Monday, March 29, 2010

Congratulations On Your Divorce; Time To Update Your Estate Plan

The following is a guest blog post written by our colleague Danielle G. Van Ess, Esq. of DGVE law, LLC in Hingham, MA.

You might be surprised how many of my new estate planning clients realize, after we’ve talked a little, that their ex-spouses are still named as the primary beneficiary of their life insurance policies or, more often even, their retirement accounts. And given the value of those assets, their reactions in that moment of realization are far less surprising. If you are divorcing or divorced, you need to ensure that you have changed the beneficiary of those and other pay on death type accounts.

And given that you will no longer be sharing your life with your ex-spouse, it’s likely you won’t also want him or her to be the one to speak for you in the event of your incapacity or be the one to make medical decisions for you, including whether to discontinue life support, if you are ever unable to do so yourself. So if you already had such estate planning documents in place (such as a Health Care Proxy or Living Will), now is the time to revise them. And if you have never got around to putting those critically important legal instruments in effect, there’s no time like the present.

But if you are a parent of a minor child, there is an even more important reason to sit down with your estate planning attorney immediately. You must make appropriate provisions for the care of your child in case anything happens to you. Yes, it’s awful to think about, maybe the second worst thing a parent could imagine, but it’s even worse not to address it and leave your child’s fate up to chance. It is your parental responsibility, not to mention a selfless act of love, to do everything you possibly can to ensure that your child be raised by the people of your choosing. It is not enough to choose and discuss it with people privately; it must be memorialized in the appropriate legal instruments. Godparents do not, for legal reasons, count.

While it’s true that if you were to die before your ex-spouse, he or she would be the “natural” guardian of your child and most likely to assume full custodial responsibility, it is also true that he or she might die while your child is still a minor and if yours is the only legal document nominating a guardian (i.e. if your ex-spouse did not also legally name a guardian), your wishes could provide persuasive guidance to the court. But if your ex-spouse were to die before you, the court would likely look to the guardian you legally named to raise your child. If you and your ex-spouse are able to be civil with one another and co-parent as cooperatively as possible for the distinct benefit of your child, see if you are able to agree on and both name the same legal guardians for the sake of sparing your child more uncertainty in the event that you and your ex-spouse should both happen to die at the same time or very close in time.

Those are the bare bones basics. Above and beyond that, there are some more complex considerations. For examples, if you are concerned that your ex-spouse might remarry and then divorce again losing your child’s inheritance to that subsequent ex-spouse, you might consider creating an asset protection trust to secure your child’s inheritance from that as well as other possible (and not at all unusual) possibilities. If you and your ex-spouse have an irrevocable charitable trust, it may be possible to divide it. Or if you and your ex-spouse have established a pattern of gifting that you do not wish to continue, you should be careful to make your change of intentions clear.

Don’t feel overwhelmed. Your estate planning attorney should be able to meet with you and help you identify your most pressing concerns, your most important priorities, and based on that properly advise you and help you create a new plan to meet your new situation so you can move forward into the next chapter of your life with peace of mind knowing you have your legal affairs firmly in place.

Monday, March 22, 2010

Alimony Reform Recommendations

UPDATE: There is pending legislation for major changes to the alimony statute in Massachusetts. The Alimony Reform Act of 2011 was filed on January 18, 2011 and you can learn more about the Act at MassAlimonyFormula.com or in our recent blog post highlighting the differences between the bill and the current law.

The Boston Bar Association has unanimously voted to endorse the Report of the Joint MBA/BBA Alimony Task Force: Alimony or Spousal Support Guidelines where there are no Dependent Children.

The Report recommends an alimony cap based on a formula. It also recommends durational limits on alimony and lists specific instances where the recommendations would not apply, such as cases where the recipient is so disabled as to become a ward of the state.

The Report also allows for deviation based on certain factors, which include cohabitation.

As indicated in a previous Alimony debate post, this is the type of reform that we believe would be an improvement over the current state of alimony in Massachusetts (especially as compared to the currently proposed reforms in the Senate and House bills).

