Cohabitation and alimony reform

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The new Massachusetts alimony reform law contains provisions that spell out what happens if  a recipient of alimony lives with someone while receiving alimony. Unfortunately the new provisions leave many questions unanswered.  The statute says that alimony “shall be suspended, reduced or terminated upon the cohabitation of the recipient spouse when the payor shows that the recipient spouse has maintained a common household, as defined in this subsection with another person for a continuous period of at least three months.”  The law does not give guidance as to which remedy is appropriate and under what circumstances.  This means it is within the discretion of the judge hearing the case to reduce,  suspend or terminate alimony, but because the statute says “shall” the court has to do something.   There is no requirement that this relationship be of a romantic or sexual nature and the lack of guidance has caused some to ask whether residing in a common household with an elderly parent might have an effect on alimony. There is nothing in the law that prevents this interpretation.

In determining whether the recipient is maintaining a common household the Court may, but is not required to consider, “oral or written statements or representations made to third parties regarding the relationship of the persons,”” the economic interdependence of the couple or economic dependence of one person on the other,”  “ the persons engaging in conduct and collaborative roles in furtherance of their life together,” the community reputation of the persons as a couple, or “other relevant and material factors.”  These are helpful factors but are not bright lines that permit easy interpretation of the statute.

Perhaps this is an example of the legislature giving the Courts some  authority and hoping that the individual judges will “know Cohabitation when they see it.”  Our probate courts are accustomed to making these decisions based upon the particular facts in each case and will continue to do so under the new law.  I think this weakens  the ability of a recipient of alimony to rely upon a stream of payments and is especially problematic for a person leaving a long term marriage.  The law allows for reinstatement if the cohabitation ends, but that too, is within the discretion of the court, and no real standards are provided.  This is an area of the new law that I believe will increase not reduce litigation. It has been my practice to discourage modification actions based upon cohabitation by a former spouse, unless the economic advantage to the recipient of alimony is dramatic and easily proved. I think this new law makes it easier to modify an alimony order based upon cohabitation and will make it more likely that clients paying alimony will wish to see how the court interprets the new law, and take their chances on a modification action.  I am not sure this is an improvement to our alimony laws and it may create more litigation than is justified.  There are occasional stories we see and hear about people living together for long periods of time with a romantic partner, rather than marrying, just to continue receiving alimony, but these situations are rare and usually justified by the marital history. It will be much more likely that these situations will result in litigation to terminate, reduce or suspend the alimony obligation now that the path has been cleared by the new law

If you live together before marriage or separate from your spouse while married it could effect your alimony

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One of the hallmarks of the new law is that the duration of alimony is now based upon the duration of the marriage. The duration of the marriage is counted from the date of the marriage to the date of service of a divorce complaint upon your spouse.  The timing of when you file for divorce AND have the complaint served on your spouse can be important. For example if you have been married for more than twenty years, your alimony obligation or entitlement would ordinarily extend to the payor reaching the full federal retirement age. If you are married less than twenty years the duration of alimony will be limited to a percentage of the time you were married, according to a schedule. If you are married 15 to 20 years alimony may not last longer than 80% of the time you were married. If you are married 10-15 years, the percentage is 70%, 5-10 years 60% and 5 years or less, 50%. It is important to note that the law sets this out as  the maximum duration of alimony.  The  courts now have the discretion to award a shorter term of alimony than the maximum prescribed by the new law.

There are exceptions to this schedule.  The court can consider(but is not obliged to consider)  any time that the couple lived together before being married to count as time married. Also the court can consider long periods of separation, presumably to shorten the durational limits under the new law. So if you and your spouse separate before filing for divorce it may shorten your alimony, but there is no guarantee. The safest approach is to file for divorce immediately to prevent the time from passing. The shame here is that many a marriage has been saved by a period of separation, and under the new law that course of action could be financially perilous for both parties.

This whole area of the new law provides ample opportunity for litigation.  How can one prove ten or twenty years later that a couple lived together for a few years before the marriage?  Who retains copies of leases, checking account statements, etc? It will be very hard to prove these circumstances after a long marriage, but it could make the difference between a few years of alimony or much more.

Unanswered Questions Under The New Alimony Reform Law

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It is likely there will be lots of news stories on or about March 1, 2012 proclaiming a new day in Massachusetts because of the alimony reform law. There are still many unanswered questions and we will begin on that date to learn how the law is applied in our probate courts. It will take many months or years before any of us will have enough experience to know for sure.

