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Divorce Mediation Blog

WHAT THE #%&*?! Or, Yikes, It’s the Probate Court: Creedon v. Haynes

Wednesday, December 07, 2016

Preface: We love the Probate and Family Court. It struggles daily with unrelenting demand, a vulnerable population, a crumbling social safety net, short staffs and an indifferent funding legislature. Between us, we made our living, and served, in the Probate Court for more than 5 decades. But, sometimes, you just shake your head, and say “You can't make this stuff up”. This is one of those days.

Creedon v. Haynes is a perfect storm of Massachusetts Probate and Family Court dysfunction:

    A separation agreement and divorce judgment required the husband to designate his children as beneficiaries of an existing life insurance policy with death benefits of $100,000.00.

    It didn’t specify any security purpose for the insurance benefits.

    He didn't have a life insurance policy.

    The Wife sued in contempt.

    A judge found Husband in contempt from the bench.

    The judge didn’t issue a paper judgment.

    The judgment never entered the docket.

    The wife asked that the court issue a written judgment.

    The contempt the judge had retired, so a new judge heard her motion.

    The new judge dismissed the wife’s contempt complaint because the children were adults.

Say, what?

Five years after the start of the contempt action, the Massachusetts Appeals Court reversed the dismissal and ordered the Probate Court to reduce the retired judge’s decision to writing. The appellate panel recounted, without any irony, its own decision to obtain the docket from the Probate Court, to search for the contempt judgment. Few Probate Court veterans are surprised to learn that the docket disclosed nothing useful.

How the wife successfully entered the appeal, without a paper judgment or supporting trial court docket entry, is mystery enough.

How the second Probate Court judge dismissed a complaint after her former colleague purported to enter judgment, on her own, and without request by the defendant, is equally curious.

Whether the first judge actually did not produce a written judgment, or if it somehow died in dictation, or if it sits in a dusty pile of paper somewhere in the courthouse to this day, is something that we will never know.

But, the wife will get her judgment; and, someday, she just may need to do something with it. Except, of course, when the wife finally does obtain her written judgment, and if it is docketed, the husband's appellate rights will begin.

Oh, my.

 

Proposed IRC §2704: Life Imitating Divorce?

Wednesday, October 12, 2016

We receive newsletters from several CPA firms, and they are often both informative and useful. Recently, they are aflame with comment on proposed IRC §2704, issued by the Internal Revenue Service on August 4th. Section 2704 would limit or eliminate the use of discounts for lack of control and lack of marketability for businesses being valued for estate and gift tax purposes: raising values and taxation on intergenerational transfers; and challenging estate planners in crafting tax avoidance/minimization strategies.

To accomplish this, we understand, the proposed rule includes minimum valuation rules (pro rata share of net worth); mandated disregard of ownership agreement and state law restrictions on stock transfers; and close scrutiny of personal goodwill, size and customer concentration concepts as value reducers. Valuation experts and estate planners promise complexity, uncertainty, litigation and general misery ahead. Among other things, critics opine that treating highly illiquid assets, as most small businesses are, as liquid, indulges a fiction that will undermine families’ ability to preserve businesses across generations.

In divorce world, we have seen this movie before. Since 2007’s Bernier v. Bernier, Massachusetts has led the way in severely limiting -- all but abolishing -- the application of discounts in valuation: rejecting the concept that divorce valuation is based on a hypothetical sale, with attendant discounting; and analogizing divorce, instead, to that of the involuntary purging of a shareholder from a going concern for which sale is not, in fact, contemplated. Fair value, rather than fair market value,now holds sway in most cases since business owners can’t dispose of their firms – quite apart from market realities – because they, and their families, depend on the businesses for their economic support. As with proposed §2704, the result of Bernier is higher valuations that often disregard business realities, to the consternation of business owners.

Policy is shaped by goals. In Bernier, the Supreme Judicial Court felt it unfair to reduce the non-owner’s sharing of value when continued operation is the value to the holder, and ruled accordingly. The government wants more tax receipts and the I.R.S., exists to collect it. No surprise there.

Is Bernier the chicken to the federal government’s egg?

