Section Review

Premarital, gifted and inherited property in Massachusetts - a reply

This article appeared in the July 1999 issue of theSection Review.
© 1999 Massachusetts Bar AssociationGuidelines are needed for all Section 34 property divisions
Douglas S.Segal practices with the Boston law firm of Goldstein & Manello. The family law bar in Massachusetts has been presentedrecently with two thought-provoking articles on how the Probate Court shouldtreat premarital, gifted and/or inherited property in a final division of marital assets under G.L. c. 208, § 34: "Contribution to the Marital Partnership and ‘Separate' Property" by Monroe L. Inker andCharles P. Kindregan, and "Premarital Gifted and Inherited Property UnderG.L. c. 208 § 34" by Judge Edward M. Ginsburg (both published in thefirst issue of the Massachusetts Bar Association's Section Review, Dec.1998, pp. 23-25 and 25-27, respectively). The articles invited replies frombench and bar, and I offer the following comments in the spirit of encouragingfurther debate.

In their article, Inker and Kindregan note,"Massachusetts is one of the very few states that has not incorporatedthe separate property concept into its statute." (p. 23). On the basis oftheir succinct and informative review of Massachusetts case law over the last20 years, Inker and Kindregan posit a "substantial special circumstances"principle to be employed in cases involving division of separate property. Theauthors argue that "there should be substantial special circumstancesbefore a court uses the divorce judgment to reallocate such [separate]property." (p. 25). In a short-term or midterm marriage, they would placethe burden on the party requesting a division of separate property to establish"special circumstances justifying an assignment of an interest in suchproperty," e.g., existence of children, or a party's severe healthproblems, needs or substantial homemaker contributions. Id. Inker and Kindreganopine that an assignment of separate property "is more justifiable aftera long-term marriage where there are insufficient other assets to provide anadequate award to the non-propertied spouse." (Id., emphasis added).
The problem with the Inker and Kindregan approach is thatwhile it identifies the problem, it gets us no closer to resolving it with anypredictability or consistency. Lawyers will spend endless hours, and thousandsof dollars of their clients' money, conjuring up "substantialspecial circumstances," the end result of which will be litigation thatis even longer and costlier than what we have now.
I recently practiced family law for six and a half yearsin California, a community property state, and while I can assure my fellowpractitioners that the complexity of community property law leaves much roomfor litigation, now that I am back in Boston I am struck by how much morefrequently cases go to trial here than they do in Los Angeles. In a communityproperty state, once agreement has been reached as to which items of propertyare community and which are separate, then, by statute, the community propertyis divided equally, and that's the end of it. In Massachusetts, however,under Section 34, identifying the marital estate is only the first, andeasiest, step in the process. In my view, the biggest problem with Section 34is that while the case law from the last 25 years has eliminated mostcontroversies over what constitutes marital property, it provides too littlepractical guidance in how that marital property should be divided. Cases go totrial here far more frequently than they do in Los Angeles County because,under Section 34, there is so much room for dispute as to how marital propertyshould be divided. Adoption of the "substantial specialcircumstances" principle advocated by Inker and Kindregan will onlycompound this unhappy situation.
Ginsburg's approach to the problem of separateproperty is refreshing for its simplicity, its common sense practicality andits essential fairness. Many of us, quite rightly I believe, are critical ofthe high percentages used in the Massachusetts Child Support Guidelines, butthe fact that we have such guidelines makes it much easier to settle issues ofchild support than it was before those guidelines were implemented. The variousapproaches which Ginsburg has advocated over the years for determiningreasonable alimony awards have also gone a long way toward making those awardseasier and less costly to negotiate than was previously the case. Guidelinescan never be perfect, but to the extent they produce substantial justice, thenthey serve a valuable purpose. There will always be cases where a rigid applicationof guidelines will produce an unjust result, but as Ginsburg says,"Unusual circumstances call for creative solutions." (p. 27) Andfor creative lawyers, one might add. These are the situations that, in terms oflegal ability, separate the wheat from the chaff.
In my view, we need guidelines for all Section 34 propertydivisions, along the same lines advocated by Ginsburg with respect to separateproperty. Here are my recommendations:

  • Ina childless marriage of less than five years, each party would take his or herown separate property, and absent special circumstances (such as one partyhaving serious health problems, and there being insufficient income to providehim or her with reasonable support), assets acquired during marriage("marital property," which would include any appreciation in valueof separate property) would be divided pro rata based on the ratio of theparties' total gross incomes during marriage.
  • Ina marriage of less than five years where there are children, each party wouldtake his or her separate property, and absent special circumstances, allmarital property would be divided equally.
  • Ina marriage (with or without children) of five to 15 years, separate propertywould be subject to inclusion in the marital estate, and division under Section34, at the rate of 5 percent per year from the date of receipt (e.g., in a10-year marriage, 50 percent [10 years times 5 percent] of the premaritalseparate property would be subject to division; if an inheritance were receivedfive years after marriage, 25 percent [five years times 5 percent] would besubject to division), and absent special circumstances, all marital propertywould be divided equally.
  • Ina marriage (with or without children) of 15 years or more, separate property,including gifts and inheritances received at any time during marriage, would beintegrated into the marital pool at the rate of 5 percent for each year ofmarriage, and, again absent special circumstances, the marital pool (i.e., allmarital and separate property) would be divided equally. Thus, once a marriagereached the 20-year mark, all property, whether marital or separate, would bedivided on a 50/50 basis, absent special circumstances. The specialcircumstances exception would permit either party to challenge the guidelinesfor division, but as a disincentive to frivolous claims, I would stronglyrecommend that an unsuccessful challenge would require that party to pay theprevailing party's reasonable attorneys' fees and costs. In thisway, we would have predictability and consistency not only in awards of childsupport, alimony and division of separate property, but in the division of theentire marital estate, and we would eliminate a great deal of needlesslitigation.
As Inker and Kindregan point out in their article, Section34 "‘and related case law do not recognize a presumption in favorof equal division.' Comins v. Comins, 33 Mass. App. Ct. 28, 29(1992)." (p. 24). The case law notwithstanding, the only reason that wepractitioners are able to settle as many cases as we do is because we and thecourts operate on the unwritten presumption that, at least in midterm andlong-term marriages, absent extraordinary circumstances marital property willbe divided equally. Indeed, as Judge Ginsburg states in his article, "Aswith other assets in long-term marriages, ‘equitable' will mostoften approximate ‘equal.'" (p. 27). The reality of thecurrent situation is that there is a serious dichotomy between the case law,which does not recognize a presumption of equal division, and the day-to-dayoperation of the court system, which does recognize such a presumption. It istime to end this dichotomy once and for all by having the Legislature amendSection 34 to explicitly provide for a rebuttable presumption of equaldivision. If the Legislature won't act promptly, then the Family Courtshould issue such guidelines on its own initiative, and make explicit what isnow implicit. The resulting reduction in litigation will both ease the burdenof the Probate and Family Court, and save divorce litigants untold thousands ofdollars in fees.
My only quarrel with Ginsburg's approach to dividingseparate property lies in his failure to define "length ofmarriage" with specificity. Marriage is rightly treated as a partnership,and the modern approach to property division, under both the community propertyand equitable division schemes, is based on the partnership model. However,once a couple has either physically separated or filed for divorce, therationale for continuing to treat the relationship as a partnership disappears.Far from continuing to work together as a team with shared goals, by this pointthe parties, if not actually at daggers drawn, are at the least in apotentially adversarial situation. We have all seen cases that drag on foryears, and if the length of marriage is determined as of date of trial or dateof execution of a separation agreement, then one party is rewarded and theother is punished if the proceedings are protracted. I therefore submit that absentspecial circumstances (such as where one party is determined to havedeliberately prolonged the litigation to the detriment of the marital estate),the length of a marriage for Section 34 purposes should be calculated from thedate of marriage to the date of the parties' physical separation or theinitiation of divorce proceedings, whichever occurs first.
In short, I heartily agree with Ginsburg's approachto taking the guesswork out of dividing separate property by the creativeapplication of what will perhaps come to be known as "the 5 percentsolution." However, I would extend the quest for predictability andconsistency in the division of property under Section 34 not only to separateproperty, but to all marital assets.
Making divorce litigation less expensive and lessadversarial than it currently is would greatly benefit all divorcing spouses,as well as their children, all of whom are dragged involuntarily into a systemwhich Ambrose Bierce, in The Devil's Dictionary, rightly defined as "amachine which you go into as a pig and come out of as a sausage."
And for those who fear that my proposals may have anegative impact on the standard of living of the members of the family law bar,take heart: the increased predictability of property awards, and the increasedlikelihood of separate property being made subject to division, will not onlyencourage more individuals to explore premarital agreements; it will also havethe spillover effect of enabling us to ensure the enforceability of thoseagreements with greater certainty than is now possible, by clarifying themeaning of the second prong of the current test of enforceability, i.e.,"fair and reasonable at time of enforcement."
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