The big innovation of the new law is that alimony is no longer for life. There are durational requirements which dictate how long alimony is payable. The new alimony law also limits alimony to 30-35% of the difference between the spouses’ respective income, although this amount is not mandated, so it could be less.  The duration of alimony payments is dependent on the duration of the marriage. The law contains a long list of exceptions and permissible grounds for deviation from the duration and amount limits.   This post will cover a couple of them and in following days I will post on others.

The easiest to understand is that if there is a chronic illness or unusual health circumstance of either party, the courts can deviate from the durational and amount limits.  This means that payors may be relieved of their obligations if they are sick and payees might receive more alimony for a longer period of time if they are sick. There are no guidelines for how to apply this exception.  Exactly how strict the courts will be in limiting or expanding this exception remains to be seen. How sick do you have to be to get excused from your alimony obligation, or to have it reduced? When does alimony have to be increased because of illness? Most likely the illness will have to have direct financial impact. So if you have a serious form of illness that does not impact you financially, it is unlikely it will have a significant impact on your alimony. You could have a minor illness such as anxiety or depression that might make it difficult or impossible for you to work, and that could result in a meaningful change in your alimony. The courts are familiar with these kinds of inquiries, as health and vocational ability have long been considerations in determining alimony.

The court may deviate if there are tax considerations. It is not clear exactly what tax considerations will matter.  I suspect that it means that the court is permitted to look at the after tax cost to the payor and the after tax benefit to the payee, but again, there are no clear guidelines regarding how the courts are to take into account tax considerations.

The court may deviate if the payor is providing health insurance or life insurance for the payee. So the implication here is that the alimony would probably be lower than the suggested range if the payor is also providing life insurance and health insurance. Given that health insurance costs are rising rapidly, that would mean that alimony payments could be reduced solely because of the extra cost of health insurance over time.

More problematic is the exception in the event there is unearned income from assets not allocated in the parties’ divorce.  This would apply if there is an inheritance, or other windfall, or simply if in the years following the divorce, one of the parties managed to acquire a significant net worth. There may be the necessity of detailed examination of the financial history of the parties in the years following the divorce. For example, if the parties sold and divided equally their marital home and the husband invested those proceeds in a new and successful business,  while the wife spent the money, would that result in a greater alimony obligation? It would seem that this is a potential outcome. At the very least, clients would be well advised to keep careful records about what they have done with the assets they receive from the divorce.

Talking to a Divorce Lawyer Can Be Bad For Your Marriage

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It is really important to think twice before filing for divorce. In my experience a small but significant percentage of clients who consult us about divorce are really unsure about whether they want to end their marriage. Many clients come to us to find out “what will happen if we divorce?”  These clients are not committed to divorcing their spouses. They may be unhappy, their spouse may have threatened divorce, but marriages can survive transient unhappiness and threats of divorce. Recently a client came to me to tell about something really horrible that their spouse had done.  The client was furious and came in prepared to give us a large retainer to go to court the next morning to redress his grievance.  As strange as it may sound coming from a divorce lawyer, in our practice we have a healthy respect for the institution of marriage and make every effort to listen to our client and hear what he or she truly wants. Often it is a change in how their spouse has been treating them, or there is a temporary crises caused by work, in-laws, illness, financial distress, or addiction.  All of these things can be remedied without filing for divorce, and clients should be encouraged to make sure they are really ready to throw in the towel and have exhausted all efforts at saving their marriage. We can refer people to therapists who can be helpful. Filing for divorce, in my experience has ended a lot of marriages that my instinct tells me could have been saved. To make another analogy to medicine. If you have a backache and consult a chiropractor you will receive manipulation, if you go to a surgeon, you will receive a recommendation for surgery. A massage therapist, personal trainer and yoga teacher will all have different approaches to back pain. When you consult a divorce lawyer all they can really do for you is get you a divorce. Make sure its what you really want and need.

Be Careful About Making Changes Because Of The New Alimony Law

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Recently we have been in touch with clients who are either happy or discouraged because of the new alimony law.  Many of our clients who have been paying alimony are looking forward to stopping their payments on March 1, 2012.  Others are afraid they are going to have their alimony cut off on that date. There will probably be news stories on March 1, 2012 in the newspapers and on television, and many people will be misinformed and either elated, or crushed to find out that in most cases existing judgments will take time to conform to the new law and there is much uncertainty.   It is important for people to keep in mind that with regard to cases decided or agreed to under prior law, the law is not automatic. It will start applying to new cases on the day it is effective, but the new law requires that for existing cases you have to file a complaint  for modification of the prior judgment and get the court’s permission to stop making payments.  Until the court tells you that you no longer have to pay alimony you have to continue to make payments or you will be in contempt of court.