 

O Pfannenstiehl! Part 7: The Eagle (SJC) Has Landed

Wednesday, September 14, 2016

The 2015 Massachusetts Appeals Court case of Pfannenstiehl v. Pfannenstiehl was so problematic and peculiar that that we published 6 previous blog entries about it. We hoped that the Supreme Judicial Court (SJC) would accept the husband’s request for further appellate review, and it did, on the trust issues only. Happily, it did, and when the SJC issued its decision in August, it reversed the Appeals Court’s split decision.

In the process, SJC furthered our understanding of just when a trust interest is, or is not, a marital asset that is subject to division in a divorce case. In deciding that Mr. Pfannenstiehl’s interest was too speculative to be deemed an asset, the court avoided the equally vexing question of how to value an interest when it is properly found to be an assignable asset; so, that is left for another day.

The SJC attacked the problem from two vantage points: 1. Was the trustees’ authority such that the husband could have a legally enforceable interest? 2. If so, was the husband’s interest, as one of 11 living beneficiaries, subject to expansion by reason of newly birthed issue, sufficiently discernible to call it an asset and assign an interest in it to the wife?

The answer on each was a resounding “no”.

The critical language was that the trustees:

“… shall pay to or apply for…

… any one or more of the Donor’s then living issue…

… such amounts of income and principal and income…

… in [the trustees’] sole discretion…

… in equal or unequal shares…

… for the comfortable support, health, maintenance, welfare and education of [the beneficiaries]...”

The wife, and the Appeals Court, focused on the “shall” and the so-called “ascertainable standard”, i.e., the “comfortable support” clause, to argue that the Husband could plausibly force the trustees to make any distribution to him that qualified under that standard. An enforceable right equals an asset, they reasoned.

The husband, and ultimately the SJC, instead seized on the open class of beneficiaries, “sole discretion” and the “equal or unequal shares” leeway, to undermine the claim that the Husband could really enforce anything. Because the donor vested the trustees with sole discretion, because some beneficiaries could receive less than others – including nothing – and because the husband’s interest could be diluted by the birth of new beneficiaries, the SJC concluded that there was nothing to enforce; hence no asset; but rather a mere “expectancy”, i.e., an economic factor but not a divisible asset under equitable division law.

The facts bore out the high court’s analysis. To the point of the parties’ divorce, only 3 of the 11 beneficiaries had received anything from the trustees. What the husband and his siblings did receive varied year-to-year, heavily dependent on the productivity of the trust res, which was stock in the donor’s company. When divorce hit, distributions for the husband stopped cold. Could they resume? Sure. Was there any legal path for the husband to compel resumption. Not by the SJC’s light.

The substantial history of trust distributions to Mr. Pfannenstiehl constituted an important financial consideration for this divorcing family, which, however, did not make it any more enforceable, the court analogized, than social security. The SJC remanded for reconsideration of the trial court’s decision to not award alimony to the wife, with language that could even justify a reconfiguration of the remaining marital assets, as impacted by the potential quantum of the husband trust expectancy. But, assignable property? No.

The bottom line for practitioners is that the financial history of the trust matters, but trust language really matters. The trial court’s charge is to determine, as nearly as possible, what the donor intended, as gleaned from the trust instrument. By that measure, this was not a hard case.

Now, one of these days, we are going to get a case that tells us something about how to value a trust interest that is a marital asset.

 

O Pfannenstiehl! Part 5: No Wonder We’re All Confused (The Fruit of the Poisonous Tree)

Tuesday, November 24, 2015

It started with an "easy" case.

In 1991's Lauricella v. Lauricella, the Massachusetts Supreme Judicial Court (SJC) Court first decided that a trust was not a trust, for divorce purposes. The facts were compelling:

  1. a simple trust (settled by the husband's father, with only two beneficiaries living, the husband and his sister, until divorce eve amendments diluted the husband's share),
  2. a single asset (2-family home in Newton),
  3. inarguable entwinement (the parties' marital home),
  4. economic dominance of the marital estate (as found, the parties' largest asset),
  5. a financially vulnerable spouse (a non-beneficiary wife who was both primary caretaker of children and possessor of "a relatively low income capacity"), and
  6. recent precedent, albeit from a lower court, in the Appeals Court's 1985 Davidson v. Davidson (holding that a remainder interest could be an asset).

