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Massachusetts Family Law Blog

What happens to home equity when you divorce?

At its core, divorce involves dividing assets, debts and, if applicable, parenting responsibilities once you no longer share a romantic relationship, and one of the most significant matters you and your partner need to address during your split is home equity. For many couples, home equity is one of, if not the, most sizable asset the two parties share between them, so dividing home equity can sometimes prove to be a point of contention after a split.

It does not have to be, though. There are three options most couples choose from when they need to determine how to divide home equity after divorce. While the following are some of the most common methods today’s divorcing couples use to divide home equity, this is not an exhaustive list of all possible options, and you and your partner may be able to get creative in crafting an agreement that works for you. However, most divorcing couples take one of the three following steps.

Do not overlook financial implications of divorce

Divorce is a difficult time for both spouses involved. While both parties will likely want to complete the divorce process quickly, it is critical to avoid moving too fast to the point where they make a disastrous mistake. 

Many spouses realize they will have to contend with alimony and child support payments in some fashion after divorce. However, there are many other financial considerations a spouse should never ignore. Consulting with financial professionals can help spouses navigate the following areas. 

Understanding Massachusetts marital property laws

As half of a married couple, you likely already know that your marital assets consist of all the property, possessions and ownership interests you and your spouse have accumulated during your marriage. These are the assets that you and your spouse must divide between you if you undergo a divorce.

Unlike California and a few other states, Massachusetts is not a community property state. What this means is that Massachusetts law does not require you and your spouse to divide your marital property by means of a precise 50/50 split. Instead, your property settlement agreement must be a fair and equitable one.

Massachusetts father gets jail time over child custody hearing

A father who failed to attend a custody court hearing will be spending six months in jail. The man, who was living in Massachusetts at the time of the child custody hearing, was found in contempt of court for failing to attend the hearing, which was held in another state. He received the maximum sentence allowed by law.

The accused father failed to travel to the other state on six occasions for hearings regarding the custody of his son, who is 4 years old. He has been in a dispute with his girlfriend over custody. The judge in the case has ordered an extradition notice to have the man serve his sentence in the state where the custody proceedings are pending, rather than in Massachusetts.

Lonzo Ball's girlfriend seeking thousands in child support

Denise Garcia, the girlfriend of NBA star Lonzo Ball, is asking him for $30,000 a month. That money, she says, is for child support for their daughter who was born this summer. Garcia went as far as to call Ball a deadbeat dad on Instagram live. Deadbeat dads are those who supposedly don't support their own children financially or otherwise, and they can be found in all states, including Massachusetts.

Yet, there are no hard facts that the couple has actually broken up. Garcia, however, has allegedly said if Ball doesn't come through with the monthly payment, she will write a book that dishes the dirt on the basketball player and his family. It looks like the two will be headed to court where a judge will decide.

Issues often arise when valuing a business in a divorce

Many times, a family business is a focal point in the property division phase of a divorce. The task of determining how to divide it is not an easy job, and some sticky issues may need resolving before reaching an equitable division.

Determining standard of value

High asset divorce in Massachusetts: The dissipation of assets

Some couples make the decision to divorce gently and amicably. However, some couples involved in a high asset divorce in Massachusetts might have trouble accomplishing that. There is much at stake financially and when money and assets are involved, negative emotions can run rampant, making it hard to make logical, unemotional decisions. When one spouse -- in most instances, a husband -- wants to keep from having to split assets, he may try to dissipate them.

Dissipate is a term used when one partner intentionally mishandles assets to keep the other spouse from getting them. Some spouses with a high net worth would rather spend the money than split it with a soon-to-be former spouse. Some states -- Massachusetts among them -- issue an Automatic Temporary Restraining Order (ATRO) as soon as the divorce action is filed in order to prevent either party from doing just that..

Child support and public assistance in Massachusetts

Single mothers usually need help raising their children. But when Massachusetts moms who are not getting child support for their kids ask for state assistance, the state will usually take it upon itself to start a case for child support even if that goes against the mothers' wishes. If it's the father who should be paying support and he isn't listed on the birth certificate or he is unknown, getting child support will obviously be pretty difficult.

On the other hand, if an individual is listed on the birth certificate or is otherwise subject to a claim for child support, he may wish to contest the paternity of the child. If the government does succeed in its child support suit, a parent will receive a small sum with the majority of support going to reimburse the government in exchange for its support of the child. It may be better for a parent to file for child support from the other parent on his or her own.

New tax laws mean a different way of treating alimony

Sharing the wealth may take on a whole new meaning come the new year. As of Jan. 1, newly divorced Massachusetts residents will be experiencing alimony payments in a new way thanks to the federal government. The person making payments will no longer be entitled to a tax deduction while the person receiving the money won't pay any tax on it at all. So, those couples who are thinking about divorcing using the current system had better have their divorces finalized prior to the beginning of 2019.

Experts are wondering how the changes will affect actions at divorce settlement negotiating tables. The tax break has been a useful bargaining tool, especially in high asset divorce cases. The area is still somewhat gray when it comes to how the new rules will affect prenuptial agreements already in place. The bottom line still is the one who has the most may be required to pay, while the other may be entitled to receive.

New laws coming in January to affect alimony payments

New tax laws will have an impact on divorce issues. Those laws will have a definite impact on alimony payments in Massachusetts. They take effect on Jan. 1, 2019. So those who are considering divorce should know that as of that time payers of alimony won't be able to deduct those payments from their taxes and those receiving those payments won't have to include the amount as part of their taxable income.

The IRS has indicated that those using alimony payments as income tax deductions far outnumber those who pay taxes for receiving the funds. Alimony payments could be affected by about 30 percent by the new laws. At a first look, it may appear that the person who pays alimony may be on the losing end of the new laws. That may not always be the case, however.

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