The new alimony law can be grounds to file a complaint for modification, but it does not permit people to file a complaint  for modification which is based solely on the new law,  immediately upon the law coming into effect on March 1, 2012.  If you are already at retirement age, you have to wait until March 1, 2013 to file your complaint for modification.   If you were married for 15 to 20 years at the time of your divorce, you will have to wait until March 1, 2015 to file your complaint for modification. There are other rules in the new law about when you can file for modification. You need to check out your situation before doing anything.

It is also important to note, that even if the new durational requirements appear to terminate alimony, there are nine different grounds for the court to decline to modify the alimony, giving the courts wide discretion and unfortunately, guaranteeing that there will much litigation over which exceptions should apply and how  to apply them.  It is too early to tell how this all will settle out, and we are glad to consult with any former or new client with questions about  how the new alimony law will effect them.

Postnuptial Agreements Instead of Divorce

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When the case of Ansin v. Ansin, 457 Mass. 283 was decided in 2010 we got an answer to a question that was unanswered in Massachusetts. We now know how to execute binding post-nuptial agreements and that if done properly they will be enforceable in court if necessary.   Since that case was decided we have recommended to several of our clients not to divorce their spouses, but rather to stay married with a post-nuptial agreement in place to deal with the finances.

The most common reason we have recommended a post-nuptial agreement rather than divorce is when clients are older. Here is an example:

Husband and wife are both retired, living on social security and their investments. They have been separated for a year or so and now their friends and family have recommended that they divorce. One of the spouses has a medical condition that will shorten his/her life expectancy.  Neither party desires to remarry.

If these parties divorce, they will each receive half of the marital estate.  Since neither is working, there will be no alimony.  When the first of the couple dies, their assets will go to whomever they designate in their wills since they are no longer married. That could be a new romantic interest or charity or even the parties’ children.  But in any event the assets will likely not be available for the surviving spouse.

With a binding post-nuptial agreement and proper estate planning documents, the parties can stay married, but continue to live apart, and upon the death of the first to die, the survivor will have 100% of the remaining marital estate to live on. The post-nuptial agreement can also contain binding provisions regarding how the parties investments are managed, including provisions for dividing income and expenses between the parties.  This is a much better solution especially in times when retirement accounts and real estate values have been affected so badly by the recession.

Second Opinions in Divorce Cases

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It is generally known that second opinions are a good idea before undertaking any major medical procedure. It is a little less well known that this is a reasonable strategy from time to time as major decisions are made in a divorce. This is so for the same reason as it is advisable in medicine.  Many of the choices about the advisability of strategy, procedure, and settlement options are really matters of opinion, just as these choices in medicine are really opinions. There are many areas of family law where there are no clear cut answers and the opinions of the lawyer you are working with depend in great measure on that lawyer’s experience and personality as much as they depend on any black letter law.

Good lawyers are not afraid to encourage their clients to get second opinions. In our firm we often rely upon retired judges for so called, “case evaluation.” What happens in this situation is that we will meet, with our clients present, with a retired judge, present the entire case (from our point of view of course), and get some feedback from the judge about how we see the case.  Even though I have been practicing law for 38 years, I get  a lot of good advice in this setting because the judges have seen thousands of cases to my hundreds over the years. They are also a little bit detached since they do not have the relationship with the client (nor are they responsible for how the advice turns out!).  It gives a client an opportunity to ask questions and get feedback from an experienced former judge.  These case evaluation sessions are confidential and the other side of the case will  never know that the consultation took place.  The cost of these case evaluations, other than what is spent on your own lawyer, is generally just the cost of a few hours of the judge’s time, billed at hourly rates ranging from $350 per hour to $500 per hour.  This is a small price to pay in comparison to the costs of litigation.  This kind of second opinion will sometimes take place with lawyers who are not retired judges, but who have specialized expertise within the area of family law or a different approach to their cases.

We also make ourselves available for second opinions for clients who are working with other lawyers.  What I have generally found is that most of the problems that clients have with their lawyers (especially when we know they are good lawyers) result from communication problems. When I hear what is going on, I explain what I think the problem is, and encourage the client to return to their current lawyer with a list of questions and concerns. The most important thing in the lawyer client relationship is that the client not be afraid to address their feelings about poor communication or questions that have not been answered completely.