In Lauricella, SJC Justice John Greaney made short work of the trial court's finding the trust "not per se" connected to the marriage, thereby excluding of the trust interest from the divisible estate. After all, Massachusetts embraces a broad view of what a "marital asset" is, including the intangible, the unvested, the fractional, the difficult-to-value and the illiquid. In essence, the SJC decided that the equities of the situation -- the demand that the court find "fairness" -- trumped a valid spendthrift clause, which would not stand as a firewall between the settlor's intent and the judicial power of equitable division.

By retrospect, Lauricella was a ripple in the family law pond. After all, the facts made an equities-based decision defensible. The corpus was the family home. Trust restrictions looked illusory. Last minute trustee machinations suggested victimization. Compared to Davidson, the SJC's leap over the spendthrift clause was unsurprising, and in the moment, comparatively benign.

In the interim, we have received a number of consequential trust/divorce cases, including, SL v. RL, DL v. SL, Williams v. Massa; and Rule 1:28 Appeals Court decisions, most notably, Krintzman v. Honig I and II. These cases address how to discern an includible trust interest from one that is too speculative or remote to be termed an asset (the first two), and when circumstances suggest that exclusion is equitably appropriate, as in Williams. Krintzman upheld a trust's inclusion, but vacated an "if and when" economic assignment as illusory, under the facts of that case.

But, none of these cases taught how to place a value on a trust interest, which the Lauricella court, perhaps with unintended irony called, "obviously... not difficult", in its case (focusing on the underlying asset, while begging the question of the husband's shared beneficiary status with his sister).

Until now.

Now, Lauricella may be seen as a ripple turned tidal wave, in the 2015 form of Pfannenstiehl v. Pfannenstiehl, which its critics call the final sublimation of trust law to divorce; where a complex intergenerational trust interest, with an expandable class of 11 living beneficiaries and a discretionary, if ascertainable, standard for distribution, is termed a marital asset, valued as 1/11 of trust corpus market value, and paid out over time to a non-beneficiary.

We know, for certain, that Mr. Pfannenstiehl has asked the SJC to review and reverse the Appeals Court decision. It seems increasingly likely to us that the SJC will accept the challenge, and grant further appellate review.

If they do, this is the time for the high court to look at this issue globally; to create broadly applicable rules for the treatment of trusts in divorce; and modifying or abandoning precedent as necessary, to bring order out of the chaos of this problematic area, which straddles, and mutually hobbles, the family law and estate planning worlds.

In our final (!) Pfannenstiehl entry, we will think through, and speculate a bit, on what the SJC justices might do, if they take the case, as we surely hope they will.

 

O Pfannenstiehl! Part 4: No Wonder We’re All Confused (Equities Trump Law?)

Wednesday, November 11, 2015

In his recent blog entry about the Massachusetts Appeals Court case, Pfannenstiehl v. Pfannenstiehl, at http://www.margolis.com/our-blog/does-recent-divorce-undermine-centuries-of-spendthrift-trust-law, Boston estate-planning counsel Harry S. Margolis, wrote that:

    This ruling, which undermines centuries of established trust law, was based in part on the equities of the situation and in part on a misunderstanding of wording commonly used in trusts.

Who are we to argue with Mr. Margolis’ observations about trust law? They sound about right to us. Today, instead, we are focused on the equities, and ask did they trump the law of trusts in the courts?

The facts that the Appeals Court highlighted shone harshly and disparagingly on the husband and his family. The decision recited the relaxed and informal manner in which biased trustees (sibling and family accountant) administered the trust, and their divorce-eve cut off of family benefits, in great detail and with considerable care. The court trashes the trust as a sham, and the husband’s advocacy, as disingenuous at best. The husband’s overpaid, no show, family business job (as in four years of paid leave) is reported, even if marginally relevant. The court also details the wife’s considerable burdens, including her care responsibilities for a Downs child, and the husband and family’s pressure for her to exit military service, just shy of her pension vesting.

The trial court’s action was extraordinary in many ways. After determining that the trust is a devisable marital asset (we don’t find that part surprising), the court completely disregards any of the ways that this generational trust restricts beneficiary access to trust resources. It simply divides the corpus by 1/11, despite those restrictions, and the fact that the beneficiary class is subject to expansion. The court ordered a 24-month cash buy out of the wife’s adjudged interest, irrespective of liquidity, taxation and access issues.

