Thursday, July 24, 2014

Can Alimony continue past Retirement in Massachusetts under the new law?

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 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, typically between 66 and 67 (a full retirement age calculator is available here).

However, the Court has discretion to extend "an existing alimony order for good cause shown; provided, however, that in granting an extension, the court shall enter written findings of (i) a material change of circumstance that occurred after entry of the alimony judgment; and (ii) reasons for the extension that are supported by clear and convincing evidence."

While this second part of section 49(f) certainly opens the door for a Judge to extend alimony past full retirement age for good cause shown there are two requirements which the recipient would have the burden of proving.  These two requirements require some unpacking:

1. To extend there must be written findings of a material change of circumstance that occurred after entry of the alimony judgment.

This would seem to require that the recipient must show that something significant has changed or the order should end.  In other words, if the parties are still earning the same amount of income and have similar health and other expectations as they did at the time of the judgement of divorce, then alimony should end upon reaching full retirement age.

That outcome might be considered unfair in situations where parties (and Judges) assumed under the old law that alimony would continue into retirement, especially if one party received more of the retirement assets or had substantial additional earnings during the separation.  However, it is unclear from the statute, if any of these issues would be relevant as they do not represent a material and significant change in circumstances.

There has been no guidance yet from the Appeals Court (as of the writing of this blog post) regarding this type of case.  In the Green case the Appeals Court dealt with the first part of section (f) which allows the court to deviate on the issue of post-retirement alimony at the time that the initial alimony order is created. One quote that might be relevant from Green, if a trial Judge was looking for some leeway in deciding whether to extend alimony past full retirement age, has to do with looking closely at the property division at the time of the divorce:
"the Act does not depart from the long-standing principle that alimony and property division are 'interrelated remedies that cannot be viewed apart..."  Green at 1109.
Of course, without more guidance from the Appeals Court it is unclear if this applies to cases where that property division happened prior to the enactment of the Alimony Reform Act.  On first impression, it would seem that the second part of section 49(f) would ignore the relation of the property division at the time, and limit the inquiry to any material and significant change in circumstances since that time.

Practically, in most cases that are well past their original judgment, a material and significant change in circumstances may not be that difficult to prove.  For example, if the recipient has reached retirement age as well, then their income has likely been reduced.  This could be enough to satisfy the requirements of the statute.  It would all depend on the trial judge's opinion (and possibly thereafter the Appeals Court's opinion) of whether this constitutes "good cause shown."

2. To extend there must be written findings that the reasons for the extension are supported by clear and convincing evidence.

This section appears to place the burden on the recipient to show by "clear and convincing evidence" that there has been a change as required by the first clause, and that the change represents a good reason for extending alimony.  This likely requires that the recipient prove, all over again, that there is a need and ability to pay.  While clear and convincing evidence may sound like a significant burden on the recipient the reality is that if the recipient is dependent on the alimony income, and the payor still has the ability to pay (which will often be obvious from a financial statement), then this burden is not that difficult to establish in many cases.

Upon a close reading, while the burden is placed on the recipient to prove their case by "clear and convincing evidence" part (2) of section 49(f) seems to take a lot of the teeth out of the language that alimony SHALL terminate upon the payor reaching full retirement age.  This language will have significant impact on decisions going forward, but it remains to be seen how much judges (and the Appeals Court) will be willing to apply it to cases that were decided before the Act was enacted.


Wednesday, July 23, 2014

Can the Court order less than the 30-35% formula for Alimony in Massachusetts?

The Alimony Reform Act of 2011 added a formula to Massachusetts Alimony determinations:
"Except for reimbursement alimony or circumstances warranting deviation for other forms of alimony, the amount of alimony should generally not exceed the recipient’s need or 30 to 35 per cent of the difference between the parties’ gross incomes established at the time of the order being issued. Subject to subsection (c), income shall be defined as set forth in the Massachusetts child support guidelines."M.G.L. c. 208 s 53(b) (emphasis added)

Mathematical formulas are convenient and many practitioners and Judges are running the formula right away to see what the boundaries of alimony are (we've even encouraged this behavior with the creation of a website calculator and iPhone App).  But the recent decision in Hassey indicates that the formula should not be the first step in the alimony inquiry.