Occasionally we will find that the client is being represented by a lawyer who is capable, but simply inexperienced with certain aspects of the case. Sometimes we can consult with the current lawyer and help the client and the lawyer move on and resolve the case satisfactorily. Sometimes we do recommend that the client changes lawyers, but we try not to be too pushy about that recommendation unless it is clear that the current lawyer is mishandling the case. Frankly, it diminishes the value of the second opinion service, if we are misperceived as trying to steal another lawyer’s client.  If the client wishes, we will keep the second opinion consultation confidential.

Most good lawyers are open to second opinions and welcome it when clients are sincerely trying to simply make sure that they are fully informed of their options. There are very few right or wrong ways to proceed in divorce, just choices. You should get as many options on the table as you can before you make a decision.

Financial Statements in Massachusetts Divorce

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There are two financial statement forms required for a divorce case, a short form for those with income of $75000 or less and a long form for those with income higher than $75000. Filling out these forms is a source of much pain and suffering for clients and for lawyers. They will be redone frequently because each time you go to court they have to be current.  The form itself is difficult and most lawyers and clients end up making changes, adding footnotes and in other ways supplementing what is asked for by the form. There is no  guidance in the rules of Court as to how to fill these out, so what does a client or lawyer do?

The first rule is make sure everything is accurate and honest and that no asset or source of income is left off the form. This can especially be a problem for clients who have cash businesses and don’t report all their income to the IRS. As divorce lawyers we must insist that ALL income whether reported to the IRS or not be shown on the financial statement form. Divorce lawyers are required to sign the form indicating that to the best of our knowledge it is accurate. It is not our problem or our desire to give advice about how to deal with the IRS.

The second rule is Explain, Explain, Explain. If your expense is an estimate, make sure it says so somewhere in the form or the footnotes. If your income is unpredictable and it is sometimes higher and sometimes lower, make sure you put it in the footnotes. Anyone filling out this form should assume(even though it is unlikely) that they will be cross examined on the witness stand about EVERY blank that is filled in and every footnote.

The last rule is to take the financial statement seriously. The most embarrassing moment in a divorce trial is usually when a client is cross examined on a hastily prepared financial statement with tons of inaccuracies . Don’t let the problems with filling out the form get you stuck. Make your best first effort at a draft, keeping in mind all of your questions and problems. Take this into your lawyer and get his/her help in answering any questions you have. No lawyer should simply hand a form to a client and ask them to fill it out. It is equally problematic to have your accountant fill out the form because the accountant will make assumptions and conclusions without informing you of any of their assumptions or conclusions. Preparing a financial statement is a collaboration in some sense because you want to involve everyone who has information and can be helpful, but in the end it is the person signing the form who is on the hook if there is a mistake. These are signed under the pains and penalties of perjury. Make sure you understand every line in the form before you sign it and take your time to get it right.

Does Alimony Reform Affect When I Should File For Divorce? Absolutely!

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Typically when divorce is contemplated by one or both spouses, the actual complaint for divorce may not be filed in court for many months, or even at all.  During that initial time period, the parties may be in negotiations or may have reached an informal agreement about custody, child support and spousal support for the time being.  Ultimately in Massachusetts, if both parties are in agreement about the final terms of the divorce, the parties will file a joint petition with the court, making it unnecessary to ever have filed a complaint for divorce.

Enter the Massachusetts Alimony Reform Act of 2011, Mass. Gen. L. c. 208  §§ 48-55, which takes effect on March 1, 2012.   Among sweeping changes to current alimony practices, such as allowing for alimony to end when the recipient is cohabiting and setting an end date for general term alimony when the payor reaches full retirement age,   the Alimony Reform Act sets durational limits for general term alimony based on the length of the marriage.  Currently, the length of the marriage is not consistently defined.  It may be defined in a variety of ways, such as when the parties began living apart or when one spouse files for divorce or the date of the divorce hearing.  Under the Alimony Reform Act, the length of the marriage is defined as the number of months from the date of the marriage to the date of service of a complaint or petition for divorce or separate support.  The Court will have the discretion to increase the duration of the marriage when there is evidence that the parties’ economic marital partnership began during their cohabitation period prior to the marriage.

Consider the difference between the duration of alimony for marriages 5 years or less, which cannot be greater than 50% of the months of the marriage and the duration of alimony for marriages 10 years or less, which cannot be greater than 60% of the months of the marriage.  The best course of action will now depend on whether you are the recipient, who would benefit from a delay in the service of a complaint for divorce, or whether you are the payor, who would benefit from filing as soon as possible.  These are not the only factors to consider and we are evaluating each client’s position on a case by case basis.  We can offer creative solutions to determine what makes the best sense to accomplish the best overall result for our clients.

