When the Massachusetts Alimony Reform Act went into effect in 2012, it provided for a payor spouse to file a Complaint for Modification to reduce or terminate his or her alimony obligation based upon durational limits, as further explained below. Rather than allowing spouses to file all at once in 2012, modification for only durational limits are being phased in over the course of three years.
Under the Alimony Reform Act, all alimony orders existing prior to the enactment of the Alimony Reform Act, are considered “General Term Alimony” unless otherwise specified. “General Term Alimony” is defined as “the periodic payment of support to a recipient spouse who is economically dependent.” Under this type of alimony, a spouse’s alimony obligation lasts for a percentage of the length of the marriage.
· For marriages lasting 5 years or less, a spouse’s alimony obligation lasts 50% the number of months the parties were married.
· For marriages lasting more than 5 years, but less than 10 years, a spouse’s alimony obligation is 60% the number of months the parties were married.
· For marriages lasting more than 10 years, but less than 15 years, a spouse’s alimony obligation is 70% the number of months the parties were married.
· For marriages lasting more than 15 years, but less than 20 years, a spouse’s alimony obligation is 80% the number of months the parties were married.
· For marriages of 20 years or more, a spouse’s alimony obligation can be indefinite.
Because many alimony orders that pre-date the Alimony Reform Act did not have durational limits included in the orders, the Alimony Reform Act provides for modification of these orders to reduce or terminate the payor spouse’s alimony obligation based upon these durational limits.
Beginning on March 1, 2013, payor spouses who were married for 5 years or less, were able to file a Complaint for Modification to reduce or terminate their alimony obligation based solely upon durational limits.
Most recently, on March 1, 2014, payor spouses married for 5-10 years are now able to file a Complaint for Modification to reduce or terminate their alimony obligations based upon durational limits.
Starting on March 1, 2015, payor spouses married for 10-15 years will be able to file a Complaint for Modification based upon durational limits. And finally, payor spouses married for 15-20 years will be able to file a Complaint for Modification based upon durational limits on September 15, 2015.
Durational limits are not the only grounds to file a Complaint for Modification to reduce or terminate alimony, but it certainly is a significant ground for filing.
Dear Clients and Friends,
Properly executed pre-nuptial agreements have been enforceable for sometime in the state of Massachusetts. These agreements are entered into between the couple before they are married to protect assets each party had at the time of marriage. Here are Amaral & Associates, P.C., we prepare pre-nuptial agreements on a regular basis on behalf of our clients.
Post-nuptial agreements, however, are entered into after a couple is married. They were considered invalid in the United States at one time and the present case law in Massachusetts has been uncertain as to the current validity until recently. Based on a July 16, 2010 case, entitled Ansin v. Cravin-Ansin, a Mass. Supreme Judicial Court case, the court for the first time enforced a post-nuptial agreement. Therefore, it is now possible for a couple to remain married yet prepare an agreement regarding how their assets are to be divided in the event of a divorce. This agreement could be helpful for parties who are thinking of getting a divorce or are afraid of losing additional assets if the marriage were to be extended. By having an agreement in advance, neither party would be worried about prematurely ending the marriage and could have a degree of certainty as to how their assets would be divided down the road. In the event that you, or a friend, is a candidate for something such as a pre-nup or post-nup do not hesitate to contact us at Amaral & Associates, P.C.
PRE-NUPS: MYTHS V. TRUTH
There are several myths regarding Pre-Nuptial Agreements that prevent many couples from broaching the topic. Keep reading to find if a Pre-Nup is right for you!
MYTH #1: ONLY PROTECT WEALTHIER SPOUSE
False. Pre-Nuptial Agreements must be fair for both parties. If the Agreement is found to be unconscionable by the Judge, it will not be honored.
MYTH #2: ONLY FOR THE RICH
False. Even if you and your spouse do not have much now, over time your income and assets will most likely increase. Your home and retirement accounts will probably become more valuable and you may even inherit additional money or assets from your families. A Pre-Nup can protect the accumulated wealth and decide how it will be dealt with.
MYTH #3: MUST COVER EVERYTHING/ ONLY USEFUL IF YOU SPLIT
False. The agreement can be as detailed or broad as you like. It can be limited and cover one specific asset or inheritance, or deal with a wide range of areas. You may also specify in the Pre-Nup issues that you will encounter during the marriage, such as the usage of funds, career expectations, child support from a previous marriage and the like.
