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Division of Property on Divorce

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Distribution of Property on Divorce
Twend v. Twend, 2014
In 2013 after 42 years of happy marriage and the enjoyment of raising three children Lauren Twend filed for divorce. The parties, residents of Massachusetts, Lauren Twend – the petitioner, and Bill Twend – the respondent still being on good terms had agreed to resolve all issues relevant to divorce proceeding in a civilized and mutually satisfactory manner. In awarding alimony and division of property the Court is facing the following tasks to resolve: (1) division of jointly held assets; (2) division of assets held solely by Bill that includes his inheritance; (3) award of alimony, if any; (4) miscellaneous (health insurance, attorney fees, etc).
Statutory Framework
Because there was no alimony jurisdiction in common law, “the power to grant alimony was wholly statutory.” Gottsegen v. Gottsegen, 397 Mass. 617 (1986). The court’s authority in granting alimony and in distribution of family assets was set in M.G.L.A. c. 208, § 34, which requires consideration of certain mandatory factors: “the length of the marriage, the conduct of the parties during the marriage, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties, the opportunity of each for future acquisition of capital assets and income, and the amount and duration of alimony . . .” M.G.L.A. c. 208, § 34. Certain alimony provisions are listed under M.G.L.A. c. 208, § 48-55 as well. Under the equitable distribution of property during the divorce proceeding, the court may assign to one party in a divorce proceeding all or part of the separate nonmarital property of the other. M.G.L.A. c. 208, § 34. The court will also consider “the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates and the contribution of each of the parties as a homemaker to the family unit.” M.G.L.A. c. 208, § 34. Thus, the contribution of the parties to the marital partnership is “the touchstone in an equitable division of the marital estate.” Moriarty v. Stone, 41 Mass. App. Ct. 151 (1996). Within these statutory constraints, the court will exercise broad discretion when making an award. Drapek v. Drapek, 399 Mass. 240 (1987).
Relevant Findings to Determination and Distribution of Marital Assets
The court considers all relevant factors under M.G.L.A. c. 208, § 34, and does not consider all irrelevant factors, i.e. outside the statutory limitations. The court made numerous findings regarding the statutory considerations. The parties were married for 43 years (long-term marriage, for the purposes of M.G.L.A. c. 208, § 49). Although both parties contributed to the marital enterprise, Lauren was the primary caregiver to the children and assumed all household related obligations while Bill was financial contributor working as CEO, as he still does, in the family business. Lauren would need assistance in meeting her everyday expenses, and Bill does not require such assistance and has the ability to contribute to the expenses of Lauren.
As for Lauren’s earning capacity, the court found that Lauren who worked as an administrative assistant at the early years of their marriage, had not worked in any capacity for 30 years, and primarily due to her age will not be able to regain any employment. In consideration of those findings, the court determined that Lauren is entitled to spousal support or/and part of the jointly owned or/and part of Bill’s estate, in addition or in lieu of alimony. M.G.L.A. c. 208, § 34. The court in awarding alimony does not consider earnings she could potentially have had as an administrative assistant, or owner of a catering business in light of the significant period since her employment and highly stipulated potential income from never existed catering business. Woodside v. Woodside, 79 Mass.App.Ct. 713 (2011). Myriad of other factors within M.G.L.A. c. 208, § 34 are discussed below.
Among other consideration in establishing the measure of support and award of the marital asset are length of the marriage and manner, in which parties while married, have lived. The standard of need is measured by the “station” of the parties—by what is required to maintain a standard of living comparable to the one enjoyed during the marriage. Grubert v. Grubert, 20 Mass.App.Ct. 811 (1985). The Twends have lived middle/middle-high standard of living including summer vocations at the family lake house, family trip to safari in Africa, college graduate children, marital home currently valued at $1.1 million, Bill’s Investment Account funds (now valued at $30 million), jointly owned assets of $1 million; Bill became CEO at the family business with the current salary of $2 million per year. Thus, the marital assets should be allocated the way that preserves the standard of living the party enjoyed prior to divorce. Under M.G.L.A. c. 208, § 49, the duration of the marriage plays a crucial role in determining the term in which alimony, if any, is going to be paid. Under above stated provision, the court may order alimony for an indefinite length of time where the marriage lasted more than 20 years. Here, the marriage lasted 42 years, excluding the last two years of separation, thus, the court reserves the discretion to order an indefinite term alimony. Absent a good reason, in a long term marriage like Lauren and Bill, there is no justification to lower one spouse’s standard of living, in this case Lauren’s (as unemployed housewife) while the other’s, Bill’s, remains high. Thus, marital home, jointly owned assets, Bill’s solely titled summer lake house and Investment Account, all in their current value, will be subject to high scrutiny while allocating those assets to either or both spouses.
The main purpose of M.G.L.A. c. 208, § 34 is “to recognize and equitably recompense the parties' respective contributions to the marital partnership,” including non-financial contributions. Heacock v. Heacock, 402 Mass. 21 (1980). “Contribution” should be read in a broad sense, not limiting to only financial input of the spouse. The court requires more than mere determination of which spouse’s money bought particular asset. The court weights whether Lauren contributed, directly or indirectly through homemaking, to the generating of the marital assets and to the success of Bill’s enterprise. Lauren was committed to taking care for the children, overall for 22 years. In addition, cleaning, organizing everyone’s lives, and meal preparation became her everyday routine. As the children grew, she also took of most chauffeuring, homework duty, doctor’s visits, etc. Lauren’s contributions to Bill’s career should not be underestimated. Hosting dinners for Bill’s business colleagues indirectly contributing to the successful relationship of Bill with his colleagues, i.e. to the success of the company overall, possibly enhanced likelihood of escalating money derivatives. Taking care of the children and house extended Bill’s available hours for pursuing his career goals.
