April Showers Brought May Flowers: How the Openshaws Prepared for Rainy Days Ahead  by Nathaniel Butzke      Just in time for the rainy season, the Massachusetts Supreme Judicial Court shed new light on what it means to "live" a certain lifestyle as a married couple and how those habits should be reflected in post-divorce alimony. The case, Openshaw v. Openshaw (2024) , revolved around a couple who, during their marriage, didn't just focus on living well but also on saving wisely. When their marriage came to an end, the question arose: should their habit of saving be considered part of their marital lifestyle for the purposes of determining the appropriate amount of alimony?      The court's answer was a resounding YES . In essence, the court argued that saving isn't just a financial strategy; it's a way of life. For the Openshaws, who enjoyed a generous annual income far exceeding their living expenses, setting money aside wasn't merely about preparin...

In many divorce cases retirement accounts are the biggest, or at least one of the biggest, assets.  Because of that, it is imperative to understand the options for transferring and dividing retirement assets in a way that maximizes the benefits and minimizes taxes.  Informed Consent is the Most Important Thing when Dividing Retirement in Divorce You don't want to make significant financial decisions about your future without understanding the financial consequences.  Retirement accounts are complicated, vary greatly in their requirements & plan details, and can result in significant tax liability.  If you don't feel fully informed when agreeing to how a retirement account or multiple accounts are being divided, then you are taking a financial risk that most likely cannot be undone once your divorce is final.  To avoid making uninformed or bad decisions, consult with retirement division and financial experts for information and advice before making these deci...

UPDATE: The MA SJC weighed in on this issue with a definitive "yes": in  Openshaw v. Openshaw - Massachusetts SJC Rules that when savings was part of the marital lifestyle then a judge may consider that history in determining a recipient's "need" for alimony in divorce: The SJC ruled that when the court finds that "ongoing, regular saving was part of the couple's standard of living during the long-term marriage and that the parties' combined postdissolution income is adequate to allow both spouses to maintain the standard of living enjoyed during the marriage" then a "judge may account for a divorcing  couple's custom of making regular contributions to their savings plans in determining, under G. L. c. 208, § 53 (alimony statute or § 53),  the amount of alimony needed to maintain the marital lifestyle." Original Post: In Massachusetts, Alimony is defined by the Alimony Reform Act of 2011 (the "Act").  We've previ...

This is a guest post from Justin L. Kelsey's consulting business,  Gray Jay Endeavors LLC .  Gray Jay provides QDRO and DRO preparation, and education and consulting services relating to retirement division in divorce.  Gray Jay has been working on resources to assist attorneys, mediators, and parties in this process, such as the following checklist: Download the Retirement Division Checklist Retirement Division Basics: In order to divide retirement as a part of a divorce, there is a one-time exception to the normal tax implications for withdrawals from retirement.  This exception allows a non-taxable transfer to a spouse's or ex-spouse's retirement account.  This can include the division of pensions, 401ks, IRAs and other types of retirement.  The document required to complete this transfer is usually called a Qualified Domestic Relations Order (“QDRO”) or Domestic Relations Order (“DRO”) depending on the type of retirement plan. Most attorneys...

Retirement Benefits are often one of the largest assets in a marriage.  That makes them particularly important to consider in a divorce. We've previously covered the  5 Things you Should Include in a Divorce Agreement when Dividing Retirement Accounts , but we barely scratched the surface when it comes to the different options you might see in more complicated retirement plans.  It is always essential to review the Summary Plan of any retirement account to ensure that you (or your attorney) understand all the benefits and limitations that surround that plan, before trying to divide it.  When the plan is a defined benefit plan, one of the most important and often misunderstood details is how to divide the survivor benefit. A defined benefit plan, also typically referred to as a pension, is a plan that has a defined amount that will pay out (usually monthly) for the participant's lifetime (instead of a total amount that could run out, like an IRA).  This cre...

In a divorce, the court has the ability to order the division of retirement accounts, as a one-time non-taxable event, transferring a portion of the account from one spouse to the other. Whether or not all or part of a retirement account is divided depends on the rules of that jurisdiction and the facts of each case.  In this article we're not dealing with that determination but assuming there has been an agreement or order to divide an account.  Now what? How the account is divided, and whether a QDRO or some other specialized order is required, depends on the type of account.  Regardless of the type of account, however, there are five basic pieces of information that a Plan Administrator or QDRO drafter will need in order to properly divide the account.  When drafting a Divorce Agreement or proposed Judgment it is best practice to include these five elements: Identify the Plan Information Clearly  - It may seem obvious, but the Agreement or Judgment m...