The formula should not be the first step in the alimony inquiry. 

When running the formula two numbers are generated: 30% of the difference in the parties' gross incomes, and 35% of the difference in the parties' gross incomes.  At this point it might be tempting to argue that a fair compromise is 32.5% of the difference in the parties' gross incomes.  This might be a fair and reasonable resolution in a case IF alimony is warranted by the facts of the case, but that is a big "IF".

Which leads us to the question: Can the Court order less than the 30-35% formula for Alimony in Massachusetts?

The answer based on close reading of the language of the statute is clearly YES!  There are three scenarios where the court can order less than 30% of the difference in gross incomes:

Scenario 1. No Need - In Hassey the Appeals Court pointed out that the "Act altered neither the fundamental purpose nor the basic definition of alimony: 'the payment of support from a spouse, who has the ability to pay, to a spouse in need of support.' G.L. c. 208, § 48."  Hassey.   The Appeals Court has clarified that the formula (despite its convenience) is not the first inquiry in a case. The first inquiry remains whether or not there is a need for alimony and an ability to pay.

In addition, the formula states that "the amount of alimony should generally not exceed the recipient's need..."  So the first inquiry should be "what is the recipient's need."  If the recipient does not have a need for alimony, or their need is less than the 30% figure then alimony should be less (anywhere in the purple range in the graph above).

Scenario 2. No Ability to Pay - As described above, the Appeals Court in Hassey clarified that the first inquiry is whether or not there is a need for alimony and an ability to pay.  If the potential payor of alimony does not have the ability to pay alimony, then it doesn't matter what the formula yields; the amount will have to be limited by the payor's ability (even if a need exists).

Scenario 3.  Marital Lifestyle is a limiting or an expanding factor depending on the circumstances.

WARNING: There is a trap in the language of the statute; many people define "need" as only the basic needs and would therefore suggest that a recipient's "need" may be well below what they are used to in the marital lifestyle.  The Appeals Court has also clarified (in Hassey and in a recent Rule 1:28 decision) that the court must consider the factors listed in M.G.L. c. 208, §53(a).  Included in these factors is the "ability of each party to maintain the marital lifestyle."   Therefore, "need" is not the amount a recipient requires for a basic level of subsistence, but rather the amount a recipient requires to "maintain the marital lifestyle."
"Need" is not the amount a recipient requires for a basic level of subsistence, but rather the amount a recipient requires to "maintain the marital lifestyle."
This means that the factual evaluation of the "marital lifestyle" could create a higher figure than basic need might imply.  However, this can also be a limiting factor.  If the parties lived a frugal marital lifestyle and the payor only recently experienced a great leap in income, then the "need" required to maintain the "marital lifestyle" might be well below the 30% figure.

Practice Tip:  If I was arguing a case where I felt that the 30-35% formula was not appropriate, then before looking at the formula, I would argue that the court must look at the definition of alimony (need and ability to pay) and the factual factors in section 53(a).

As with many of these evaluations this complicated factual inquiry required by the court to determine alimony leaves a lot of room for error.  Clients should be encouraged to try mediation, collaborative law, or other out of court settlement options before taking this issue to a Judge, because both sides risk an alimony order that doesn't reflect all of the details of their financial reality.


Tuesday, July 22, 2014

Middlesex Pilot Program: Fast-Lane Informal Estate Petitions

from Wikipedia
The Middlesex Probate & Family Court already has a very successful and convenient "Fast Lane" program for so-called uncontested divorce petitions (Section 1A Joint Petitions for Divorce).  It saves time for both the courts and the parties to be able to walk an uncontested matter in to the courthouse and, if all of their paperwork is in order, be heard the same day.

