I hope you all are enjoying this gorgeous weather, I love it! We have been very busy here since March with a number of modification cases, as the new Alimony Law allowed for a large group of payors to file for modification at that time.
Generally, modification occurs as a result of a major change in circumstances; i.e. a new job, a lost job, a need for a custody change or a child reaching emancipation age. The change is really any change that could be considered a material change in circumstances. Now the age of the alimony payor and length of the marriage are added to the mix, and can constitute on their own a material change in circumstances. This new law (which I think has a number of real flaws) has become a touchstone for other states trying to change their alimony structure.
The new alimony law leaves untouched divorce agreements which “survived” as independent contracts. Without getting too legally obtruse, that was because the parties to those contracts had non-modifiable legal rights that the legislature couldn’t change. Those agreements can only be modified if countervailing equities are present. In reality, that generally means one person or the other is about to become a public charge.
In the next couple of posts I will talk about what the modification process in Massachusetts looks like.
I’ve been playing hooky, and my colleague Andrea Dunbar has stepped up to complete her series on points to consider in gray divorces.
DIVIDING RETIREMENT ACCOUNTS
There are important differences associated with dividing retirement plans that are already in pay status and those that are not. Some people divorcing later in life are already retired, and thus are most likely already collecting from a retirement plan. This limits the options available for dividing some plans in divorce. Different plans have different options, so it is imperative to know the rules of the plan you are dealing with.
Pension plans, as opposed to 401(k) plans or 403(b) plans, once in pay status, pay a fixed sum of money each month for the rest of a participant’s life. The amount of the payment is typically based on the income the person earned over a period of time. The payment amount will also depend on whether there was a survivor beneficiary named at the time of retirement and the extent of the continued benefit. Continue Reading
Gray divorce is on the increase. As Boomers age they are deciding to divorce. There are a number of issues that are of particular importance. My very talented colleague Andrea Dunbar has written today about Social Security and Medicare benefits.
While each divorce case presents its own set of complex facts and circumstances, divorces involving older clients (also known as “gray divorce”) can be especially complex. Issues such as Social Security, Medicare, retirement benefits and estate planning are, more often than not, fringe issues when dealing with couples divorcing at other points in life. These issues come to the forefront, and sometimes become of critical importance when a divorce occurs later in life.
It is important to know the ins and outs of Social Security when going through a divorce during advanced age. The rules of Social Security, like most other federal benefits programs, are counter-intuitive and often lead to surprising results.
A widow or widower at full retirement age or older receives 100% of a deceased spouse’s basic Social Security benefit amount. The same is true even if the spouses are divorced, as long as they were married for at least ten years and the spouse seeking to collect benefits is not remarried. Johnny Carson provides an interesting illustration of this rule: He was married four times, each marriage lasted at least ten years, and none of Johnny’s former spouses remarried. Upon Johnny’s death, all four of his ex-wives qualified for and received an amount equal to his full Social Security benefit.
The Social Security Administration provides a benefit option to married and divorced spouses known as “claim and suspend.” Claim and suspend allows a married or divorced couple to simultaneously take advantage of spousal benefits and delayed retirement credits. A former spouse of a worker who has reached full retirement age and claimed benefits upon reaching full retirement age her/himself, may claim and suspend, and receive an amount equal to 50% of the worker’s benefit each month without affecting the former spouse’s ability to continue to work until age seventy (70); thus, earning delayed retirement credits which increase the former spouse’s ultimate benefit. This of course is so long as the former spouse is not remarried and the marriage lasted at least ten years.
Some state courts take the position that making an equitable division of Social Security benefits upon divorce violates federal law. Where one spouse worked and the other stayed home, or both spouses worked but one spouse was the higher wage earner, the Court’s refusal to make an equitable division of Social Security benefits can result in serious inequities, especially when a couple is divorcing at or after full retirement age. Some courts remedy this inequity by assigning a larger share of marital assets to the spouse with the lower social security payout.