Estate of Confusion: What is in the Marital Estate and how is it Divided?

First, what is the marital estate? The marital estate is the collection of all property, assets, and liabilities which are subject to division during a divorce. In Massachusetts, the marital estate includes any and all property acquired by the parties, regardless of how or when it was acquired or whose name it is in.

Many people believe that the only property subject to division during the divorce is that which was earned, saved, or bought during the marriage or in both parties' names. Some common assumptions of property excluded from the marital estate are: the house one party purchased before the marriage, the interest in a grandparents' trust fund, the inheritance from a parent's estate, lottery winnings, monies transferred to irrevocable trusts---the list goes on and on.

Unless there is a prenuptial agreement specifically defining the divisible assets in the event of divorce, the short answer as to whether property is included in the marital estate, is "yes." The house purchased before marriage in only one person's name, the Bentley inherited from late Uncle Jack, and the $50,000 won in the lottery after years of legal separation are all included in the marital estate. This means that all of these assets are subject to division.

Assets with an uncertain value, such as an expectancy of an inheritance, are also included in the marital estate. However, the nature of wills is that they can be changed at any time prior to the Testator's death, and so until the estate is probated, being named as a beneficiary in someone else's will is just an expectancy. This means that while the expectancy may be considered as part of the marital estate, it is not necessarily counted dollar for dollar as an IRA or savings account would be, until an actual distribution from the decedent's estate is calculated and/or distributed.

Assets acquired post-separation are also included in the marital estate, such as with the example with the party who wins the lottery after years of separation. Until the Judgment of Divorce is issued, all income earned and assets acquired are subject to inclusion in the marital estate.

Gifting assets to third parties does not automatically exclude the assets from the marital estate. Sometimes if animosity enters into the the heat of analyzing the marital assets, one party might feel gifting assets to a third party will diminish the marital estate, and therefore also diminish the other party's share. The more likely outcome with such an attempt, however, is that the Court will attribute the gifted amount to the gifter's asset column, which will result in the gifter receiving a smaller portion of the marital estate. If the gifter then retrieves the gifted amounts, this is proof that the transfer was never really a gift.

What is included in the marital estate is different from the question of how the marital estate is divided, and how the assets are considered during division. In Massachusetts, the marital estate is subject to "equitable division." The Probate and Family Court is a court of equity. There is no hard and fast rule or formula that divides assets by a certain percentage, as you would find in a community property state.

Instead, the Court considers a host of factors regarding the divorcing parties, including among other things, their educational, employment, and health status, their financial and non-financial contributions to the marriage, their respective contributions to the preservation and improvements to the assets, and the overall marital estate. After examining the totality of the factors, the Court makes a determination as to the equitable division of assets. As a rule of thumb, the shorter the marriage, the closer the parties may be put back in their respective pre-marriage positions; the longer the marriage, the closer the division of assets may be to a 50-50 split, but as with any rule of thumb, there are always exceptions.

Additionally, a division of assets may not entail dividing each asset. The party who purchased the house prior to the marriage may end up keeping sole title and interest in that property. The fact that assets are in the marital estate just means they are subject to overall division, and not that each party will necessarily get a slice of that particular house. If it happens that the house is the only asset, the Court may have no choice but to divide the interest in the asset to effect an equitable division. Each case presents different assets, circumstances, and legal factors, and so what is equitable in one divorce may not be so in another. Parties can also negotiate their own division of assets, and often do so in the face of uncertainty about what the Court might order in final judgment.

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