PROPERTY & DEBT DIVISION
In Massachusetts, the court will divide all marital property at the time of your divorce. Virtually all property is considered to be marital property, no matter when it was acquired – before marriage, after marriage, etc. Even inherited property and gifts can be considered marital property. Our attorneys will always remind you – everything counts, so take a complete inventory of all of your marital assets!
Being that Massachusetts follows an equitable distribution statute, there is no guarantee of a 50/50 split, but rather one that is deemed to be fair based on a list of factors.
When you leave the decision to the Judge, it is typically viewed, in a long-term marriage that the starting point is an approximate equal distribution, in the absence of other factors.
So far, so good. But here’s the problem. The agreed-upon split is often done without considering taxes. That can turn out to be a costly mistake for one side and an undeserved windfall for the other. Why? Because some assets carry a built-in tax liability while others don’t. In real property distribution, you certainly wouldn’t ignore a mortgage against a piece of real estate. For the same reason, the fact that a particular asset may have a hefty tax bill attached should not be ignored.
If you and your spouse are going to attempt property division on your own, understand that each asset may be valued differently:
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The Marital Home: When you and your spouse are separating, the distribution of the marital home is most often one of the most contested issues. If your children are comfortable there, you may yearn to live with them in the home, post-divorce. But does it make sense? You need to weigh the expenses involved in keeping the home and what you may have to give up to get it. There are
tax ramifications to consider. Learn More
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Stocks, Bonds, Mutual Funds, Money Market Accounts: You must set a date on which these are to be valued. This is most often the date of the divorce.
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Family Business: A business is typically any couple’s largest single asset‚ and a divorce could require the business to be sold and the proceeds divided between the parties. Before it can be sold or traded for other marital assets, a business valuation must be prepared. Once both parties understand and agree upon the value of the business‚ the decision whether to buy-out one party‚ or sell to a third party should become clearer. In order to determine the value, a valuation expert and forensic accountant ought to be retained. Their role is to determine a fair market value of the business. Learn More
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Life Insurance: Term life insurance has no value, but whole or universal life insurance may if it has a cash surrender value. You also should address the issue of changing beneficiaries on your policy once the divorce is over if your current beneficiary is a spouse. Learn More
Household items like pots, pans and furniture are often less valuable than people might think. Jewelry and collectables, however, are often worth more than you think. If your intention is to proceed with an uncontested divorce, dividing your property may create tension, but the more you can work out between you, the easier the process will be. Here are five ideas worth pursuing if you reach an impasse:
1. Choose items alternately: The spouses take turns selecting from a list of all the marital property, without regard for the value of items selected.
2. One spouse divides, the other chooses: One spouse divides all the marital property into two parts and the other spouse gets the choice of parts.
3. Sale: Some or all of the marital property is sold and the proceeds divided.
4. Secret bids: The spouses place secret bids on each item of marital property and the one who bids highest for an item gets it. Where one receives items that exceed his or her share of the total value, there will be an equalization payment to the other spouse.
5. Valuation: List every item of marital property valued over $50. Total the value of the marital estate. Each spouse gets fifty percent of the estate and takes turns choosing property until they reach the end.
In contested divorces, if you and your spouse cannot agree on how to value the estate, file a motion with the court. List what you cannot agree upon and what you believe the market value is for each item. If you cannot agree on the market value of cars, boats, or other expensive property, you may want to get an appraisal and bring the appraiser as a witness to the hearing.
Omitted Property
Many clients ask what happens when a spouse
hides assets or fails to disclose assets he or she has. The first strategy we employ is to utilize the tools of
discovery, such as
document requests, as they relate to those assets. The second strategy would be to use the power of the subpoena to obtain information. We also depose parties, which is oral testimony taken under oath. We often continue by retaining experts to conduct asset searches or forensic investigations. There are additional strategies if these are not successful.
Fortunately, the court has the power to issue orders relating to undisclosed assets after a divorce is final. The risk in not fully disclosing is that a Judge may find that an unequal division of assets is justifiable and that it would be required in the interests of justice.
Dealing With Debt
Just as property acquired during the marriage belongs to both spouses equally, debts incurred before separation are the responsibility of both spouses as well. Creditors don’t care who pays a debt; they are usually entitled to collect the entire amount from either spouse. If you’ve been married for any length of time, it’s almost certain that you and your spouse have marital debt. The foregoing principles are important to review:
1. Joint credit accounts are the responsibility of both spouses. This remains true even if your Separation Agreement assigns the debt to your spouse. If the account goes into default due to non-payment, both of you will be held liable.
2. You should consider closing joint accounts that were opened in both of your names, as well as removing your spouse as an authorized user on your own accounts.
**IMPORTANT NOTE**
Unlike child support and parenting issues, property and debt division cannot be changed after the divorce is final. This means that once your divorce is granted, the division is final.
Contact Massachusetts Flat-Fee Divorce Attorneys today to discuss your options. You have the power to control your destiny – use it! Get Started
If you need assistance with contested divorce matters, our sister-firm The Massachusetts Family Law Group handles those matters.