One difficult aspect of a divorce is the division of property. In Massachusetts, property must be divided “equitably”; which means taking into account factors such as:
With respect to property, division, there are a few important aspects that should be understood:
Some types of property that would not seem divisible but in Massachusetts are, include: club memberships, frequent flyer miles, professional season tickets, timeshares, artwork, etc. While the property itself may not be divisible (like a timeshare) the fair market value of the property will be considered, and the spouse not receiving the property may receive other property to make up for the difference.
Below is a list of property types and potential ways in which such property might be divided:
Real property – Real property can be given to the title holder, assigned to the other spouse or sold to a third party, and proceeds from the sale divided between the spouses. If there are children that live in the home the division of the asset can be postponed until a set date or event occurs.
Retirement and benefit plans – Retirement and benefit plans are subject to equitable division upon divorce. Typically, one of two approaches is taken: (1) one spouse (usually the one holding the retirement plan) will pay to the other spouse (or have other property given to the other spouse) an amount equal to one-half of the present value of the benefits, or (2) a qualified domestic relations order (QDRO) is entered, which gives the non-employee spouse the right to receive their fair share of the benefits in the future when such benefits are paid.
Closely held family businesses – Normally the spouse who retains the business will forgo another asset or pay the other spouse the lump sum amount for the spouse’s share of the business. The valuation of the business is usually done by an outside expert.
Premarital Assets – Assets acquired before a marriage may be subject to division if there is no prenuptial agreement in place. In a short-term marriage it is less likely that premarital assets will be divided. In a lengthier marriage, if the asset can be deemed as brought into the marriage, the chances of division are more likely; particularly if such assets were “co-mingled” or not kept separately from the marital assets.
Potential damages – If a cause of action accrues, such as a injuries from a car accident caused by another driver, any potential future damages are part of the estate and potentially subject to division by the court.
Other Assets – For paintings, pets, livestock, jewelry, timeshares, treasures, club memberships, season tickets, etc., it may be hard to determine a valuation. When valuation becomes an issue, these items may be used as “trade-offs” for other assets in the property division process. . Trade-offs are when one spouse is willing to relinquish his/her rights to a portion of the estate in return for keeping another portion of the estate.
Debts and liabilities – Loans on assets jointly owned or used by the couple will often be assigned equally. Loans in a particular spouse’s name tend to be delegated to that spouse (car loans, educational loans, etc.). Credit card debt tends to be trickier and will often be divided under the court’s discretion unless one party can show that the debt belongs entirely to the opposing spouse.
How and when are the assets valued? The valuation date for marital assets is usually the date of divorce but the court may specify another date prior to the date of divorce if it makes sense to do so. The division date also tends to be the date of divorce. In some cases, property division may be postponed until a certain event occurs. In these cases one spouse may have to wait until that event occurs before receiving such assets.
Property division in not taxable.
Property division cannot be undone simply because one person later decides that they did not like their settlement. It’s important to seek experienced counsel at the outset of a divorce who will be focused on getting you the best result possible; particularly with respect to the assets that are the most important to you.
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