Is Your Inheritance Up For Grabs in a Divorce?

In Massachusetts divorce cases, expected future property acquisitions in the form of inheritances or family trusts may be taken into consideration by the Court when dividing marital property.  The law has been very well settled that “Opportunities for future acquisition of capital assets and income” are one of the factors the Court should take into consideration as under M.G.L. Ch. 208, §34.

During the divorce process, each party seeks to obtain from the other evidence of financial assets so that the Court properly takes them into consideration when determining the division of marital property. A party in a divorce case will want evidence of the other parties future interests (i.e. money or property), which may take the form of future inheritances. The private nature of these possible future interests raise a problem for parties in a divorce which is not easily dealt with without use of a common discovery tool known as the “Vaughan Affidavit.”

In order to establish a balance between the privacy interest of third parties and the right of a divorcing spouse to the full disclosure of marital assets, in 1991 the Court in Vaughn v. Vaughn held that third parties have legitimate privacy interests that need to be protected while acknowledging that the Court may properly take a party’s expectancy interests into consideration when determining what disposition to make of the marital property that is subject to division. The result was the so-called Vaughan affidavit.

The Vaughan affidavit is a document supplied by the third party (usually the parents or grandparents of a divorcing spouse) in a divorce proceeding, that provides limited disclosure of the individuals financial assets, net worth, and a general description of their estate plan. The affidavit is supplied in lieu of deposing the third party.  If the third parties reside in Massachusetts, they will in all likelihood confer with their own counsel once they receive the subpoena to get legal advice.  Upon doing so, they will understand that they may choose to either produce the documents and/or appear for the deposition, or execute the Vaughan affidavit.  When presented with these options, they will almost always choose the latter, less intrusive alternative.

The Vaughan affidavit is an important tool for lawyers practicing family law, but judges are entitled to a substantial amount of discretion when taking it into consideration. Parties in a divorce action have a right to know about substantial expectancy interests of the opposing party but the Court is mindful that a person could be dis-inherited or divested of any such interests at the sole discretion of a third party.  Nonetheless, the importance of obtaining a Vaughan affidavit in a divorce action cannot be overstated where one party suspects the other of having a substantial inheritance coming their way. Taking a future interest into consideration can make a significant difference when calculating divisible marital assets and should not be overlooked.

 

How to Take the Fight out of Divorce

Inability to effectively communicate and negative emotions can prevent resolution of minor issues between divorcing spouses.

When facing divorce, the last thing any family needs is arguing and confrontation.  Just because two people fall out of love,  doesn’t mean they should try to hurt one another emotionally and financially. Divorces can be overwhelming, and are the cause of significant fear and anxiety for a lot of people.  What many people don’t realize is that “this doesn’t have to be the case.”  The best outcomes in divorce situations is when both parties put their personal feelings aside and view it as a business negotiation.  In fact,  data from the Project on Negotiation at Harvard Law School substantiates this position concluding that “good decisions are not made when there are negative emotions or fear.’

Many people have heard the term “mediation” and may loosely understand what it means, but don’t have a firm handle on what it can do for them in the context of divorce situation.  In Mediation, both  spouses come together,  for a few sessions, and use interest based negotiations to help them reach agreements on child custody, support and division of assets. After the agreement is reached, the mediator will typically draft a separation agreement. The mediator does not represent either party, and does not give legal advice. The function of the mediator is to assist parties in communicating, and to help them in forming their own resolutions to the issues that they have difficulty with.  Mediation can preserve a family’s financial resources, and may accomplish the divorce process in  less time and with less stress.

It is important to remember that not all divorcing spouses are going to be candidates for mediation.  If one person is using the mediation process in order to “strong arm” the  less-aggressive spouse into complying with his or her wants or wishes, this will be a waste of time.  Most mediators can see right through this and will end the sessions  if it becomes unproductive.  There are also no guarantees that a mediation can fast-track a divorce.  If the process breaks down at any point,  people may find themselves quickly lawyering up.

