bedford and Hingham on the South Coast of Massachusetts. Contact us today!
Our firm serves Boston as well as all courts in Bristol County, including the New Bedford, Fall River and Taunton courthouses. We also serve all courts in Plymouth County including the Family and Probate Courthouses in Plymouth, Hingham and Brockton, as well as the Family Courts in Middlesex County and Norfolk County.