M.G.L.A. c.208, § 34 allows the court to “assign to either husband or wife all or any part of the estate of the other.” Under our law, a party's “estate” includes all property to which a party holds title, however acquired. Drapek v. Drapek, 399 Mass. 240 (1987). The Court makes determination that Bill’s inherited Investment Account, currently valued at $30 million, and vocation house on the lake of $3 million are part of the marital estate for purposes of possible division under M.G.L.A. c. 208, § 34. As it has been said above, the court considers contributions of each of the spouses. Here, considering the financial contribution of the wife is minimal, such a disparity of contributions may be reflected in the division of inherited assets. Another reason for such determination is Lauren’s reliance on the vocation home. Bill inherited lake house in 1980. The house has been in family’s possession for over 30 years, the family spent every summer in the lake house, Lauren and Bill’s children with families of their own are still visiting the house. The house carries a lot of sentimental value for both of the spouses and their children. While the house is within marital asset boundaries, the court exercises its discretion on whether to sell the house and divide the proceeds from the sale or leave the house in the joint ownership of both parties.
As for Investment Account, the court will consider the source of these assets, each party’s role in managing the assets, and whether the assets in question had been kept separate or commingled with the couple's jointly owned property in the assignment of this asset. Williams v. Massa, 431 Mass. 619 (200). The court made the following findings. In 1980, already being married to Lauren, Bill inherited $10 million in investments. Throughout the course of 34 years, the investment account incurred $20 million in appreciation value.
The court will consider those factors one by one. Source of the asset is clear. Investment account is inheritance acquired while being married, titled in Bill’s name alone. Under M.G.L.A. c. 208, § 34, the court may assign to either party all or any part of the estate, including “rights and funds accrued during the marriage.” M.G.L.A. c. 208,
§ 34. Most of its value (2/3) the investment account generated during the years of the marriage while Bill working in the family business and Lauren being a housewife. Though the initial value of $10 million is inherited, consequently Bill played insignificant role in the cause of generating $20 million in appreciation. Essentially, the interest derived is a passive income. Bill took no part in managing this asset and did not keep this account separate from other family property. The family used funds from Investment Account to buy the marital home in 1981 for $220,000, without taking out the mortgage on the house. They have also used funds periodically for major family expenses, such as nurses to provide care for one child and $50,000 family safari in Africa. In total, about $300,000 from Investment Account has been used for family purposes. It could be ascertained the family relied on these funds in a case of need. The fact that Lauren did not directly contribute to the family business will not override her nonmonetary input in the success of family enterprise. In Williams v. Massa, 431 Mass. 619 (2000), the court awarded inherited trust to the husband not because it was listed as an inherited asset, but because the afore mentioned considerations were not satisfied, which is not the case in the Twends divorce action.
It is to be said that neither party assumed any responsibility in managing the Investment Account assets, and the funds were not separate from the rest of marital property. Within the statutory provision of M.G.L.A., appreciation value incurred during the marriage in the amount of $20 million is to be allocated to both parties.
The interest income, which derives from Investment Account, shall be considered under the § 34 criterion of “opportunity of each for future acquisition of capital assets and income.” The estimated value of such interest income is highly speculative. This interest is a mere expectancy, which is not sufficient property interest to be considered a part of the marital estate. Davidson v. Davidson, 19 Mass.App.Ct. 364 (1985). Parties do not contend the allocation of jointly owned assets, which constitutes $2.1 million including the marital house, in the 50%/50% proportion. The current value of the marital home is $1.1 million leaving the remainder of joint assets in the amount of $1 million. The division of assets in half will require the sale of the marital house with proceeds from the sale to be divided equally and allocation of $500,000 to each party. The court will not force the sale of the marital home. In lieu of part of the alimony, the house is to be assigned to Lauren, while Bill will retain $1 million of jointly owned assets. Bill will recover $50,000 allocated in excess to Lauren, in computing alimony or in allocation of other assets.
Alimony Award
The fundamental purpose of alimony is to provide economic support to the dependent spouse.
Pursuant to set standards in determining the appropriate form of alimony, the 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; 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;” M.G.L.A. c. 208, § 53. The considerations of this statute directly echo the factors set forth in provision § 34. Despite the fact that alimony and property division serve different purposes, they are interrelated remedies that cannot be viewed apart. D.L. v. G.L., 61 Mass.App.Ct. 488 (2004) The decisions to be made in distribution of property will directly influence determining the form of alimony.
Petitioner is entitled to the general term alimony – the periodic payment to a spouse that is economically dependent. The court discussed above the particulars of Lauren’s needs. The court will look further in the Bill’s ability to pay. Bill’s current salary and other remunerations from the family business amount to approximately $2 million per year. Income for purposes of alimony is calculated on the basis of gross income, that is, pretax income. M.G.L.A. c. 208, § 53 (b). Pursuant to M.G.L.A. c. 208, § 53 (b), alimony should not exceed the recipient’s need or 30% to 35% of the difference between the parties’ gross income. Under M.G.L.A. c. 208, § 53 (c), the court shall exclude from its income calculation “interest income which derive from assets equitably divided between the parties under § 34.” M.G.L.A. c. 208, § 53 (c)(1). Under afore mentioned statutory provisions Lauren is awarded 25% of Bill’s annual income which is $500,000/annually. Though, in consideration of $50,000 owed by Lauren to Bill in awarding marital house, Lauren’s first year alimony will constitute $450,000, with $500,000 the following years. This amount covers all her needs under M.G.L.A. c. 208, § 53 (b) and allows Lauren to maintain life style close to which Lauren had become accustomed during the marriage.
Under M.G.L.A. c. 208, § 49 (c), Lauren is entitled to alimony for an indefinite length of time. Bill contends that he is ready to pay alimony until he retires, but nothing after that. Bill was born in 1952, assuming that at the moment of the trial he is 62 years old. The earliest a person may start receiving his Social Security retirement benefits is at the age of 62. There is a slight chance Bill would retire not long after the divorce proceedings. His full retirement age is 66. The latest he would start his social security benefits is at his full retirement age. If Bill’s argument satisfied, in the best case scenario, Lauren would loose her spousal support in approximately four years. Due to the above-mentioned considerations, the court orders the payment of spousal support at stated amount of $450 first year and $500,000 subsequent years, continues until her death or remarriage. In granting the deviation of alimony termination date the court followed the provisions of M.G.L.A. c. 208, § 49 (f)(1).
Finally, Bill Twend is obligated to provide health insurance and the cost of health insurance for Lauren, in consideration of her age.
Each party covers attorney fees independently.
Tax considerations are not raised in this decision.