According to a press release dated July 9, 2014 (available here), the Court will now be expanding this type of procedure to include Informal Estate Administration Petitions:
"Tara E. DeCristofaro, Register of the Middlesex Probate and Family Court, has announced that she will be piloting a walk-in session for informal petitions. The walk-in session will be available in the Registry every Tuesday afternoon from 12:00 pm. - 3:00 pm., beginning August 5, 2014. If the program is well received, plans are to expand it to multiple days per week."
As with joint petition divorce walk-ins, the informal packet must be complete and include all necessary documents and filing fees to be heard the same day.  This procedure should improve the experience of petitioners and we applaud the Register's efforts.

If you are looking for assistance in preparing the necessary documents to include in an informal packet, contact us for a consultation.

Wednesday, July 9, 2014

New Divorce Calculator Apps for Massachusetts

Kelsey & Trask, P.C. was the first to have an iPhone App for calculating Child Support in Massachusetts and we've recently updated it with a new look.  In addition we are now introducing two new iPhone applications:

The Massachusetts Alimony App: Use this worksheet to calculate the maximum amount and duration of alimony in Massachusetts based on the Alimony Reform Act which took effect on March 1, 2012.  The App allows you to save your calculations or e-mail them.

  


Massachusetts Divorce Calculators App: Includes the following 4 calculators necessary to determine family support in Massachusetts: Massachusetts Child Support Calculator, Massachusetts Alimony Calculator, Full Retirement Age Calculator, and Alimony Recapture Calculator.

The Massachusetts Child Support Calculator is the same one contained in our Child Support App and the Massachusetts Alimony Calculator is the same one contained in our Mass Alimony App:

  

The two additional calculators relate to the calculation of alimony in Massachusetts:

The Full Retirement Age Calculator assists with calculating the full retirement age under the Social Security Act, as referenced in the Alimony Reform Act.


The Alimony Recapture Calculator assists with determining if your alimony order will lead to any tax recapture under the current IRS rules.


Click here to view all of the Kelsey & Trask, P.C. iPhone Apps.


Wednesday, June 25, 2014

Alimony & Property Division: 7 Lessons from the Appeals Court

The Alimony Reform Act of 2011 took effect on March 1, 2012 and significantly changed the law in Massachusetts relating to awards of alimony. Today, the Massachusetts Appeals Court released an opinion that addresses some of the questions still surrounding the Act. Hassey v. Hassey, No. 13-P-864 (2014, available for download here).

In Hassey, the Appeals Court addressed four primary issues in the lower court's decision:


  • Base Alimony of $8,500 per month - VACATED
  • Self-Modifying Alimony of 30% of Husband's gross income in excess of $250,000 - VACATED
  • Termination of Alimony on ""retirement as defined in the Act Reforming Alimony of 2011, as it may be amended." - REMANDED FOR AMBIGUITY
  • Exclusion of Wife's inherited interest in vacation home from marital estate - VACATED

We've summarized the take-away points from this decision:

1. The Basic Definition of Alimony and its Purpose HAS NOT CHANGED

While there are numerous provisions dealing with the determination of amounts and duration of alimony, the Appeals Court pointed out clearly that the "Act altered neither the fundamental purpose nor the basic definition of alimony: 'the payment of support from a spouse, who has the ability to pay, to a spouse in need of support.' G.L. c. 208, § 48."  Hassey.   Because of the existence of a formula for calculating the maximum general term alimony under the new law, many have argued that the new statute encourages alimony in cases even when the recipient spouse may not have a need, but simply has a lower income. The Appeals Court has clarified that the formula (despite its convenience) is not the first inquiry in a case. The first inquiry remains whether or not there is a need for alimony and an ability to pay.

2. All of the Relevant Factors from § 53(a) Must be Considered

In this case, the lower court failed to include in the findings of fact a finding making it clear that "he considered the ability of each party to maintain the marital lifestyle." Hassey.  This failure opened the door for the Appeals Court to review the amount of the alimony award.