MYTH #4: KILLS THE ROMANCE
False. Pre-Nuptial agreements have a stigma of being unromantic, however, they are actually endearing in a way. If two people love each other, they should be open and reasonable enough to plan for a possible future without each other and want to make sure that they will both be taken care of. Moreover, statistics have shown that marriages can actually last longer between couples who have Pre-Nups, as neither party is worried about how the length of their marriage will affect the division of their assets and, instead, can work together towards saving their marriage.
In Massachusetts, along with most other states, there are two types of child custody: 1) legal custody; 2) physical custody. Not all parents understand the difference between the two types of custody, and it can sometimes be confusing.
When a parent has legal custody of a child, then the parent has the right to make important and major decisions in the child’s life. This includes where the child will go to school, decisions about the child’s health and welfare, what religion(s) the child will be raised in, as well as other significant decisions affecting the child. Typically, but not always, both parents share legal custody, which then is known as joint legal custody. However, in certain instances, only one parent has legal custody, which is known as sole legal custody.
The other type of custody is physical custody. This type of custody relates to who the child physically resides with. If a child resides with one parent more than the other parent, then the parent who has the child more of the time has primary physical custody. If parents equally share time with the child, then there is no primary physical custodian, but rather joint or shared physical custody.
A custody arrangement is typically created either by agreement of the parents or by order of the court. The legal standard for developing a custody arrangement is the best interests of the child. Through the legal standard, the courts analyze how a child’s living arrangements and upbringing affect their physical, mental, and emotional well-being, and based upon that, what is best for the child. Oftentimes, the determination is very case and fact-specific, and there is not one “clear cut” answer to any case.
Child Custody & Visitation Mediation FAQ’s
Do you wish there was a way to make getting a separation from your significant other or divorce from your spouse easier on your children?
Mediation helps preserve and maintain whatever is left of the good part of your relationship by significantly reducing the tension of getting a divorce. Parties who mediate their family law matters are typically able to reach an agreement that first serves the “best interests” of their children and then themselves.
Who is best suited to make decisions about your children?
Typically the parties are more satisfied by having arrived at their own "solutions" to the problems as opposed to having a judge ram a decision against you both that neither party may like.
How do you know if mediation is right for you?
Mediation may be an option if each party wants to save money for their children’s interest instead of paying excessive fees to their lawyers and if both parties wish to reach and create a thorough agreement in a short period of time usually a month or so as opposed to waiting close to 14 months for the traditional and contested divorce to play out.
Would you like to reduce the fees involved in child custody for the same results?
If you are able to Mediate your child custody matter it reduces costs significantly. Eliminating costs means that money can be spent on the children and their education. Instead of spending upwards of $ 10,000 each and usually more on attorney fees, you can spend less than $ 1,000 each through Amaral’s Online Divorce Mediation (ODM) program found at www.OnlineDivorceMediation.Com.
Child Custody & Visitation FAQ'S
What is child custody?
Child custody is a term that refers to the rights and responsibilities that a parent carries with respect to his/her child.
What is child visitation and a "Parenting Plan"?
The term "child visitation" refers to the time when the non-custodial parent has the right to be with the child. The custodial parent's right to be with the child is often subject to the non-custodial parent's right to visit with the child.
What factors determine custody and visitation?
The term "parenting plan" refers to the agreement between the parents or the court order which defines provisions for custody and visitation. The parenting plan also defines when the child is to be with the non-custodial parent.
The primary consideration is, "What is in the best interest of the child?"
Child Support FAQ'S
What is child support?
Child support is a payment by one parent (often the "non-custodial parent") to the other parent for the support of their common child. It is in the best interest of a child for both parents to be obligated to pay for the support of their child.
What is a child support order?
A Child Support Order is a document from a court that states (a) when, (b) how often, and (c) how much a parent is to pay for child support. A Child Support Order is typically part of a divorce decree or paternity judgment.
Who can be ordered to pay it?
A court can order either parent of a child to pay support to other parent. The court order for support is usually payable on a monthly basis. Many states now require that child support be paid by wage assignment (automatic deductions from the paycheck) whenever available, thus reducing the need for subsequent enforcement actions.
A recent study showed that brides and grooms-to-be who have cold feet before their wedding could very well foreshadow an unhappy marriage that could even end in divorce.
Brides and grooms-to-be who have cold feet should really consider entering into a prenuptial agreement with their future spouse. This agreement can protect both spouses-to-be in the event that the marriage does not work out and end in a divorce.
