For couples considering divorce, the issue of dividing assets is an important consideration. In the United States, some states are considered “community property” states, meaning that most property acquired during marriage, with the exception of gifts, inheritances, and assets owned before marriage, is considered “marital” and therefore divisible in the event of a divorce. Other states, including Massachusetts, are “equitable apportionment” states, meaning that assets held by either party that were acquired either before or during marriage, including assets received by gift, inheritance, or assets held at the time of Marriage, it is divided “fairly”. at the time of the divorce.
In Massachusetts, in the absence of a prenuptial or postnuptial agreement, the vast majority of assets are “touchable” (ie divisible) in the event of a divorce. Massachusetts law includes a very broad definition of “marital property” or “marital property” in the context of divorce. Marital property includes all property owned by either party, when and how it was acquired, and where it is located. The double “bowl” includes Everything owns the divorce party. This does not mean that the judge will necessarily give one spouse’s beloved autographed baseball kit to the other, but that the value of that kit will be factored into the division of marital property in general. In other words, the value of that pool to the spouse holding it may be matched by assets of similar value held by the other spouse. This publication will discuss several different types of assets, whether those assets are “untouchable” in a divorce, and outline some specific considerations for specific asset classes.
Real estate interests are divisible in a divorce. The judge has the power to order the sale of real estate or to prevent any party from selling real estate held as security for support obligations. If the divorcing party owns real estate outside of Massachusetts, including in foreign countries, provided the court has personal jurisdiction over the party that owns the property, the judge can order the property to be transferred or sold. Under certain circumstances, beneficial interest in real estate may also be included in the marital property and divisible in a divorce.
Bank accounts, cryptocurrencies, stocks and bonds
Generally, bank accounts, cryptocurrencies, stocks, and bonds are included in the marital property and are therefore divisible. Stocks and bonds should usually be valued at the time of the divorce. Shares are typically valued using the applicable share price multiplied by the number of shares. A limited exception is bank or investment accounts held for others, including the children of the parties, which will not be considered part of the spouse’s marital property subject to division. Additionally, since stocks and bonds earn income with very little “work” on the part of the person who owns them, in a short-term marriage, the divorced spouse may be able to say successfully because the other spouse did not contribute to the increase in the value of the stocks or bonds held before Marriage, which was only the result of prudent investments in which the assets are held by the spouse, and therefore should not be divided in divorce.
Retirement and pension accounts
Retirement and annuity accounts are divisible upon divorce, regardless of whether the fund or annuity was or accrued at the time of the divorce. These assets may be assigned a present value and held by the spouse holding the annuity or account, who then purchases the other spouse’s share in them for cash or other assets. Alternatively, the division may be deferred until future retirement benefits are received, and a fixed percentage of those benefits may be allocated to the non-pensionable spouse to be received at the time the benefits are received.
Stock options received or acquired during the marriage, including options not vested at the time of the divorce, are marital property and are divisible in the divorce. Unvested stock options are usually divided according to a formula or “time rule” in the stock market Pacante v. Morton434, Mass 787 (2001). under pacante As a time rule, if the options grant is closer to being fully vested at the time of the divorce, the portion of that grant that would be considered a divisible marital asset is greater.
“Honor” awards, such as those received for a scientific discovery (such as a Nobel Prize), an athletic competition (such as an Olympic medal), or other major award, are marital property and divisible in the event of divorce.
Royalties, copyright and patent interests
Royalties, such as those related to income-producing shares, the right to receive income from a published book, or compensation for the use of property, are divisible in divorce, as are copyright and patent interests. Normally, it is possible to assign a value to these assets. However, in rare cases, its value may be so speculative or uncertain that the court does not take it into account when dividing marital property.
Business interests are divisible assets in a divorce. Since the business is also often a source of income for the spouse who owns the interest, the court will often allow that spouse to retain the business interests and cede other assets, such as real estate, bank accounts, and/or retirement accounts, to the other spouse to offset the business interests Owned by the husband who runs the company. Let’s say both spouses have an interest in the business. In this case, it is customary for one spouse to purchase the other spouse’s interest so that the spouses do not attempt to run a business together after the divorce.
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“Option to action” is a legal term that means the right to file a claim or recover a debt or money. Although this type of asset is somewhat unusual, it is divisible upon divorce.
Personal property (including pets)
Personal property of all kinds is divisible by divorce. Personal possessions include personal items, clothing, jewelry, household items, collections, pets, and more unusual items. For example, winning lottery tickets are marital assets and divisible if a right of collection accumulates before a divorce, as are burial lots, ownership of season tickets to sporting or musical events, credit card points, and frequent flyer miles.
