Skip to main content

Are Gifts from my Family considered Income by the Family Court?

The following is a joint Blog Post prepared by Justin Kelsey, Esq. of Kelsey & Trask, P.C. (co-author of Scaling the Summit: A Family Law Blog) and Danielle G. Van Ess, Esq. of DGVE law, LLC (author of the Massachusetts, Wills, Trusts, and Estates blog).

The Judges in the Probate & Family Court have a lot of discretion to decide what constitutes income when the Court is considering child support or alimony.

According to M.G.L. c. 208 s. 34, the court can consider "amount and sources of income... and the opportunity of each for future acquisition of capital assets and income" when dividing property or awarding alimony. This language obviously leaves a lot of leeway for the court to consider all "sources of income" including potential "future" income.

Similarly, the Massachusetts Child Support Guidelines indicate that the court can consider "gross income from whatever source regardless of whether that income is recognized by the Internal Revenue Code or reported to the Internal Revenue Service or state Department of Revenue or other taxing authority." The specific list of possible income ends with "any other form of income or compensation not specifically itemized above." Just like with alimony, this broad language provides the Court with discretion to include family gifts as income, especially if the gifts are regular. For example, this could include the right to withdraw funds from an Irrevocable Life Insurance Trust (ILIT) established by parents to reduce estate tax liability and made available to their children as evidenced by regular Crummey notice letters.

The MA Appeals Court recently confirmed this in an unpublished decision holding that a Judge did not abuse his discretion by attributing income to a father based on family gifts, and using that attributed income to calculate child support. DiMambro v. DiMambro (Lawyers Weekly No. 82-281-10) (3 pages) (Appeals Court – Unpublished) (No. 09-P-1387) (Nov. 9, 2010).

“Future income” under the alimony statute, or “attributable income” under the child support guidelines may also include cash gifts such as annual gifts according to the gift tax exclusion amount, which is presently $13,000 per year per individual or $26,000 per year for a married couple to another person.

As the courts may consider all sources of income, particularly where one’s adult child is separated or divorcing it may be best to leave real property (such as a home or vacation home), gifts, and inheritances to one’s adult children in protected trusts rather than outright to attempt to ensure that those gifts will be preserved for one’s child and any grandchildren and not be subject to claims of the child’s ex-spouse. Parents of adult children should also be very cautious about putting their adult child’s name on their real property or bank accounts for purposes of convenience and assistance with management as those assets may become assets of the child as well and subject to claims in bankruptcy or divorce.

Given the Judge's broad discretion in this area, families should discuss gifts and the impact of those gifts with their attorneys to ensure they understand all the relevantthose gifts might have.


Popular posts from this blog

What is the purpose of the Divorce Nisi waiting period?

In Massachusetts the statutory waiting period after a Judgment of Divorce and before the divorce becomes final (or absolute) is called the Nisi period. After a divorce case settles or goes to trial, a Judgment of Divorce Nisi will issue and it will become Absolute after a further ninety (90) days. This waiting period serves the purpose of allowing parties to change their mind before the divorce becomes final. If the Judgment of Divorce Nisi has issued but not become final yet, and you and your spouse decide you don't want to get divorced, then you can file a Motion to Dismiss and the Judgment will be undone. Although many of my clients who are getting divorced think the idea of getting back together with their ex sounds crazy, I have had cases where this happened. In addition to offering a grace period to change your mind, the Nisi period has three other legal effects: 1. The most obvious effect of the waiting period is that you cannot remarry during the Nisi period, be

New Massachusetts Child Support Guidelines (2021): Big Changes, Little Changes, Typos & some Unexpected Results

UPDATE: The court has released a web calculating version of the 2021 MA Child Support Guidelines Worksheet .  It resolves some of the typos referred to below, but the unexpected calculations still apply. Every four years, per federal mandate, the Massachusetts Probate & Family Court revisits the Child Support Guidelines through the work of a Task Force appointed by the Chief Justice.  The 2021 Massachusetts Child Support Guidelines were recently posted.  They take effect on October 4, 2021.    If you are interested in a training on all of these changes to the new Child Support Guidelines: DMTA Presents the 2021 MA Child Support Guidelines Update  – Attend this event to learn the key updates you need to know for your mediation clients. Presented by Justin Kelsey of  Divorce Mediation Training Associates  and  Skylark Law & Mediation, PC . For a full comparison of all the  tracked changes between the 2018 and 2021 Massachusetts Child Support Guidelines you can download a pdf sho

Does a Criminal Record affect Child Custody?

If one of the parents in a custody case has a criminal record, the types of crimes on their record could have an effect on their chances of obtaining custody. In custody cases the issue is always going to come down to whether or not the best interests of the child might be affected. In the most extreme case, in which one parent has been convicted of first degree murder of the other parent, the law specifically prohibits visitation with the children until they are of a suitable age to assent. Similarly, but to a less serious degree, in making custody and visitation determinations the court will consider crimes that would cause one to question the fitness of a parent. These types of crimes would obviously include any violent crime convictions which could call into question whether the children would be in danger around a parent who has shown themselves to resort to violence when faced with conflict. In addition, drug and alcohol abuse offenses would call into question a parent&#