3. Exceeding the 30-35% Maximum Requires Specific Determination of Need

The base alimony of $8,500 per month represented approximately 41% of the difference in incomes.  The Appeals Court vacated this award as not supported by the findings:
"While such an award may nonetheless be reasonable and lawful under § 53(b ) if based on a specific determination of the recipient's need (and assuming a proper consideration of the other spouse's ability to pay), we cannot say that is the case here because the judge made no finding as to the amount of alimony the wife needed in order to maintain the lifestyle she enjoyed during the marriage. See Heins v. Ledis, 422 Mass. 477, 484 (1996) ("An award of alimony is improper absent a finding of financial need on the part of the recipient spouse")." Hassey.
4. Self-Modifying Order is NOT Authorized by the Act.

The lower court in Hassey attempted to provide the Wife with further alimony via a self-modifying alimony provision requiring the Husband to pay of 30% of Husband's gross income in excess of $250,000.  The Appeals Court had two problems with the Self-Modifying Order.  First, the self-modifying order "is not based on a judicial determination, supported by subsidiary findings of fact, of an increase in the wife's need accompanied by the husband's ability to provide for the same." Hassey. This determination on a modification would put the burden on the Wife but by creating a self-modifying order the burden is improperly shifted to the Husband.

Second, the Appeals Court found that the self-modifying order is "inequitable because it requires only the husband to disclose quarterly income to the wife."  Hassey.  If the Wife earned income, it would certainly affect her need and the calculation of any formula difference in the future.

5. The Act Defines "Full Retirement Age", which is not the same as "Retirement"

The language of the order terminated the alimony order upon "retirement as defined in the Act Reforming Alimony of 2011, as it may be amended." Hassey.  While the Appeals Court recognized that the lower court meant for "retirement" to mean "full-retirement age" as defined in the act, the exact terminology is important:
"...the Act does not define the term "retirement," and the order could therefore be read to terminate instead upon the husband's actual retirement. Because the order could be read as the husband suggests and because the case must be remanded in any event, we also vacate and remand this portion of the amended judgment to enable the judge to eliminate the ambiguity." Hassey.
6. All of the Relevant Factors from § 34 Must be Considered in Property Division

"Section 34 contains both mandatory and discretionary factors that must be considered... the Act added for consideration 'the amount and duration of alimony, if any.'" Hassey.

The Appeals Court points out the failure of the lower court to include in the findings of a fact reference to consideration of the parties' financial needs and how the alimony order might affect the property division. Similar to the lower court's failure to include all factors under § 53(a), this failure opens the door for the Appeals Court to scrutinize the award of the lower court. Once that door was open, the Appeals Court weighed in on the inherited property with their own thoughts:
"In view of the family's enjoyment of the Chatham property during the marriage-- contributed by the wife to the marital partnership--the exclusion of the wife's interest in the Chatham property cannot be sustained. We think the judge took too narrow a view of "financial reliance" upon an asset, evidently basing his analysis solely on the asset's impact on the family's tax obligations."
7. Incomplete Findings will lead to Greater Appellate Oversight

Reviewing a property division or alimony award is a two step process:
"First, we examine the trial judge's findings to determine whether all relevant factors were considered (and whether irrelevant factors were disregarded). See Rice v. Rice, supra at 401-402; Bowring v. Reid, 399 Mass. 265, 267 (1987)." Hassey.
"Next, we decide whether the rationale underlying the judge's conclusions is apparent and whether these "flow rationally from the findings and rulings." Williams v. Massa,431 Mass. 619, 631 (2000)." Hassey.
Considerable discretion is given, but only if all factors were considered.  As practitioners the obvious lesson here is that very detailed and complete Proposed Findings of Fact could be the key to losing or winning on appeal.


Thursday, June 12, 2014

Lifestyle During Separation Does Not Define Marital Lifestyle, According to Massachusetts Appeals Court

Guest Post from Jonathan R. Eaton, Esq. of Finn & Eaton, P.C. and of counsel to Kelsey & Trask, P.C.  - Attorney Eaton focuses his practice on family law, serving clients in the areas of divorce law, child custody & visitation disputes, modifications of existing judgments in the Probate & Family Courts, drafting and negotiating prenuptial agreements, and guardianships & conservatorships.  Jonathan is also trained in Collaborative Law.