If you have an opinion on which solution is best, vote here.

Can Assets I Owned Prior to the Marriage be Divided in a Divorce?

The short answer is YES! Whether or not they are divided will depend on a number of factors.

For divorce purposes, Massachusetts gives very broad definition to "marital assets". Absent a pre-nuptial agreement every asset and liability owed by either party is considered by the Court in a division. The Court can consider the source of the asset but that is just one of the factors in whether or not to divide it. Under M.G.L. ch. 208 § 34, the Court can assign alimony or division of property based on the following section:

"In determining the amount of alimony, if any, to be paid, or in fixing the nature and value of the property, if any, to be so assigned, the court, after hearing the witnesses, if any, of each party, shall consider 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 each of the parties and the opportunity of each for future acquisition of capital assets and income. In fixing the nature and value of the property to be so assigned, the court shall also consider the present and future needs of the dependent children of the marriage. The court may also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates and the contribution of each of the parties as a homemaker to the family unit." (emphasis added)

Generally, any asset earned during the marriage will be divided 50/50. A stay at home parent's contribution as homemaker and in child-rearing is considered equal in value to the earning capacity of a working parent. A good example of this is the equal division of retirement accounts earned during the marriage.

Regarding assets earned prior to the marriage, those are more difficult to predict. The other factors, such as the length of the marriage, health of the parties, etc. can have a significant impact on whether or not these assets are divided. Generally we tell clients that in short term marriages (less than 5 years) the Court tries to put people back in the position they were in prior to the marriage (returning previously owned assets).

As marriages get longer, though, it is very typical for assets to "merge" into the fabric of the marriage. A major factor in this consideration is whether or not the asset was shared during the marriage. For instance the marital home (if purchased by one party prior to the marriage) is pretty likely to "merge" as more time goes by because both parties contribute to its "preservation and appreciation"(even if the title is not changed).

If you are concerned about keeping pre-marital assets separate you should consult with an attorney regarding the preparation of a pre-nuptial agreement prior to the marriage. If you are already married and considering a divorce, you should consult with an attorney to explain your specific circumstances before assuming property will be kept separate or merged by the Court.

Thursday, March 11, 2010

Where you get Divorced matters! - British woman loses rights to £1.2 Million Pension

Every state (and every country) has standards for jurisdiction that decide whether or not you can bring a divorce case to their courts.

Where you can file for divorce is an important question because the laws of the state or county where you will file will control how your divorce case is resolved, and those laws can differ significantly. A British woman was recently denied access to file divorce in the United Kingdom courts because her and her Husband last lived together in France. According to The Daily Telegraph, this decision will result in her losing any rights she might have had to her Husband's £1.2m pension.

The laws can also differ greatly by state. In Massachusetts, for instance, the court can consider potential inheritance as an opportunity "for future acquisition of capital assets and income" and award alimony or assign property to one spouse or the other based on that consideration. In many other states inheritance or potential inheritance cannot be considered by the divorce court.

In order to know where you can file for Divorce consult with a local attorney in the jurisdiction in which you live.

In Massachusetts M.G.L. ch 208 §4 requires that to file a divorce case in the Commonwealth the parties must have lived together in the Commonwealth as a married couple, and at least one of them lived in the Commonwealth at the time the cause of the divorce happened. As an exception to this requirement, M.G.L. ch 208 §5 allows you to file for divorce in the Commonwealth if you have been a resident for one year, or if the cause of the divorce occurred in Massachusetts and you are currently a resident. Since the standard for a no-fault divorce is a subjective standard relating only to whether or not you believe your marriage is irretrievably broken down, the Supreme Judicial Court on an interlocutory appeal has ruled that if you lived in Massachusetts when you came to the realization that your marriage is over, that is sufficient for establishing jurisdiction to file for divorce in Massachusetts. Caffyn v. Caffyn SJC-09141 (2004).

