Many married couples give little thought to the issue of which party “legally owns” property acquired during the marriage or the impact that legal ownership may have upon the distribution of assets in the event the marriage ends by death or divorce. Some couples assume, albeit incorrectly, that all property is “marital” in the sense that everything owned by either party will pass to the surviving spouse in the event of death. Other couples assume, also incorrectly, that owning property in one’s individual name (rather than jointly) will protect the asset from the other in the event of divorce. While neither assumption is correct, the irony of the current state of Massachusetts law is that parties are afforded far greater rights in the property and estate of the other if their marriage ends in divorce than they are if their marriage ends in death.
Massachusetts is a common law property state, which means that the legal ownership of property is determined according to how title is held. For example, if a wife purchases a vehicle in her individual name, it is considered to be owned completely and solely by her. She is free to use, sell or gift this asset as she wishes during the course of the marriage. However, a spouse’s ownership interest in his or her property in the event of death or divorce is not unrestricted, and will be limited by Massachusetts law governing same.
In the absence of a premarital agreement, entering into a legal marriage confers upon both parties certain rights under Massachusetts law, including but not limited to a “marital interest” in the property and estate of the other. While certain rights will be exercised during the marriage, others only become effective in the event the marriage ends by death or divorce.
While parties are generally free to use or dispose of their assets as they see fit during the course of the marriage, they are not permitted to completely disinherit the other at the time of death. If a deceased spouse writes the other out of her will (or leaves him a disproportionately small share of her estate), the disadvantaged spouse can “waive” the will and inherit under the statutory elective share. However, for all intent and purposes, the rights of the disinherited spouse are limited and generally unsatisfactory. For example, if there were children born during the marriage, a disinherited spouse can receive, at most, a “life estate” in one-third of the deceased’s property. Although a life estate enables the surviving spouse to use the property during his lifetime (for example, he may live in the marital home or receive income from an investment account) he cannot sell, gift or bequeath the property indefinitely, nor can he use the principal in order to meet his needs.
In contrast, the rights afforded parties to a divorce are far greater, as Massachusetts law provides that “the court may assign to either husband or wife all or any part of the estate of the other, including but not limited to, all vested and nonvested benefits, rights and funds accrued during the marriage and which shall include, but not be limited to, retirement benefits, military retirement benefits if qualified under and to the extent provided by federal law, pension, profit-sharing, annuity, deferred compensation and insurance.” G.L. c. 208, § 34. In determining an appropriate division of the total assets owned by both parties, a court is obligated to consider factors such as the length of the marriage, the conduct of the parties during the marriage, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties, the opportunity of each for future acquisition of capital assets and income, the amount and duration of alimony, if any, awarded, and the present and future needs of the dependent children of the marriage. The court may also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates and the contribution of each of the parties as a homemaker to the family unit. Although the list of factors is lengthy, property acquired during the marriage is most commonly divided equally in the event of divorce — regardless of which spouse is the legal owner of same.
The unfairness of the fact that a spouse whose long and happy marriage ends upon the death of one party may be left with a far smaller portion of the total “marital estate” than he or she would have received had the marriage ended in divorce has not gone unrecognized. The Supreme Judicial Court has specifically called upon the Massachusetts Legislature to update the state’s spousal elective share, declaring that it was “neither equitable nor logical to extend to a divorced spouse greater rights in the [marital] assets…than are extended to a spouse who remains married until the death of his or her spouse.” Sullivan v. Burkin, 390 Mass. 864 (1984). Nonetheless, despite the efforts of numerous individuals and organizations to bring our laws regarding the spousal elective share in line with the laws governing the division and disposition of assets in a divorce, recent attempts to pass a new statue have stalled and the antiquated probate laws remain effect.
Until relatively recently, a party faced with the possibility of receiving a disproportionately smaller share of the marital estate under his spouse’s estate plan than he would in the event of divorce had few options available to him other than dissolving the marriage. However, parties faced with such circumstances now have the option of negotiating a marital (“post-nuptial”) agreement in order to determine each party’s rights in the estate of the other. Though most commonly used to establish how property will be divided in the event of divorce, such agreements may also be used to protect the rights of a surviving spouse in the event of death. As marital agreements are negotiated against the backdrop of what each party’s rights and obligations would be in the event of divorce, they may be particularly useful in cases where a disadvantaged spouse merely seeks to be provided for in a manner which he or she deems sufficient. Under such circumstances, the disadvantaged spouse may be agreeable to accepting less than that to which he would be entitled in the event of divorce for the sake of saving the marriage; further the advantaged spouse is incentivized to negotiate an agreement that provides the other more than the current estate plan in order to avoid a divorce. Thus, marital agreements serve the public policy interests of allowing parties to maintain control over the disposition of their assets, while adequately preserving the marital rights of a surviving spouse and enabling the parties to avoid divorce.