But, beyond that, the court then divided the husband’s family trust interest disproportionately against him, in tandem with an unequal split of the non-trust estate, in the same proportions.

It is not unusual in a case of trust-divorce case, for the court to split the non-trust estate in favor of the non-beneficiary spouse. This is usually a form of compensation for a disproportionate split of the trust asset in the beneficiary’s favor. But, here, the judge favored the wife with 60% of the whole estate, trust included. It is entirely fair to argue, that by valuing the trust as if it were cash in the bank, rather than a discretionary vehicle of future distributions, that the net asset split to the wife is substantially greater than the surface 60%.

How does this square with Moriarty v. Stone, still good law that establishes that “contribution” remains “touchstone” of asset division? Neither party created the trust wealth, so the only contributory link is the husband’s lineage. Do the wife’s overall contributions echo Williams v. Massa, the famous case of the multi-hatted (economic and non-economic) contributor, who kept his trust interest? Not really.

In the end, it does look like the trial court punished the spouse whom she took to be the bad actor, and advanced the interests of the needier, and perhaps more virtuous spouse, notwithstanding the law of trusts. The Appeals Court decision, and its machinations to get a majority, does nothing to dispel that view.

In our next blog, we will turn to how the Supreme Judicial Court may look at the situation, should it accept the case.

 

O Pfannenstiehl! No Wonder We're All Confused Part 1: The Appeals Court's Fuzzy Math

Thursday, October 01, 2015

Lawyers will be talking about the recent Massachusetts Appeals Court case, Pfannenstiehl v. Pfannenstiehl, for years to come.  Decided on the question of what happens when trusts and divorce collide, it is rocking the family law and estate planning bar, alike.  We have read it, read it and read it again; and like pollen in allergy season, and the winter snows of 2015, the head-scratchers just keep coming. 

Over subsequent blog entries, we will address the substance of the case (there’s lots to talk about), but for today, we are most curious about the fact that this controversial decision was decided by one panelist (Justice Berry) of the three who heard the case, while the majority disagreed strongly enough to write (Justice Fecteau) and join in (Justice Kantrowitz) a, exceedingly rare family law dissent, a compelling one at that.

From footnote 2 of the decision, we learn that the panel was “expanded” to include two justices who did not participate in the argument of the case, but jumped in only after the circulation of the opinion.  Admittedly unfamiliar with this process, which struck us a bit like expanding the World Series to nine games because the wrong team won, we read the authority cited, and found that it is grounded in Mass. R.A.P. 24 (a); and that:

    The procedure that was followed reflects a long-standing practice of the Appeals Court, designed to ensure that published opinions reflect the view of a majority of the Justices. See Lyons v. Labor Relations Commn., 19 Mass. App. Ct. 562 , 566 n.7 (1985), indicating that published opinions are considered by the entire court prior to release. In the case of a dissent, if a majority of all the Justices agrees with the majority of the panel, the decision is published as a two to one decision of the original panel. If a majority of all the Justices agrees with the dissent, the panel is enlarged to reflect the view of the majority of the court, generally by adding to the panel the two senior Justices who are part of the full court majority.

Sciaba Constr. Corp. v. Boston, 35 Mass. App. Ct. 181, 181 n.2, 617 N.E.2d 1023 (1993) (our underlining).

Let’s break it down:

  1. In the case of a dissent, if a majority of all the Justices agrees with the majority of the panel, the decision is published as a two to one decision of the original panel.

    The opposite occurred, here. An apparent majority of the court agreed with Justice Berry, who was the minority on the panel.

  2. If a majority of all the Justices agrees with the dissent, the panel is enlarged to reflect the view of the majority of the court, generally by adding to the panel the two senior Justices who are part of the full court majority. 

    The implication is that Justice Berry began as the lone dissenter. She then succeeded in gaining a majority, off-panel, consigning the panel majority to the dissent; and, reversing the will of the panel.

Apparently, the events of this case are not unique, but we presume them to be uncommon. One result of this action is that the Appeals Court negated the majority opinion of the justices whom the litigants assumed, incorrectly, would determine their fate.

