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The Opportunity to Acquire Future Assets: How Family Wealth Can Impact the Division of Assets

Massachusetts divorce lawyer Nicole K. Levy analyzes an Appeals Court case that suggests a spouse’s wealthy family can generate a more generous asset division for the other party.

A recent Massachusetts Appeals Court Rule 1:28 Memorandum and Order, Heystek v. Duncan (2016), addresses multiple issues in an exceptionally succinct manner, and is worthy of a review in multiple areas. Indeed, the opinion in Heystek is so well considered that we have made the unusual choice of reviewing the decision in multiple blogs. In today’s blog, I will review the portion of the opinion addressing how one spouse’s opportunity to acquire future income and assets – via family wealth – can result in a disproportionate division of the marital assets favoring the other spouse.

Judges have wide discretion in the division and distribution of marital assets and property. While the court’s core review centers on present marital assets, such as retirement accounts, real property, and other current assets, the court may consider other factors, such as each parties’ skills, employability and/or their respective ability to acquire future income and assets. In our blog on expectancy interests, we touched on how courts treat each party’s ability to acquire income or assets in the future. We discussed it again in our blog on how irrevocable trust assets are treated in a divorce.

In Heystek, the judge, Hon. Peter C. DiGangi of the Essex Probate and Family Court, determined that the husband’s family trust was created prior to the marriage. Although the parties relied on gifts from the Husband’s mother to finance their lifestyle, the judge found that the parties did not rely on the trust as a source of income until their final year of marriage. Ultimately, Judge DiGangi concluded that the Husband’s trust distributions were unexpected and did not play a role in the marital financial management, and thus were not woven into the fabric of the marriage. On these grounds, he ruled that the trust payments were an expectancy interest not subject to division.

After excluding the Husband’s family trust from the division of assets, the judge went about dividing the remaining assets. The decision generally favored the Husband, where the Wife received assets valued at $1,071,497, while the Husband received valued at $1,639,388. (It should be noted, however, that we do not know some important facts, such as the length of the parties’ marriage or the existence of an alimony or child support award, which could have figured in the judge’s disproportionate division of assets favoring the Husband.)

Table of Contents for this Blog

  • A Spouse with a Wealthy Family will have Superior Financial Clout in the Future
  • When Parties do not Budget/Save During a Marriage Due to One Spouse’s Wealthy Family, the Non-Wealthy Spouse may Benefit
  • A Note About the “Opportunity of Each Party to Acquire Future Assets” and other Unique Section 34 “Factors”

A Spouse with a Wealthy Family will have Superior Financial Clout in the Future

The Appeals Court vacated Judge DiGangi’s asset division, finding that the judgment failed “to consider the husband’s opportunity for acquisition of capital or income in the form of gifts or inheritances from his mother”. In its review, the Court found that the Husband’s trust (along with a steady stream of gifts from his mother) created an opportunity for the Husband to acquire future capital assets or income in the form of future trust distributions and generous maternal gifts. The Court went on to explain that while the Husband could not demand distributions from the trustee – or gifts from his mother, for that matter – it seemed extremely likely that the Husband would receive these financial benefits in the future. Moreover, the Court found that the Husband’s likely receipt of these monies should be a significant consideration in the division of assets in the divorce, such that it warranted vacating Judge DiGangi’s decision. The Court reasoned:

[T]he foundational reality of the parties’ financial circumstances throughout their marriage was that their life-style relied to a significant degree on a fairly steady stream of such largesse, and it would ignore that reality to anticipate that the husband would not continue to benefit from similar generosity following dissolution of the marriage. Similarly, while the speculative character of a future inheritance from a still-living person may preclude inclusion of such interest as marital property, it does not preclude consideration of such a prospect under the category of opportunities for future acquisition.

