USA – MASSACHUSETTS TRENDS AND DEVELOPMENTS Contributed by: Caterina S Wurman and Madeline R Pelagalli, Fitch Law Partners LLP
Prenuptial and Postnuptial Agreements Prenuptial agreements are widely used in Mas - sachusetts as a protective measure for wealthy and high net worth individuals if a marriage ends in divorce. Often, prenuptial agreements are requested in order to safeguard premarital assets, inherited and gifted wealth, or closely held business interests. Unlike most other jurisdictions, Massachusetts does not delineate in a divorce what consti - tutes the marital estate by determining whether a divorcing spouse’s property was acquired during – versus before – the marriage. With no prenuptial agreement, a court considers as part of the marital estate and subject to equi - table division all property owned by each of the parties, whether held individually or jointly, and regardless of whether the property was obtained before or after the parties got married. Therefore, prenuptial agreements can serve to limit which categories of assets can be equitably divided in the case of divorce, and can also predetermine in what proportion each category of assets is equitably divided (if at all). In the event of a divorce, prenuptial agreements can also be used to establish whether or under what circumstances one spouse will pay alimony to the other, and how the amount will be calcu - lated or paid. Prenuptial agreements may also be drafted to support an individual’s estate-planning goals by providing for a waiver of certain rights a spouse acquires upon marriage to the other spouse’s estate in the event of death, or by ensuring a portion of one spouse’s estate is preserved so it can ultimately be left to children of a prior mar - riage or other family members.
ocable, and the trustee had sole and absolute discretion as to whether or not to make distribu - tions in any amounts. Contrary to prior cases, the class of beneficiaries was closed, the mandatory distribution upon the mother’s death was enforceable, and any power that the trustee had to postpone any distribu - tions to the mother was limited by law and the terms of the trust itself. She also had the power of appointment. Due to these factors, the court thus concluded that the trust was includible in the marital estate, assigned the value of the trust in its entirety to the wife, and ordered an offset - ting payment to the husband. Many families establish trusts as estate-planning vehicles. Some of the trusts are designed to “protect” family assets in the event of a divorce. That said, current case trends suggest the court has been putting less weight on protections that estate planners put in place to keep certain assets out of the marital estate, such as spend - thrift provisions, irrevocability, trustee discretion, and whether or not the trustees have made dis- tributions. The parties must be prepared for the possibility that the intent of the trust’s settlor will be ignored and the value of the trust (if not the trust interest itself) will be included in the marital estate and be subject to division. What remains true, however, is that the decision- makers are still charged with making judgments on a piecemeal basis, based on the specific facts of the case and the particular attributes of the trusts at issue. If a divorcing spouse has a beneficial interest in a trust, a careful analysis is needed to determine the most equitable result, and the strategy that best aligns with a client’s needs.
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