Is this good policy? As long as Rule 1:28 exists, might it not have been better to simply allow the panel majority to stand, and if the rest of the justices felt it just, limit its impact beyond the parties themselves, with a non-precedent, unpublished opinion?

Were this case a simple one or if it were unassailable in its analysis and result, this curious procedure might matter a whole lot less. But as we will discuss in subsequent entries, this case is anything but. In our view, it is highly problematic.

We hear that a request for further appellate review before the Supreme Judicial Court is likely (if not already pending); and we hope that the SJC takes it. If so, we also hope that the SJC reviews the “longstanding practice” of re-constituting the panel in these circumstances.

Before Yankees fans were cut down to size in 2004, some used to joke that 1975 was the only World Series ever won, 3-4. Maybe the Series actually did revert to nine games that year, and we all just didn’t know it!

 

It is marital -- or isn't it? Canisius v. Morgenstern

Wednesday, August 19, 2015

The Massachusetts Appeals Court's recent case, Canisius v. Morgenstern, followed substantial precedent for the proposition that contractual rights that accrue during marriage are divisible marital assets, even when the financial fruits of those rights a) may stretch beyond conclusion of the marriage, and b) may be uncertain, even speculative, as to amount or ultimate duration.

In correctly reversing a trial court judge for implicitly excluding potential post-divorce book (and possibly film) income from asset division, the appellate court added royalty rights to stock options, many trust benefits, "guaranteed" partnership distributions and pension plans, a growing list of assets that are divisible despite indeterminate values and time of future enjoyment.

Then, after finding and explaining the trial judge's error, the Appeals Court gave parameters for remand, instructing the Probate judge to revise his property judgment, to include the net-after-tax royalties that the wife may later receive, for "if and when" division. Shadowing the Supreme Judicial Court's Baccanti v. Morton ("time" formula for granted but unvested stock options), the Canisius court preemptively endorsed a "sliding scale of decreasing percentages".

This suggestion was necessary and appropriate to capture the concept that future royalties may increasingly be seen as the product of the wife's post-divorce efforts, where the initial flow of royalties had subsided substantially pre-divorce, and a future revival of fortune would likely arise from the wife's own post-divorce professional efforts, be they purely promotional or by future creativity that causes renewed interest in her inaugural book. Think To Kill a Mockingbird and Go Set A Watchman, but in reverse!

So far so good.

But -- and we wish there weren't a "but" -- the Appeals Court then exceeded all of the Massachusetts precedent on which it relied, by inviting the trial judge on remand to include a "specific termination date." In other words, the wife's royalty rights may be perpetual, but at some yet-to-be defined point, they would cease to be marital at all.

Really? If not so for options, trusts and pensions, then why for royalties?

We understand the court's equitable impulse. The parties were, after all, married for barely 5 years at the time of separation. Doesn't fairness suggest that a time be reached where the relationship of future royalties to the parties’ mutual marital efforts melts to zero? Maybe. But does reason dictate the same result? Probably not.

Think about it. The court concluded that the contract was a product of the marriage. A reducing fraction of division is a proxy for the declining ratio of marital to post-marital efforts. But, once the nexus is drawn on a property theory, how can it be extinguished, let alone merely by time, when the underlying rights persist? Is it not arbitrary to say that the marital gift keeps on giving, but at some point it stops giving to both partners, whose marital enterprise brought it forth? A right is a right, unless it is not.

In fairness, the opinion stated: "That the future royalty, and other payments in the present case are to be divided on an if and when received basis does not require that such payments continue indefinitely." (Italics ours.) Thus, appellate panel did not exactly mandate the result, but it repeated the concept no fewer that 3 times in one paragraph, and its footnote. By doing so, the Appeals Court irrevocably changed the dialogue on remand, and in any future appeal, especially striking since the opinion does not identify it is as an issue that was raised by the trial judge, or by either party on appeal.

Clearly, the Appeals Court could not find Massachusetts precedent to support its time limit suggestion. Its only citation is to Connecticut's Gallo v. Gallo, a 1981 case of the Supreme Court of Connecticut that upheld a sharing of the husband's academic text and workbook revenue, post-divorce, but for a period of 5 years only, with little explanation except its apparent acceptance of the husband's trial testimony that he expected royalties to extend for that time period. If the Appeals Court felt compelled to import authority to establish a time limit parameter, was it prudent to ground it in a case where the foreign court had, in fact, upheld royalty share for the entire expected duration of royalties?