Buyer’s Remorse Over Separation Agreements in Divorce

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We can all relate to the following scenario: after many long and grueling hours on the phone and in meetings, you and your client have settled his divorce outside of the courtroom.  Everyone is relieved that they only need to go to court once, and that is to have their separation agreement approved by a judge.  But let’s face it — every divorce lawyer has, had or will have a client who experiences “buyer’s remorse” after reaching an agreement with their spouse.  Your client has “buyer’s remorse” because s/he is afraid s/he made a wrong choice; believes that their spouse took advantage and/or tricked them during the negotiation or your client feels guilty for “giving away the whole farm.”  Whatever the reason may be for their “buyer’s remorse” your client regrets the deal s/he made with their spouse and now wants to change the terms of the divorce agreement.  So, what do you do now?

There may be an opportunity to modify and revise the separation agreement but it depends on your client’s circumstances.  The provisions of the statute are very specific to the filing of a Joint Petition for Divorce.  As we all know, according to G.L.C. 208, § 1A, after the parties’ separation agreement has been presented to the court, the court shall make a finding within thirty days as to whether or not an irretrievable breakdown of the marriage exists and whether or not the agreement has made proper provisions for custody, support and maintenance, for alimony and/or for the division of marital property.  If the court finds that an irretrievable breakdown of the marriage exists and the separation agreement does make proper provisions for custody, support, alimony and/or disposition of marital property, the separation agreement shall be approved by the court and a judgment of divorce nisi is entered thirty (30) days later.  If the court finds that the separation agreement does not make proper provisions for custody, support and maintenance, for alimony and for the division of marital property, the separation agreement shall be null and void and have no further affect on the parties.

The statute further provides that if after the separation agreement has been approved but before a judgment of divorce nisi has been entered (90 days from date of the judgment of divorce nisi), the separation agreement can be modified by agreement of the parties and the court’s approval.  The separation agreement can also be modified upon petition to the court by one of the parties “after a showing of a substantial change of circumstances” and that the parties’ modified agreement shall continue as a court order.  Another possibility (but one that I have yet to experience) is where the Joint Petition for Divorce is withdrawn by mutual agreement of the parties.

In the circumstance where the scheduled 1A hearing has not yet occurred but a party has a change of heart regarding the agreement, the party may file a motion to strike the separation agreement for the judge’s consideration.  In ruling on the motion the judge must decide whether or not the separation agreement made proper provisions for custody, support and maintenance, for alimony and/or for the division of marital property as well as whether the agreement was fair and reasonable and free of fraud under the standard set in Dominick v. Dominick, 18 Mass.App.Ct. 85 (1984).

Regardless of whether you filed a Joint Petition for Divorce under M.G.L.A. c. 208, § 1A of a Complaint for Divorce under M.G.L.A. c. 208, § 1B — What happens when the judgment for divorce nisi has been entered but the 90 days has not yet passed for the judgment to become absolute?  Per M.G.L.A. c. 208, § 21, the judgment of divorce shall become absolute unless a court orders otherwise for sufficient cause.  A party must make an application to the court to prevent the judgment of divorce from becoming absolute.

The spouse who has “buyer’s remorse” for whatever the reason may file a statement of objections with the court to prevent their judgment of divorce nisi from becoming absolute.  M.G.L.A. c. 208, § 21; Mass.R.Dom.Rel.P.R. 58(c).  The statement of objections must be fact-specific and must be accompanied with an affidavit.  Of course, notice of the objections must be given to the other party no later than the day of filing.  The portion of the judgment that is objected to, and only that portion, will not become absolute until the objections have been disposed of by the court.  If the objections are dismissed by the court, the judgment becomes absolute as of 90 days from the initial judgment of divorce nisi.

It is important to mention that the death of a spouse during the 90 day nisi period prevents the judgment of divorce nisi from becoming absolute.  The death of the spouse dissolves the marriage and not the divorce absolute because it has not occurred yet.  As a practice tip, you may include language in the separation agreement that the separation agreement takes effect as of the date of the court hearing under M.G.L.A.  c. 208, § 1A, and absent any countervailing equities, said provision may be enforceable if a spouse dies before the judgment of divorce nisi is entered or becomes absolute.

In summary, most of the divorces we settle are left alone by our clients and their spouses.  However, there are occasions where we will need to vacate a judgment of divorce nisi and address our client’s “buyer’s remorse”.