Summary of the final decisions of the court in distribution of marital assets.
The summary includes final decisions in distribution of marital assets not disclosed in the discussion above. | Lauren Twend | Bill Twend | Jointly owned assets, including marital house | Marital house valued at $1.1 million (in lieu of alimony). | $1 million in cash assets | Investment Account | 50% of appreciation – $10 million. | Initial value of the Investment Account – $10 million;50% of appreciation - $10 million.Total: $20 million. | Summer lake house | Summer lake house Jointly owned – alternating who attends. If parties agree on selling the house – the proceeds from the sale are divided in half. | | Share of the house: $1.5 million | Share of the house: $1.5 million | Alimony | $450,000 first year;$500,000 the subsequent years. | n/a | Health insurance | Provided by Bill Twend until her death or remarriage | n/a | Attorney fees | Covered by each party independently. |

The court exercised the broad discretion in allocating the marital assets and awarding alimony. The court weighed all the statutory factors in reaching this decision and considered no extraneous factors.

--------------------------------------------
[ 1 ]. Years raising children – 1974 to 1996. 1974 – first child born; 1996 – third child majority age. 1974 to 1996 – 22 years.
[ 2 ]. 1980 – inherited. 2014 – trial proceedings. 1980 to 2014 – 34 years.
[ 3 ]. Current value - $30 million. Initial value - $10 million. 30-10=20. Appreciation value - $20 million.
[ 4 ]. In the absence of definite character of assets, it is assumed to be cash or cash equivalent.
[ 5 ]. Lauren is awarded $1.1 million house and Bill $1 million in cash assets. While 50/50 allocation would have been $1,05 million, Lauren is assigned $50,000 more than Bill. This contradicts court decision in allocating assets 50/50. Thus, Lauren ‘s excess amount is to be subtracted from her alimony award.
[ 6 ]. For the purposes of this exercise, salary of $2 million per year considered as gross pretax income, exempt interest income.
[ 7 ]. Source www.ssa.gov

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