Three months ago we told you about three very important pending cases that were argued before the Massachusetts Supreme Judicial Court, all three having to do with the issue of alimony modification. Today, the SJC released their decision on these three cases ( Chin v. Merriot , Rodman v. Rodman , and Doktor v. Doktor ) and in doing so they have created two clearly separate classes of alimony cases: those cases that were decided prior to March 1, 2012 and those that were decided after March 1, 2012. On March 1, 2012, the Alimony Reform Act took effect, and it included limits on the amount and duration of alimony orders going forward.  It was the law before the Act, and still is, after the Act, that alimony orders which are merged into the Judgment are modifiable if there has been a material and significant change in circumstances.  The Act also provides that the duration of old orders can be modified based solely on the "durational limits" in the new Act, even if there ...

UPDATE: The SJC decided all three of these cases on 1/30/2015.  Our post regarding the decisions can be read here:  Lifetime Alimony is Back (for some)! - Chin v. Merriot Original Post: There are three appeals pending before the Massachusetts SJC which will significantly impact how the Alimony Reform Act of 2011  is interpreted by the courts.  All three cases have to do with whether the parts of the Act can apply when modifying Judgments or Agreements entered prior to the Act’s effective date (March 1, 2012).  Each case deals with a slightly different component of this issue: Doktor v. Doktor (SJC-11727) presents the question of whether the Act's provision regarding termination of general term alimony upon full retirement age (see M.G. L. c. 208, § 49f ) applies to a divorce judgment that predates the Act, where the payor reaches retirement age after the effective date of the Act.  In addition, the case should address whether, and how, the parties' ...

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...

Until 2011, there was no formula enacted or endorsed by the Massachusetts Legislature or the Courts for the calculation of duration of alimony. However, on September 26, 2011, Governor Deval Patrick signed into law The Alimony Reform Act of 2011 , which became effective on March 1, 2012. The act provides for multiple types of alimony, and for maximum amounts and duration of alimony. The new law also limits the duration of General Term Alimony : General Term Alimony Ends Upon: Remarriage of the recipient; Death of the recipient; Death of the payor (though the court may order life insurance or reasonable security for payment of sums due to the recipient in the event of the payor's death during the alimony term); Except when the court finds that deviation is warranted, upon the expiration of the duration formula calculated below; Upon the cohabitation of the recipient spouse with another person for a continuous period of at least three months (may also result in suspension o...

Pursuant to the Alimony Reform Act of 2011 , there is a presumption that general term alimony ends upon the payor attaining Full Retirement Age, 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. The presumption can be rebutted but it requires clear and convincing evidence. The Social Security Full Retirement Age may be different than your actual retirement date. Kelsey & Trask, P.C. has created an online calculator to help you determine your Full Retirement Age and retirement date by simply entering your birth date. Click here to try the Calculator. The Calculator is based on the information available below which is taken directly from the Social Security website: If you were born in 1944 or earlier, you are already eligible for your full Social Security benefit. If you were born from 1943 to 1960, the age at which full retirement benefits are payable increases gr...

QDRO stands for Qualified Domestic Relations Order, and they are the vehicle by which retirement assets are transferred post-divorce. Retirement accounts are not typically transferable between anyone, even spouses, without tax consequences. In order to transfer funds held in a retirement account the owner must first remove them from the retirement account, which, if allowed by the rules of the plan, will result in taxable income and, prior to retirement age, tax penalties. However, in the event of a divorce the IRS allows for a one-time transfer by Qualified Domestic Relations Order (also known as a "QDRO") to avoid these taxes and penalties. A transfer of retirement account between former spouses pursuant to a QDRO results in a new retirement account held in the name of the other spouse (or "alternate payee") in the amounts and per the terms specified in the QDRO. The retirement income paid from said account will be taxable income upon receipt just as it woul...

A Divorce actually has very little effect on your rights in your spouse's/ex-spouse's Social Security benefits. So long as the marriage lasted ten years, a spouse who has not worked or who has low earnings can be entitled to as much as one-half of the retired worker’s full benefit. If you are eligible for both your own retirement benefits and for benefits as a spouse/ex-spouse, Social Security always pays your own benefits first. If your share of your spouse's/ex-spouse's benefits are higher than your retirement benefits, you will get a combination of benefits equaling the higher spouse benefit. The amount of your spouses/ex-spouses benefit that you receive has no effect on the amount of benefits that they receive. To see a more complete explanation visit this helpful Social Security website.

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 . A much awaited decision from the Massachusetts Supreme Judicial Court was published today: Pierce v. Pierce, SJC - 10381, Nov. 9, 2009 . In this case, the Husband had agreed to an alimony order of $110,000 per year after a 32 year marriage, and had voluntarily retired at age 65. Upon retirement, the Husband filed a Complaint for Modification seeking the elimination of his alimony. The trial Judge reduced the alimony to $42,000 per year but declined to terminate alimony. The Pierce appeal centered around the Husband's claim that there should be a presumption that alimony ends upon retirement. Without that presumption, the Husband argues, the person receiving ali...