If a mediation breaks down, it doesn’t necessarily mean a divorce is headed straight to trial.  In Massachusetts, (and in a majority of states) most divorces have great potential to settle out of court simply because litigation is expensive and trials can be very time consuming and unpleasant.  In Massachusetts, several of the county bar associations offer conciliation programs which have assisted the courts greatly in resolving contentious cases that would otherwise go to trial.  These programs are staffed by volunteer family law attorneys who are trained and experienced.  They also function as third-party neutrals, so the process tends to move much faster and is more directed than a mediation. A conciliator can make helpful suggestions on how to resolve a case and may also write a report to the court on what options were discussed as part of the process.  Sometimes a session is broken down by dividing up into small groups so that each party feels as though they can speak freely if a case is especially contentious.  The success rate of conciliation is remarkable in Massachusetts.  Roughly 70% of the cases that are referred by the family court for conciliation are resolved and reported as settled.

Managing conflict is never easy, but it doesn’t have to be impossible.  A good mediator is open and understanding about different ideas, perspectives and experiences and has creative solutions that take each of them into consideration.  Taking the fight out of divorce spares couples time, money and anguish and is well worth the investment.

 

Holiday Spending and Bankruptcy: Don’t Make a Mistake ‘Yule’ Regret

Bankruptcy is never a pleasant thing to think about, and it is likely the absolute last thing you would want to think about during the holidays. In today’s frantic world, it’s so easy for time and money to be overextended and it becomes even more overwhelming for many people during the holiday season. It’s important for all of us to be responsible while using credit cards, and to use “sound financial planning” in all holiday shopping to avoid future problems. If you’re feeling the holiday pressure to “out spend” what you make or currently have credit card debt that is snowballing as the holiday season rolls along, read on.

A New Year, A Fresh Start?

It can be enticing to just give in to the pressure to do whatever it takes to get the gift-buying out of the way this time of year. Many, if not most people feel obligated to give into giving/receiving expectations and don’t want to think about the consequences. “I’ll just get Uncle Tom taken care of, then I’ll worry about the credit card bill later on in the new year…” If you find yourself adopting this thinking pattern, first, ask yourself whether or not you will even have a job next year to pay the credit card will with. Then, consider that even if you do, is it going to be worth 9 months of bills, only to succumb to the pressure again next year?

Many cash-strapped consumers erroneously believe that a chapter 7 bankruptcy filing will get rid of any charges they put on their credit cards while doing their holiday shopping. This misplaced “new years” mind set causes many people to think they will have their fresh start and be “off with the old and in with the new”, not realizing how long a bankruptcy procedure can take.

Credit Cards – Avoid Charging Gifts

If you already know, or reasonably believe that you will have to file a bankruptcy petition in the coming months, beware that your pre-bankruptcy holiday credit card spending may be risky business. Racking up debt within 90 days of the filing of a bankruptcy petition is preemptively fraudulent, and many would-be bankruptcy clients are shocked when that word surfaces during their initial consultation. “What do you mean, fraud? Me? Never!” are a few of the things people frequently say when this issue surfaces. Most people do not intend to engage in fraud, but for some, the temptation to use a credit card during the holiday shopping rush is overwhelming. These are important issues to keep in mind if you are thinking about filing a bankruptcy petition within the near future.

Cash Advances – You Better Watch Out

Like the charges on your credit card, if there are cash advances taken on a credit card within the 90 days prior to your bankruptcy filing that totals more than $600 you may be distraught to learn that it may not be dischargable. A bankruptcy trustee will not be pleased to see large sums of cash drawn against unsecured lines of credit timed right around the holiday season. Be mindful that it is considered fraudulent if the debt is incurred with the intention not to repay it and the credit card company can come in and object to those specific cash advances being discharged in your bankruptcy.

The Bottom Line

Use good judgment and do your best to to make this holiday season “cash-only”. You will never regret not digging the debt hole deeper only to find it even more difficult to later escape through a self-propelling cycle of credit card use. You may cringe at the thought of being dubbed a “Grinch” by your kids, but you will only be doing your them a favor in later life. Instead of giving into their material desires, they will see you exercising self-control and frugality, which are both good character traits to model.

If the damage has already been done, there is still hope and it is never to late for a fresh start.  If you are a Massachusetts resident, consult a qualified bankruptcy attorney to discuss your options and see what relief you may qualify for.