The Appeals Court explained (with little factual background and detail) that the spouses had planned their lifestyle around the understanding that they would receive substantial gifts from Husband’s mother and/or the trust. (The decision suggests that the parties received substantial gifts and payments from Husband’s mother, and that the mother’s “largesse” supported their lifestyle.) The Court reasoned that the parties clearly relied on the availability of gifts/distributions from Husband’s family in their spending decisions and financial management, and the backstop of Husband’s rich family was a major factor in their failure to accumulate more savings.

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When Parties do not Budget/Save During a Marriage Due to One Spouse’s Wealthy Family, the Non-Wealthy Spouse may Benefit

Heystek is an exception opinion because of the extra attention to detail offered by the Court. Instead of focusing solely on the Husband’s ability to acquire future family wealth, the Court examined the parties’ spending during the marriage. The Court suggests that the parties did not save or budget in the manner that a similarly situated couple that lacked wealthy relatives would have. Implicit in this observation was the Court’s view that both parties relied on the Husband’s family wealth when making financial decisions during the marriage, and it would be unfair to ignore this reliance in the division of assets.

Without specific facts, one can only speculate as to what how the parties spent in anticipation of family gifts, but some examples could include: the parties saved minimally for retirement, paid for their children’s private school tuitions and colleges outright, and/or lived beyond their means, comfortable in the knowledge that Husband’s mother would bail them out of any financial difficulties. In addition, the Wife may have testified that Husband assured her that no savings were needed because his family would always provide financial backing.

In the end, the Appeals Court found that while the wealth of Husband’s mother was not an asset that could be divided in the divorce, the overwhelming certainty that Husband would continue to receive financial support from his family, following the divorce, was an important factor for determining how the parties’ marital assets should be divided. Although the Appeals Court did not specify what an appropriate final division might say, the decision was remanded to the lower court with a clear instruction to increase the Wife’s share.

A Note About the “Opportunity of Each Party to Acquire Future Assets” and other Unique Section 34 “Factors”

The Court’s treatment of Husband’s family wealth raises an interesting point about the Massachusetts Asset Division statute, M.G.L. c. 208 s. 34. As we noted in our blog on the Mandatory Section 34 factors, Massachusetts courts must consider fourteen mandatory “factors” when determining the division of assets. These factors range from everything from the conduct of the parties to each party’s contribution to the marital estate. In most cases, however, the most important factor is the length of the marriage, where Probate and Family Courts judges heavily favor an equal (50/50) division of assets in longer term marriages.

Heystek is part of a narrow class of cases in which a single Section 34 factor plays an outsized role in a divorce. In Heystek, the big factor was the opportunity of each party to acquire future assets or income. However, in a case involving years of serious domestic violence, an outsized focus might be placed on the conduct of the parties. Similarly, if a spouse lost huge sums of marital assets due to illegal gambling, then that party’s contribution (or lack thereof) to the marital estate could be the overriding factor. The point is, even if most asset division cases turn on the length of the marriage, we occasionally see cases where another of the 14 factors plays a huge role.

However, Heystek also provides a cautionary tale for parties and attorneys who gamble by taking their case to trial based on a single Section 34 factor. As Heystek shows, because Section 34 (and frankly the surrounding case law) is so vague regarding how judges should weigh the Section 34 factors, and what impact each factor should actually have on the division of assets, there is simply no way to know how a particular judge will treat evidence – even dramatic evidence – relating to a single Section 34 factor. The Wife in Heystek ultimately found relief in the Appeals Court, but the fact that her argument did not persuade Judge DiGangi at trial shows just how little predictability there is in Massachusetts divorce cases, where judges have near-limitless discretion and little statutory or common law guidance on how to apply their discretion.

About the Author: Nicole K. Levy is a Massachusetts divorce lawyer and Massachusetts family law attorney for Lynch & Owens, located in Hingham, Massachusetts and East Sandwich, Massachusetts. She is also a mediator for South Shore Divorce Mediation.

Schedule a consultation with Nicole K. Levy today at (781) 253-2049 or send her an email.

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