As we have worried in the past here, when appellate courts go beyond what needs to be decided in a precedent case (Canisius is a "reported case", and hence, deemed precedent), the law of unintended consequences too often intrudes.

What facts can this trial judge find on remand to fix the vanishing point of marital nexus? Length of the marriage? A fraction of same? The wife's projection of likely duration? An "expert's" word? We worry that whatever time limit the trial court chooses, as he inevitably will, will simply fuel the next appeal. How then will the Appeals Court discern sound discretion from an abuse?

To say nothing of the fact that that the Appeals Court also said that the "...judge may also limit... amount to be received..."

Stay tuned.

 

What does Pisano v. Pisano mean? (And why was it “reported”?)

Wednesday, July 08, 2015

The recent case Pisano v. Pisano delivers less than its primary key word (premarital agreements) and name (the wife is the late John Belushi’s sister) might suggest. In fact, we wonder why the Massachusetts Appeals Court chose to make a "reported" decision, rather than a Rule 1:28 opinion (issued primarily for the parties, and not intended to be precedent). The case broke no new ground; it did not illumine any previously uncertain rule of law; and, in the end, we are not really sure of the court's reason for reversing. We may not always agree with the appellate courts’ reasoning, but we usually know what it is. Here? Not so sure.

The Appeals Court upheld the discretionary allocation of responsibility for a debt to the wife; and vacated an order for reimbursement of temporary alimony payments made by the wife to the husband, which the trial court had entered after concluding that alimony was precluded by a valid and enforceable pre-marital agreement. Without explanation, the appellate court rejected the "unjust enrichment" remedy that a special master and Probate and Family Court judge concurred should apply.

The alimony ruling was three-pronged. It cited the SJC's Holmes v. Holmes, presumably (because it was not stated) to establish that temporary alimony order authority stands apart, statutorily, from judgments made after trial. Second, the pre-nuptial agreement didn't explicitly mention temporary alimony. And, third, the court reported that the wife did not insist that the pre-nuptial agreement barred the temporary alimony order before its entry, but rather, she proposed a lesser sum than the husband sought. Thus, the court implied but did not expressly say that she gave up her right to complain later about the $32,000.00 of payments that she made, from sources that a master and two courts all agreed were derived from a validly prohibited source. v So, which factor killed the wife's alimony reimbursement claim: Holmes, the agreement or maybe-imputed waiver? If the case is intended as precedent, should we be left to wonder? Ironically, given our recent blog about Rule 1:28 decisions, maybe this case should be among them.

 

Who Says that Mediation Needs Reclaiming?

Wednesday, April 01, 2015

Maybe we are the victims of poor training, but we don't think so. In fact our training was pretty good. At core, we learned that divorce mediation is:

A confidential...form of structured negotiation designed to help the clients reach an informed agreement with the assistance of one impartial mediator...the goal of mediation is to reach a fair and lasting agreement, one which will be approved by the appropriate court and allow the clients to divorce. Read more

 

Another Rehabilitative Alimony Case Highlights Important Issues, But Muddles Need Further: Vedensky v. Vedensky – Part 1

Wednesday, January 07, 2015

The New Year began with the January 2d release of an alimony case, Vedensky v. Vedensky, by the Massachusetts Appeals Court. It is noticeable for several reasons:

  1. It is the latest in a line of cases addressing rehabilitative alimony, that until 2012, was exceedingly rare in Massachusetts, but which has dominated alimony case law development since;
  2. The court clarified the concept of an “earlier judgment” when determining whether a “material change of circumstances” has occurred that may justify a modification of alimony;
  3. The case drew a clear line on the question of second or secondary jobs that a payor obtains after divorce, and tied it to income attribution rules;
  4. The panel approved application of Social Security Administration (SSA) disability rules in defining a partially disabled recipient’s income capacity; and, finally,
  5. The Appeals Court unfortunately muddied the increasingly murky waters of “needs” in relation to alimony rights.