Lifestyle During Separation Does Not Define Marital Lifestyle, 
According to Massachusetts Appeals Court

In setting the amount of alimony to be paid, and how long it is to be paid, a Probate & Family Court judge in Massachusetts must consider twelve mandatory factors:
"In determining the appropriate form of alimony and in setting the amount and duration of support, a court shall consider: the length of the marriage; age of the parties; health of the parties; income, employment and employability of both parties, including employability through reasonable diligence and additional training, if necessary; economic and non-economic contribution of both parties to the marriage; marital lifestyle; ability of each party to maintain the marital lifestyle; lost economic opportunity as a result of the marriage; and such other factors as the court considers relevant and material."  M.G.L. c. 208, §53(a).  
The judge is limited in cases of general term alimony to not exceeding "the recipient's need or 30 to 35 per cent of the difference between the parties' gross incomes established at the time of the order being issued."  M.G.L. c. 208, §53(b).  However, the judge may deviate from these limitations for the reasons enumerated in §53(e).

In Steele v. Steele, a Rule 1:28 decision by the Massachusetts Appeals Court successfully tried and argued by Jonathan R. Eaton through Kelsey & Trask, P.C., the husband and wife had been separated for the last seven years of a twenty-eight year marriage.  During their separation, the wife lived frugally, while the husband's upper middle class lifestyle remained unchanged.  Further, the value of the couple's assets increased during this period.

The trial judge had calculated the wife's need for purposes of determining the amount of alimony that the husband was to pay, as well as analyzing the §53(a) factors, by examining the marriage and lifestyle during periods of cohabitation and separation.  The husband appealed, arguing that the wife had reduced her need, and as such, the amount of alimony that she required should be correspondingly reduced.

The Appeals Court disagreed, and affirmed the alimony award of 30 per cent of the difference in the couple's respective incomes.  M.G.L. c. 208, §53(e)(6) provides that a judge may deviate if there is a significant period of marital separation, but only for considering the length of the marriage.  Not marital lifestyle, and not need.  The Appeals Court cautioned during oral argument that allowing need to be defined during a period of separation would open the door for potential alimony payors to benefit from financially cutting off access to the marital assets from potential alimony recipients.  Conversely, the would-be alimony recipients would benefit from spending lavishly during a period of marital separation.  The Court wrote:
"It would obviously defeat that purpose if the separation itself needed to be vigorously disputed by the parties to avoid the specter of enduring advantage."
Clouding the alimony analysis was the wife's separate support action a year prior to the husband's complaint for divorce.  The separate support action was resolved by stipulation, for a weekly amount significantly less than the alimony award.  The husband appealed this issue as well, arguing that a material change in circumstances had not occurred warranting a change in the amount to be paid.

The Appeals Court disagreed on this issue as well, rejecting the husband's argument to apply the standard in modifying a divorce judgment, when a divorce had not yet taken place.  A separate support action is different from a divorce, as the marital relationship remains while the spouses are living apart, and there is no contemporaneous division of the marital assets.

Lastly, the husband argued that the couple's assets should have been divided using values as of the date of separation, and not at the time of divorce.  The trial judge had awarded the husband more of the assets than she did to the wife, to reflect the differences in their respective contributions after the couple separated.  The trial judge found that, through the joint management of certain assets and the continued filing of tax returns, the couple continued some aspects of their marital partnership.  As such, using values as of the date of separation would have been improper, and Appeals Court agreed.

If you should have any questions about alimony or property division in Massachusetts, contact the attorneys at Finn & Eaton, P.C. or Kelsey & Trask, P.C. to schedule a free one-hour consultation.

Wednesday, May 21, 2014

Divorce Mediation Infographic

Divorce Mediation
Source: TopCounselingSchools.org

Kelsey & Trask, P.C. provides this graphic for informational purposes only. We do not endorse nor claim endorsement from the source site or organization. Kelsey & Trask, P.C. is not responsible for any information contained therein, unless indicated specifically on that site.
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