Proceeds from personal injury proceedings
Damages for tort claims, such as personal injury claims, are marital property and divisible in a divorce. This can include damages for future lost wages (including after a divorce), lost future earning capacity, and future medical expenses. However, the open question under Massachusetts law is whether damages awarded for pain and suffering, disability, disfigurement, or loss of union should be considered marital property.
Gifts and inheritance
gDonations and inheritances received before and during marriage are marital property and are usually divisible. However, gifts or inheritance may also be excluded, depending on the factual circumstances of the case. If the gift or inheritance is received at the end of the marriage or even after separation, it is likely to be excluded from the marital property. If the gift or inheritance is completely unexpected and something like a windfall, it is likely to be excluded from the marital property. But suppose the couple relied on an endowment or inheritance during the marriage (eg, they planned, once they had received the inheritance from Uncle Jimmy, to renovate the kitchen, pay down the house equity line, go on vacation to Aruba and put the rest in the children’s college funds). In this case, it may be more likely to be included.
This may also include gifts and inheritances not yet received by either party, although it is not customary for the spouse to be required to transfer part of the gift or inheritance received after a divorce to the other. Alternatively, if one spouse is expected to receive a large gift or inheritance in the future, they may receive a disproportionately smaller amount of assets in the divorce. This unequal division is based on the fact that the spouse who receives the gift or inheritance has a greater chance of earning or acquiring assets in the future than the other spouse by virtue of that gift or inheritance, which is an important factor.(1) That the court took into account when determining how to “fairly” divide marital assets.
If the divorcing spouse has a present, enforceable, and valuable beneficial interest in a trust, that interest is often considered marital property and is divisible in a divorce. However, whether the interest exists, is enforceable, and is valuable can be a difficult question and will often require analysis by an attorney experienced in divorce and trust issues.
The assets in a short-term marriage
Massachusetts mandates an “equitable” rather than “equal” division of marital assets. In long-term marriages, assets are usually divided equally. However, in short-term marriages, especially marriages of less than five years, the arguments of the divorcing spouses that they should retain, for example, assets that were owned before marriage or gifts and inheritances received during the marriage, are stronger. In other words, in a short-term marriage, the spouses are more likely to leave the marriage with the assets they had at the time of the marriage, or at least the bulk of those assets, especially if one spouse had significant assets at the time of the marriage to which the other spouse did not contribute in any way of forms. However, a “fair” split always requires a specific analysis of each divorced couple’s circumstances, and there are a few hard and fast rules.
Educational degrees and professional licenses
Some states treat educational degrees and professional licenses acquired or granted during marriage as marital property subject to division in divorce by giving the non-degree spouse a share of future income earned through the practice of that profession. Massachusetts, along with the vast majority of states, does not treat educational degrees or professional licenses as marital property. However, the court takes into account the spouses’ professional skills, their employability, and the opportunity to earn or obtain assets and income in the future when determining how to divide the marital property equitably. Degrees and licenses may play an indirect role in the division of marital property as a result.
Social Security benefits
Because a federal law prohibits state courts from setting aside the right to collect Social Security benefits as a form of property in the event of a divorce, in Massachusetts, as in all other states, Social Security benefits are not divided marital property in the event of a divorce. However, Social Security may be considered income for child support or alimony purposes.
Property owned by children of divorced spouses cannot be transferred to the divorced spouse because it is not considered marital property. This is because the statute applicable to the division of property refers to the estate of “each of the parties”, and does not include children. However, if a divorcing spouse transfers assets to a child with the intent to fraudulently deny the other spouse a claim to the assets in the event of a divorce, the court has the power to annul the transfer.
So, how do I protect my assets in a divorce?
Let’s say you are married or considering marriage and are concerned about your assets in the event of a divorce. In this case, one fairly sure way to protect your assets if you do eventually get a divorce is a prenuptial or postnuptial agreement. A valid and enforceable prenuptial or postnuptial agreement can specifically specify which assets are considered separate property and therefore cannot be divided in a divorce and which assets are considered marital property. A prenuptial or postnuptial agreement can also specify, for example, that the marital property is to be divided equally, “equitably”, or in some other way. If you are already married, a postnuptial agreement is appropriate, while if you are looking to get married in the future, you will need a prenuptial agreement. An important factor in determining whether a prenuptial or postnuptial agreement is valid and enforceable is whether the parties have independent counsel in connection with the negotiation of the agreement. You should use an experienced consultant to draft and negotiate it. Making sure assets are “untouchable” in a divorce is worth it!