A large source of stress and potential conflict in divorce is the division of property. Accumulating property and assets together is a part of marriage, and deciding which spouse gets what assets when the marriage ends is no easy task.
A recent case involving fraud highlights complications that can arise when dividing assets after divorce. The husband had invested $5.4 million in an investment with Bernie Madoff, who is currently serving a 150-year sentence for fraudulently taking approximately $20 billion from investors. At the time of the divorce in 2006, however, authorities had not yet caught Madoff, and so the $5.4 million was included in the property settlement.
After discovering the fraud, the husband sought to have the property settlement modified based on “mutual mistake” regarding the investment and its value. While property settlements can be modified after a mutual mistake is discovered, ultimately the court decided that the mistake was not substantial enough to warrant a modification in this case.
Equitable Distribution Basics
Under Massachusetts law, marital property is divided according to the legal concept of equitable distribution. Broadly speaking, equitable distribution holds that each party to the divorce should have a fair marital property division, which may or may not mean that each party receives the equivalent of half of the marital property. Marital property is generally any property acquired by either spouse during the marriage, with only a few exceptions.
In Massachusetts, equitable distribution is governed by statute, which lists several factors a court must take into account when dividing assets:
- The length of the marriage (the longer the marriage, the likelier the split will be more equal)
- The conduct of the parties
- The age and health of the parties
- The amount and sources of income, including work skills and future employability
- The estate and liabilities the parties
- The needs of the parties
- The potential for future acquisition of assets and income
A judge will also consider these same factors when awarding alimony, if any.
Property division in a divorce can be complicated, even for couples with no extenuating circumstances such as being victims in a $20 billion fraud scheme. If you are contemplating divorce, contact an experienced divorce lawyer to discuss your situation and protect your legal rights to your assets.