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Thursday, July 24, 2014

Can Alimony continue past Retirement in Massachusetts under the new law?

Part of the significant ground-swell of support for a change to Massachusetts alimony laws came after the Pierce decision, which ordered alimony to continue past retirement.  While a quick reading of the new alimony statute might lead you to believe otherwise, there are a number of scenarios in which alimony could (and in many cases will) still continue past retirement age.

The Alimony Reform Act of 2011, which became effective on March 1, 2012 provides for multiple types of alimony, and for maximum amounts and duration of alimony.  Any alimony orders that were in effect prior to March 1, 2012 will be considered General Term Alimony, and the Act included duration limits for General Term Alimony that we described at length in a previous post.

One of the limitations on duration is contained in M.G.L. c. 208 s 49(f) and indicates that the court SHALL terminate alimony "upon the payor attaining the full retirement age."  Full retirement age is defined as when he or she is eligible for the old-age retirement benefit under the United States Old-Age, Disability, and Survivors Insurance Act, 42 U.S.C. 416, typically between 66 and 67 (a full retirement age calculator is available here).

However, the Court has discretion to extend "an existing alimony order for good cause shown; provided, however, that in granting an extension, the court shall enter written findings of (i) a material change of circumstance that occurred after entry of the alimony judgment; and (ii) reasons for the extension that are supported by clear and convincing evidence."

While this second part of section 49(f) certainly opens the door for a Judge to extend alimony past full retirement age for good cause shown there are two requirements which the recipient would have the burden of proving.  These two requirements require some unpacking:

1. To extend there must be written findings of a material change of circumstance that occurred after entry of the alimony judgment.

This would seem to require that the recipient must show that something significant has changed or the order should end.  In other words, if the parties are still earning the same amount of income and have similar health and other expectations as they did at the time of the judgement of divorce, then alimony should end upon reaching full retirement age.

That outcome might be considered unfair in situations where parties (and Judges) assumed under the old law that alimony would continue into retirement, especially if one party received more of the retirement assets or had substantial additional earnings during the separation.  However, it is unclear from the statute, if any of these issues would be relevant as they do not represent a material and significant change in circumstances.

There has been no guidance yet from the Appeals Court (as of the writing of this blog post) regarding this type of case.  In the Green case the Appeals Court dealt with the first part of section (f) which allows the court to deviate on the issue of post-retirement alimony at the time that the initial alimony order is created. One quote that might be relevant from Green, if a trial Judge was looking for some leeway in deciding whether to extend alimony past full retirement age, has to do with looking closely at the property division at the time of the divorce:
"the Act does not depart from the long-standing principle that alimony and property division are 'interrelated remedies that cannot be viewed apart..."  Green at 1109.
Of course, without more guidance from the Appeals Court it is unclear if this applies to cases where that property division happened prior to the enactment of the Alimony Reform Act.  On first impression, it would seem that the second part of section 49(f) would ignore the relation of the property division at the time, and limit the inquiry to any material and significant change in circumstances since that time.

Practically, in most cases that are well past their original judgment, a material and significant change in circumstances may not be that difficult to prove.  For example, if the recipient has reached retirement age as well, then their income has likely been reduced.  This could be enough to satisfy the requirements of the statute.  It would all depend on the trial judge's opinion (and possibly thereafter the Appeals Court's opinion) of whether this constitutes "good cause shown."

2. To extend there must be written findings that the reasons for the extension are supported by clear and convincing evidence.

This section appears to place the burden on the recipient to show by "clear and convincing evidence" that there has been a change as required by the first clause, and that the change represents a good reason for extending alimony.  This likely requires that the recipient prove, all over again, that there is a need and ability to pay.  While clear and convincing evidence may sound like a significant burden on the recipient the reality is that if the recipient is dependent on the alimony income, and the payor still has the ability to pay (which will often be obvious from a financial statement), then this burden is not that difficult to establish in many cases.

Upon a close reading, while the burden is placed on the recipient to prove their case by "clear and convincing evidence" part (2) of section 49(f) seems to take a lot of the teeth out of the language that alimony SHALL terminate upon the payor reaching full retirement age.  This language will have significant impact on decisions going forward, but it remains to be seen how much judges (and the Appeals Court) will be willing to apply it to cases that were decided before the Act was enacted.


Wednesday, July 23, 2014

Can the Court order less than the 30-35% formula for Alimony in Massachusetts?

The Alimony Reform Act of 2011 added a formula to Massachusetts Alimony determinations:
"Except for reimbursement alimony or circumstances warranting deviation for other forms of alimony, the amount of alimony should generally not exceed the recipient’s need or 30 to 35 per cent of the difference between the parties’ gross incomes established at the time of the order being issued. Subject to subsection (c), income shall be defined as set forth in the Massachusetts child support guidelines."M.G.L. c. 208 s 53(b) (emphasis added)

Mathematical formulas are convenient and many practitioners and Judges are running the formula right away to see what the boundaries of alimony are (we've even encouraged this behavior with the creation of a website calculator and iPhone App).  But the recent decision in Hassey indicates that the formula should not be the first step in the alimony inquiry.

The formula should not be the first step in the alimony inquiry. 

When running the formula two numbers are generated: 30% of the difference in the parties' gross incomes, and 35% of the difference in the parties' gross incomes.  At this point it might be tempting to argue that a fair compromise is 32.5% of the difference in the parties' gross incomes.  This might be a fair and reasonable resolution in a case IF alimony is warranted by the facts of the case, but that is a big "IF".