Contrary to popular belief, a prenuptial agreement does not protect just one spouse; it protects both spouses. It must be fair and reasonable for both parties. It can be a very specific agreement dealing with all aspects that may be covered in a potential divorce, including distribution of property and assets, alimony, child support, and child custody. Or, the agreement can be narrow, and just address one or two issues, like protecting a specific property owned by one spouse-to-be.
A prenuptial agreement also requires both spouses-to-be to make a full and accurate disclosure of their assets and liabilities. This way neither spouse enters the marriage with any financial secrets.
A prenuptial agreement can be a good idea to protect spouses who are concerned about any potential risk of divorce in the future.
Source: www.theglobeandmail.com , "Wedding day cold fee? Divorce may be in the cards"Wency Leungr, Nov. 8, 2012.
Recent studies show that “shotgun weddings” are becoming less popular as cultural norms become more progressive. Rather than marrying due to a pregnancy, couples are moving in together, not marrying, and raising the child as a family. However, when a couple lives together out of wedlock, they are not afforded the same rights and benefits as married couples. There are ways to protect against this, and couples should consider their options, just in case the relationship ever turns sour.
First, if the couple has a child together, they should discuss how to co-parent the child. If it appears that the couple can agree on how to raise and co-parent the child, then the couple should not need to take any further action. However, if it appears that there are some significant differences, then the couple may want to consider filing a Complaint to Establish Paternity or a Complaint for Support-Custody-Visitation to establish an order with the Probate and Family Court regarding custody, parenting time, and child support. Otherwise, if there is a disagreement, and there is no court order, Massachusetts law states that the mother of a child born out of wedlock is presumed to have sole legal and physical custody of the child, and thus is the sole person with the legal right to make decisions regarding the child.
Cohabitating couples should also consider other issues, like apportionment of payment of living expenses, jointly owned assets, joint debts, amongst other issues. Because unmarried cohabitating couples do not have the protections and benefits of married couples, they also cannot obtain relief from the Probate and Family Court if disputes arise regarding these issues. To protect against this, cohabitating couples should consider entering into cohabitation agreements. Cohabitation agreements are not unlike prenuptial agreements. Cohabitation agreements are contracts that outline the rights and protections of each person in the relationship. Like prenuptial agreements, they can determine how to apportion payment of living expenses, what to do with jointly owned property in the event of a break-up, how to apportion payment of debt, as well as other issues. Cohabitation agreements give couples certainty and protection in the event the relationship does not work out.
However, it is important to note that cohabitation agreements are not enforced through family law, like prenuptial agreements, postnuptial agreements, and separation agreements are. Rather, cohabitation agreements are enforced based upon contract law. That means any dispute regarding the agreement would be submitted to the District Court or Superior Court, and not the Probate and Family Court. But much like prenuptial agreements and postnuptial agreements, cohabitation agreements must be fair and reasonable at the time of execution, and at the time they are reviewed by the court.
Since the law does not afford cohabitating couples the same rights and benefits married couples are afforded, cohabitation agreements give some predictability to couples, and also protect the couple in the event of a breakup.
Source: Boston.com, As cohabitation gains favor, shotgun weddings fade, Hope Yen, January 14, 2014.
One of the greatest benefits of mediation is the cost. Please read the below column from a mediation client of another firm. Our firm can get you divorced for $995.00.
COLUMN-How I got divorced for less than $1,500 in legal fees
By Tim McLaughlin
Jan 9 (Reuters) - When my wife and I decided to get divorced, the last thing we wanted was a financial crisis.
We're divorced now, and the dust has settled. We had acrimony and some serious bouts of tension, but we didn't wreck each other's personal finances with out-of-control legal fees and other costs.
I spent about $1,500 on legal and mediation fees, and while my former wife spent more on our uncontested divorce, it still was a manageable amount.
An average divorce can cost anywhere from $10,000 to $20,000, according to bankrate.com and other websites. If you go to trial, the sky is the limit.
We could have done worse. News Corp Executive Chairman Rupert Murdoch divorced his second wife of 31 years, Anna, with a $1.7 billion settlement in 1999. Another divorce settlement is on the way for his third wife.
Here's how we kept our costs contained:
To be sure, attorneys are valuable in hammering out a divorce agreement, but we didn't run out and hire lawyers right away. On a friend's recommendation, we met with a mediator, talked about the finances of running two households and worked out a parenting plan for our daughter. This later became the basis for our custody agreement.