Determined to start 2015 in a positive note, we will discuss the first four points here, and the last, lamented, one in a separate, subsequent entry.

The rehabilitative alimony phenomenon. An out-sized proportion of the appellate cases decided under the Alimony Reform Act (eff. 3.1.12) to date are appeals from rehabilitative alimony awards. While this short-term support remedy was never foreclosed here, its application was inhibited by case law prohibitions on pre-determined termination dates generally, which was itself a major spur for the reform effort. This must be a popular part of the new statute, causing rapid case law development as judges grant rehabilitative orders and necessarily grapple with it conceptually, and with the relevant factors to apply all alimony questions, namely ability to pay and the needs of the recipient. It also means that rules that will more often apply to general term alimony (we assume) are being made in the less usual context of fixed, short-term support. We wonder how this may impact those rules.

The applicable judgment against which to measure change. The alimony question in Vendensky was advanced by a 2011 complaint for modification brought by the former husband. The parties did not make alimony provisions in their divorce agreement/judgment, but they expressly reserved the parties’ rights to seek alimony in the future. They stipulated to child support orders, paid by husband to wife. In 2007, the husband sought reduction of child support because of job loss, psychiatric disability and SSA disability dependent payments now payable to the wife. He succeeded. When his disability persisted, the husband brought his alimony modification action.

The wife advanced a defense that the action was barred because the Husband’s employment problems (he had actually become partially re-employed) and disability had preceded the child support modification judgment. Predictably, she argued that since no material negative change occurred since that judgment, it was impossible for the husband to meet his burden of proving material change to justify further support relief. The husband argued, and the trial judge and Appeals Court agreed, however, that the material change burden ran from the facts existing at the time of divorce the last time that alimony was addressed (i.e., no disability or employment problems); and not from the later child support modification judgment, when alimony was not in issue.

This was an important decision, if not entirely novel. To find otherwise, the appellate court reasoned, would compel parties to seek alimony when it is not needed, so as to protect against being foreclosed from requesting it a later date when it might become necessary.

Second or secondary jobs. The wife is a doctor who had a primary full time job that she elected to augment with per diem moonlighting at a rehabilitation hospital, post-divorce. In evaluating her ability to pay alimony, the trial judge included the income from her second job when calculating the wife’s income available for support, despite the presumption of M.G.L., chapter 208, section 54(b) that suggests that such earnings not be considered. Overreaching further, the judge imputed income to the wife by finding that she could make even greater income money by moonlighting more!

The Appeals Court correctly vacated these income findings because the Probate and Family Court judge did not find any facts that amounted to a rebuttal of the presumption against including the wife’s second job income, especially, here, where the wife was working a side-job as primary caretaker of the parties’ children, with no financial contribution from the husband (other than SSA payments on his behalf). The double insult of attributing income to the more than fully employed wife was equally out-of-bounds, the appellate panel found, since the judge did not find, and could not have found, the wife to be “underemployed”.

The Appeals Court intersected the two statutory provisions with one concise ruling, that:

    … a party who works at a full-time or full-time equivalent job may not be found to be “unemployed” or “underemployed” based on the level of compensation received from a second job obtained “after entry of the initial order” unless a judge concludes…that a basis exists for rebutting the presumption of immateriality applicable to the income earned from the second job.

A useful and sensible conclusion.

The husband’s income capacity. The trial judge determined the husband’s present income capacity to be the maximum earnings that the husband may earn under SSA regulations without jeopardizing his disability benefits during the rehabilitative alimony term selected (2 years). The wife argued for a less restrictive measure, specifically the SSA standard that applies at the outset of disability payments. The Appeals Court agreed that the trial court was justified in crediting the standard prevailing at the time of his decision, during a period when the court is expecting the Husband to be working towards a return to full time work, as indicated by counseling orders and the 2-year alimony term. This is a relatively narrow ruling on very specific facts, but it is respectful of the trial court’s sound discretion.

The result and the husband’s needs. The Appeals Court reversed the Probate Court’s judgment because the judge’s over-counting of the wife’s income may have skewed the alimony sum result unfairly. They could have, and should have, let it rest there. We promised to stay positive and leave the matter of needs for another day, and that we shall do.

 



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