Which leads us to the question: Can the Court order less than the 30-35% formula for Alimony in Massachusetts?

The answer based on close reading of the language of the statute is clearly YES!  There are three scenarios where the court can order less than 30% of the difference in gross incomes:

Scenario 1. No Need - In Hassey the Appeals Court pointed out that the "Act altered neither the fundamental purpose nor the basic definition of alimony: 'the payment of support from a spouse, who has the ability to pay, to a spouse in need of support.' G.L. c. 208, § 48."  Hassey.   The Appeals Court has clarified that the formula (despite its convenience) is not the first inquiry in a case. The first inquiry remains whether or not there is a need for alimony and an ability to pay.

In addition, the formula states that "the amount of alimony should generally not exceed the recipient's need..."  So the first inquiry should be "what is the recipient's need."  If the recipient does not have a need for alimony, or their need is less than the 30% figure then alimony should be less (anywhere in the purple range in the graph above).

Scenario 2. No Ability to Pay - As described above, the Appeals Court in Hassey clarified that the first inquiry is whether or not there is a need for alimony and an ability to pay.  If the potential payor of alimony does not have the ability to pay alimony, then it doesn't matter what the formula yields; the amount will have to be limited by the payor's ability (even if a need exists).

Scenario 3.  Marital Lifestyle is a limiting or an expanding factor depending on the circumstances.

WARNING: There is a trap in the language of the statute; many people define "need" as only the basic needs and would therefore suggest that a recipient's "need" may be well below what they are used to in the marital lifestyle.  The Appeals Court has also clarified (in Hassey and in a recent Rule 1:28 decision) that the court must consider the factors listed in M.G.L. c. 208, §53(a).  Included in these factors is the "ability of each party to maintain the marital lifestyle."   Therefore, "need" is not the amount a recipient requires for a basic level of subsistence, but rather the amount a recipient requires to "maintain the marital lifestyle."
"Need" is not the amount a recipient requires for a basic level of subsistence, but rather the amount a recipient requires to "maintain the marital lifestyle."
This means that the factual evaluation of the "marital lifestyle" could create a higher figure than basic need might imply.  However, this can also be a limiting factor.  If the parties lived a frugal marital lifestyle and the payor only recently experienced a great leap in income, then the "need" required to maintain the "marital lifestyle" might be well below the 30% figure.

Practice Tip:  If I was arguing a case where I felt that the 30-35% formula was not appropriate, then before looking at the formula, I would argue that the court must look at the definition of alimony (need and ability to pay) and the factual factors in section 53(a).

As with many of these evaluations this complicated factual inquiry required by the court to determine alimony leaves a lot of room for error.  Clients should be encouraged to try mediation, collaborative law, or other out of court settlement options before taking this issue to a Judge, because both sides risk an alimony order that doesn't reflect all of the details of their financial reality.


Tuesday, July 22, 2014

Middlesex Pilot Program: Fast-Lane Informal Estate Petitions

from Wikipedia
The Middlesex Probate & Family Court already has a very successful and convenient "Fast Lane" program for so-called uncontested divorce petitions (Section 1A Joint Petitions for Divorce).  It saves time for both the courts and the parties to be able to walk an uncontested matter in to the courthouse and, if all of their paperwork is in order, be heard the same day.

According to a press release dated July 9, 2014 (available here), the Court will now be expanding this type of procedure to include Informal Estate Administration Petitions:
"Tara E. DeCristofaro, Register of the Middlesex Probate and Family Court, has announced that she will be piloting a walk-in session for informal petitions. The walk-in session will be available in the Registry every Tuesday afternoon from 12:00 pm. - 3:00 pm., beginning August 5, 2014. If the program is well received, plans are to expand it to multiple days per week."
As with joint petition divorce walk-ins, the informal packet must be complete and include all necessary documents and filing fees to be heard the same day.  This procedure should improve the experience of petitioners and we applaud the Register's efforts.

If you are looking for assistance in preparing the necessary documents to include in an informal packet, contact us for a consultation.

Wednesday, July 9, 2014

New Divorce Calculator Apps for Massachusetts

Kelsey & Trask, P.C. was the first to have an iPhone App for calculating Child Support in Massachusetts and we've recently updated it with a new look.  In addition we are now introducing two new iPhone applications:

The Massachusetts Alimony App: Use this worksheet to calculate the maximum amount and duration of alimony in Massachusetts based on the Alimony Reform Act which took effect on March 1, 2012.  The App allows you to save your calculations or e-mail them.

  


Massachusetts Divorce Calculators App: Includes the following 4 calculators necessary to determine family support in Massachusetts: Massachusetts Child Support Calculator, Massachusetts Alimony Calculator, Full Retirement Age Calculator, and Alimony Recapture Calculator.

The Massachusetts Child Support Calculator is the same one contained in our Child Support App and the Massachusetts Alimony Calculator is the same one contained in our Mass Alimony App:

  

The two additional calculators relate to the calculation of alimony in Massachusetts:

The Full Retirement Age Calculator assists with calculating the full retirement age under the Social Security Act, as referenced in the Alimony Reform Act.


The Alimony Recapture Calculator assists with determining if your alimony order will lead to any tax recapture under the current IRS rules.


Click here to view all of the Kelsey & Trask, P.C. iPhone Apps.


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