If you have questions about divorce in Massachusetts schedule a 1-hour Free Consultation.

Wednesday, March 3, 2010

Since we have No-Fault Divorce, how about No-Fault Custody?

A recent Op-ed article in the New York times, entitled No Fault of Their Own, suggests that we should change the way custody decisions are made to minimize litigation and fighting over children. The author notes that custody battles, that leave the issue of what is in "the best interest of the child" to the Judge to decide, often result in trials over who is the "better" parent.

This is a valid point. The damage that these types of battles can cause to children warrants a different approach to family law than to the practice of other types of law. While zealous advocacy for a corporate client whose vendor screwed them on a contract might necessitate a trial or dictate destructive cross-examination, in family law this type of litigious approach hurts children.

I often explain to my clients that it is not constructive when they form their view or their goals in a divorce case with a negative comment about their ex-spouse. I want my clients to tell me what their life looks like in five years, so together we can figure out how to get them to that goal, not what they "deserve" to receive from their ex-spouse. I believe this is the point of no-fault divorce.

Similarly, I like the concept of No-Fault custody. I want my clients to tell me what is best for their children, by telling me about their children's schedules, and activities and friends. Telling me what a bad parent the other person is, doesn't describe what is best for the child. In fact it's simply a waste of time unless that parent is so bad that they are unfit.

The author of the op-ed article concludes that mandatory mediation or amendments to the way child support is calculated could help move the system towards No-Fault custody. I believe that regardless of whether couples mediate, or what the child support is, common-sense is the key to resolving custody battles. 99% of custody disputes can be solved by parents, and attorneys, who are willing to set aside the fight, participating in an open an honest four-way conference (with or without a mediator) about what is actually best for the child with reference to the child's needs and activities and schedule.

I don't know if No-Fault Custody is something the state can legislate due to the need for the law to protect against the truly un-fit parents. But I do know that less children would be harmed by divorce if more attorneys and more parents would practice No-Fault Custody.

For more information about proposed resolutions of co-parenting issues, please read our Custody page and the Association of Family and Conciliation Courts brochure: Planning for Shared Parenting: A Guide for Parents Living Apart.

Monday, March 1, 2010

Can you Go to Jail for Bringing Your Child to Church?

Getting divorced doesn’t always mean the end of a relationship. When parents of a child get divorced, there is a need for some form of continuing communication and cooperation. When parents fail to recognize that need for ongoing cooperation, the child is the one who suffers.

The latest example of parents putting their child in the middles is the story of Joseph and Rebecca Reyes as reported in this ABC news story:

Joseph Reyes returned home from serving in Afghanistan and soon married his sweetheart, Rebecca. Because Rebecca is Jewish and Joseph was Catholic, Joseph converted to Judaism to make his wife, and her family, happy. After a few years, and the birth of a daughter, their marriage had started to deteriorate.

Religion became a contentious issue between the two, and they decided to get divorced. Rebecca became the daughter’s custodial parent, and Joseph had visitation rights. Although Rebecca had been raising their daughter in the Jewish faith, Joseph unilaterally decided to have her baptized. He sent pictures of the baptism to Rebecca, who responded by getting a court order prohibiting Joseph from bringing the girl to church. In response, Joseph had a local television crew follow him as he brought his daughter to church in violation of this order, for which he now may face jail time.

While some have been quick to criticize this as what feels like an unconstitutional endorsement of one religion over another, the issue was that Joseph had his daughter baptized without first discussing the matter with Rebecca. Getting along with an ex-spouse is often not an easy task, but some level of cooperation is necessary for the healthy upbringing of any children caught in the middle. With Joseph and Rebecca, regardless of who “wins” in a courtroom, their daughter loses.

Parents who find themselves struggling over child-care issues with an ex-spouse should consider going to a therapist with experience in post-divorce relationships, taking advantage of the resources that organizations such as The Divorce Center offer, or trying mediation. It’s certainly in the best interests of the child to work towards agreement on these types of issues rather than involving T.V. cameras.
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