We paid $180 an hour for each mediation session. Divorce attorneys in the Boston area typically charge $250 to $350 an hour for similar work. These fees vary throughout the United States and can be much higher for both mediators and attorneys.
Parenting plans for custody schedules and vacations can be pretty formulaic. You might even get a template of one from a friend who has already gone through divorce. That could save even more time and money.
Call (800)290-1012 for your free consultation.
What is the role of stock options in negotiating a divorce settlement? Far from being an academic question, the answer can actually determine the ownership of hundreds of thousands of dollars generated by the sale of appreciated stock acquired through company stock options. By specifying in the divorce settlement exactly how stock options will be treated—even if no such stock options exist at the time of divorce—divorcing spouses can proactively minimize future problems.
When it comes to complex compensation packages, the importance of understanding the mechanics, purpose and nature of stock options should not be overlooked. The ability of divorcing couples and their advisors to properly determine the role a stock option plays is pivotal in both the division of marital assets and as a potential mechanism for calculating future support.
Unfortunately, stock options often go unnoticed during settlement negotiations. One reason is the nature of stock options themselves. Stock options give an employee the right to buy company stock in the future at today’s prices. Typically, an employee will have up to 10 years to exercise this right once the vesting period has expired. The first potential pitfall is identifying if any options exist. The second is determining if they have any value. Thus, stock options can be easily overlooked as either an asset or a potential source of income at the time of divorce.
Once the parties have an understanding of the stock options, the next question is how the options should be treated in the divorce settlement. Indeed, two Massachusetts court opinions make it clear what a difficult question this is—and exactly how much is at stake.
The two cases offer guidance from two different perspectives on how stock options should be handled in divorce. In one case, stock options are considered a marital asset to be divided at the time of divorce. In the other, the exercise and sale of the options after the divorce are viewed as income and are subject to alimony. This seemingly technical difference between one approach and the other can add up to hundreds of thousands of dollars.
In 2001, Massachusetts courts ruled that stock options were a marital asset in the widely cited case Baccanti v. Morton. The principle of this case was that stock options should be divided between divorcing spouses, with any non-vested options apportioned according to a vesting percentage.
In Baccanti, the options to be allocated as part of the division of assets were granted before the divorce. Even though the value of the options was uncertain at the time of the divorce, the right to buy existed and was thus dividable as an asset as part of the divorce settlement. According to the ruling, the husband could exercise his options and provide the wife with half the net gain. If he decided not to exercise his options, he could notify the wife of his decision and allow her to exercise her portion of the options through him.
However, the 2009 Massachusetts case Wooters v. Wooters opened the door to a different interpretation. At the time of the divorce, the husband was a partner in a law firm who reported fluctuating annual income. In determining alimony, the agreement gave the wife one-third of her ex-husband’s future gross income. After the divorce, the husband went to work for a new company that provided him with stock options. When he exercised and sold those options for a substantial profit 12 years after the divorce, the gains created by sale of the options showed up as income on his W-2, boosting his gross pay to nearly $1.2 million. The ex-wife claimed a one-third share under the terms of the original divorce settlement.
The trial court ruled for the ex-wife, and the Appeals Court of Massachusetts agreed, saying that the husband’s exercised stock options fell within the definition of “gross annual employment income” and were therefore subject to the alimony agreement. In issuing this ruling, the appeals court cited cases in other states—including Arizona, Illinois, California, Florida, New Hampshire and Ohio—where exercised stock options were considered income for the purposes of either child support or alimony. The Wooters case is a cautionary tale: Divorcing couples need to address the issue of stock options even if no options actually exist at the time of the divorce.
Faced with these two distinct and seemingly contradictory rulings, advisors and their clients should consider a wide range of “what ifs” in negotiating divorce settlements.
For example, what would the court ruling have been in Wooters v. Wooters if the stock options had been granted during the marriage? Would the options have been considered an asset, precluding their eventual inclusion in future gross employment income?
What if the husband had immediately exercised his options, purchasing them with his own money at their initial strike price? That would have converted any eventual appreciation of the stock into a capital gain instead of employment income reported on his W-2.
Stock options are a unique benefit awarded to employees. A stock option is designed as an award that grants the employee the future right to purchase company stock, with their own money, at their discretion based on the company’s stock price as of the date of the award. But how stock options are characterized is a key issue for any divorce settlement. Was the stock option awarded to compensate an individual for taking a reduction in an annual salary? The ongoing income from these options could more closely resemble forfeited wages and thus figure into the calculation of alimony. In contrast, if the options more closely resemble an additional benefit to purchase company stock in the future, this more closely resembles an asset in the form of an investment and thus could be considered a marital asset to be divided at the time of the divorce. Understanding the difference could help guide divorcing couples and their advisors in determining how to treat stock options.
To help shed additional light on the appropriate way to treat a stock option in divorce settlements, one might take a look at a different type of non-compensatory plan which awards an employee “restricted stock units.”
A restricted stock unit is an award that gives the employee automatic ownership of stock when the stock actually vests. A restricted stock unit vests when the employee has satisfied the vesting requirements, such as length of employment.
The distinction of how an employee takes ownership of stock options compared to restricted stock could play a critical role in determining if the options should be treated as a marital asset or as income. With a stock option, the employee has a right to purchase company stock and will only purchase the stock if the current stock price exceeds the grant price—the price at which the employee can purchase the stock. With restricted stock, however, an employee will take ownership of the stock at the vesting date even if the current price is below the grant price.
Consider the case of an employee who is annually awarded both stock options and restricted stock. Once the restricted stock vests, based on annual grants, it will eventually create a form of additional annual income to the employee and, as a result, may become part of the alimony calculation. With a stock option, the employee will only purchase the stock with his or her own money if the stock price appreciates—an outcome for which there is no guarantee. The stock option in this case is more likely to be considered a marital asset subject to division.
Based on current rulings, stock options seem to be an asset that can morph into income at a later date depending on the way they are exercised, the timing of their exercise and the profitability of the transaction. That means divorcing spouses need to plan for all stock-option eventualities in their settlements.
Failure to understand and properly address key issues—the timing of the stock options, the nature of the stock grant and what the owner actually may do with the option—could leave divorcing parties open to future litigation.
The appeals court in Wooters v. Wooters makes this point clearly, with the judge noting that the parties could have restricted the definition of “gross annual employment income” at the time of divorce if they had wished to do so.
Those who fail to take such steps when negotiating a settlement may come to wish that they had.
Marc D. Bello, CPA/ABV, CVA, MAAF, CFF, MST, is a partner in the accounting firm Edelstein & Company LLP in Boston.
Under Massachusetts law, parents who are divorced or separated must continue to support their children. In Massachusetts, a parent’s child support obligation is calculated based upon the Child Support Guidelines. The Child Support Guidelines are a set of rules that dictate how to calculate a parent’s child support obligation, and what income must be included in the calculation of child support.
The Child Support Guidelines often compare the respective financial circumstances of each parent and also look at the standard of living the child(ren) enjoyed while the parents were still married. In calculating child support, the court considers all sources of income, including salaries, wages, overtime, bonus, income from self-employment, commissions, interest and dividends, disability benefits, social security benefits, unemployment benefits, and many other sources. The court may even impute income to a parent, if the court believes that the parent is not working or earning income to his or her fullest ability.
A parent’s child support obligation is calculated by adding the combined gross incomes of the recipient parent and the payor parent, less any child care, health insurance, dental and vision insurance, and other child support obligations already paid. This combined gross income is then multiplied by a factor based upon the number of children in the family. The product of the parents’ gross income multiplied by the pre-determined factor based upon the number of children in the family is the combined child support obligation of the parents. Each parent’s child support obligation is then factored on a pro-rata share based upon their gross incomes.
Even in cases where a payor parent has no income, they can be ordered to pay a state-mandated minimum order of $80.00 per month (or $18.46 per week). In cases where the parents’ combined income exceeds $250,000.00, the court is not obligated to order a child support obligation above the first $250,000.00, but has the discretion to do so.
In cases in which the child(ren) are residing with both parents, then the child support guidelines must be run with as if each parent was the payor parent, and the parent with the larger obligation must pay the difference in the two Child Support Guidelines amounts.
By statute, a parent’s child support obligation continues through until a child is at least 18 years old. However, a parent’s child support obligation can continue up until the child attains the age of 23, if the child is still predominantly dependent upon the custodial parent and is enrolled full-time in college.
A parent’s child support obligation can be modified every 3 years, or upon a showing of a material and substantial change of circumstances. A child support obligation may be modified by filing a Complaint for Modification with the court.
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