Guest speaker, Attorney Russell P. Schwartz, shares six tips he would recommend to his clients when they are considering a divorce.
Russell has more than three decades of practice, exclusively in the area of domestic relations litigation. He is a noted trial attorney who has litigated notable cases over the course of his career, resulting in the creation of new case law in Massachusetts.
Watch the video below, or scroll down to read the transcript.
Topics Discussed:
What options are available for resolving a divorce case?
What is the cost of divorce?
What if children are involved?
What is the emotional cost of divorce?
Can social media have an effect on your divorce?
You can watch this video and others on the Waymark Wealth Management YouTube channel.
Video Transcript
Brendan Sheehan: All right, well let's jump in. So welcome everyone to the webinar. This is our third webinar that we've done. We've done the social security webinar and also an estate planning seminar the last couple months. Today with me is Russell Schwartz. Russell is colloquially called a divorce attorney, but I think he would call himself an attorney in domestic relations litigation. Personally, Russell and I have known each other for several years now, and I've seen him and we've worked together on a number of cases. I've found him to be very thorough, very diligent at what he does, and I do actually see that there are a couple folks that are also on this webinar that are clients of Russell's, so I think they could probably attest to how tenacious he can be in the courtroom. So he's a great guy to have on board. He has over 30 years of experience, so we're really happy to have him here. So Russell, thank you.
Russell Schwartz: Thank you very much for being here.
Brendan Sheehan: All right, so let's jump into the seminar, and I'll start sharing my screen. All right, so you should all see our contact information there. Six tips when contemplating a divorce. The first thing we have to get out of the way is disclosures, so all of this information is going to be general in nature. So please contact a legal or tax professional if you do want to act upon any of the information that is presented in this workshop today. So let's start. So let's just start very basic. You're thinking about engaging in the divorce process, and you're contemplating it. So what are some of the options, Russ, that you have to potentially see this through?
Russell Schwartz: In this divorce process there are a lot of options that come up for folks in terms of how to resolve their cases. I'm a litigator. I'm a trial lawyer. We often will find ourselves in front of a judge with another lawyer making presentations, making our arguments in front of the judge. That's one option. We call it litigation. A second option is what is becoming very popular, and that's alternative dispute resolution. The most popular term we use today is mediation, conciliation, and even private adjudication, where we will bring in a private judge to have one or more issues heard in a very quick and efficient manner. There are occasions where people can try to go through and navigate the process by themselves, although we don't generally recommend it. In those very, very simple cases where there's only one or two little issues, oftentimes we'll see that. But for the most part, it is litigation and alternative dispute resolution. One, litigation tends to be more complicated, tends to be a little bit more expensive. Conciliation and mediation is a little bit more efficient, not always as effective, but yet a good option.
Brendan Sheehan: Mm-hmm (affirmative), and Russ, I know this kind of puts you in a tough position, but any ranges in terms of cost associated with each one of these? So a litigation, if it took six months, a year, five years, what that would look like? Mediation, what that would look like? Obviously if you did it yourself it's probably a lower cost, but there's still a cost associated with completing the documents. So any feedback on that, please.
Russell Schwartz: The litmus test that we use in litigation is that in Massachusetts the courts are requiring parties to be done from beginning to end in their cases in about 14 months, from beginning to end. The courts, believe it or not, are getting a little bit more efficient, and we're finding ourselves in litigation being completed in the process in about 12 or so months, sometimes less. Now, in fairness and in full disclosure, I also participate as a principal in a company called Why Litigate, and that is a alternative dispute resolution company, which does exactly opposite of what we do in litigation.
Brendan Sheehan: Okay.
Russell Schwartz: So I have some kind of metrics in terms of how effective it can be. Again, litigation is for a certain type of folk who has a certain issue, and mediation is for a certain type of issue, as well. What we're finding is that if cases resolve themselves in mediation, they resolve themselves very quickly or not at all
Brendan Sheehan: Okay.
Russell Schwartz: That will generally happen within 30 to 90 days from beginning to end, and we'll know very quickly whether these issues that are brought to us will come to a final resolution. Litigation takes a little bit longer, obviously, but it can move at a more effective pace sometimes when a third party like a judge is involved.
Brendan Sheehan: Mm-hmm (affirmative). So just to summarize, mediation, 30 to 90 days, but at the end of that 90th day you'll probably know is this actually going to get resolved or is it going to need to go to mediation.
Russell Schwartz: Well, it's go to litigation.
Brendan Sheehan: Litigation, sorry.
Russell Schwartz: And that's true. We never know for sure how this works, but when folks are coming to a alternative dispute resolution process, they're both coming with the mindset that they want get done quickly, they want to get done in a cost-effective way, and as peaceful and as amicably as really can be done. So it's generally 60, 90 days we have a pretty good idea. Sometimes it takes longer. I mean, we can resolve matters in a matter of hours if everybody's on the same page. That is not to say that two good divorce lawyers or family law attorneys can't be in the same room, come up with the same concept, and make some really good recommendations to their clients that will get them to the final resolution, as well.
Brendan Sheehan: Okay, so I'm going to put you on the spot here. Costs on all this?
Russell Schwartz: It's hard to say. I tell my clients that I am an hourly wage employee, and the cost of our cases are directly related to the complexity of the cases.
Brendan Sheehan: Got it.
Russell Schwartz: The complexity of the case is like a chemical compound, so we have husband's lawyer, wife's lawyer, husband, wife, all different elements of a chemical compound. They either work well together or they don't work well together, and that [crosstalk 00:06:50].
Brendan Sheehan: Great analogy. I like that.
Russell Schwartz: Of course, the issues involved make things a little bit more complicated. If there's a lot of business valuations and a lot of experts that we need, it would slow down the process and of course make things a little bit more expensive.
Brendan Sheehan: I'm sure the child aspect of that also is very-
Russell Schwartz: Of course, of course.
Brendan Sheehan: ... and can lead to a lot of complexity.
Russell Schwartz: Once children are involved, it becomes a whole nother set of issues that we have to contend with.
Brendan Sheehan: Mm-hmm (affirmative). Okay. Well, let's move along here. Okay, so let's talk about the emotional component. So broad scheme, there are multiple ways of resolving a divorce, with litigation, mediation, et cetera, but there's obviously a gigantic emotional component to this. So talk to me a little bit about the role emotions play in the process.
Russell Schwartz: There's no question that this process is an emotionally driven process. When clients come to me, we talk about how to cope with this long-term or short-term event. We talk about the different ways to get through it. I often tell my clients that being active, working out, exercising is one good way to kind of keep things in check. I say to my clients a healthy body turns into a healthy mind. We often will recommend that our clients consider some form of counseling or group therapy to help them deal with these issues that come up, and frankly we just say that we should be in charge. The lawyers will take clients through the process. They have to trust us. They have to believe that if they take their foot off the gas, we'll bring them right through the process. We've done this many, many times, and we have a level of confidence that we bring to the table. We hope that they trust us and let the process take control.
Brendan Sheehan: Got it. Okay. So counseling, things like that. We have the things up here on the slide. Still obviously, again, big emotions, especially in light of extramarital stuff. Talk to me a little bit about that piece. I think there's a ... or I shouldn't say a misperception, but maybe a myth that there's a blame game, that if you can say that your husband, your wife did something that broke up the relationship that that will lead to a different outcome. Can you talk a little about that piece?
Russell Schwartz: Sure. Ironically, the truth is that people's conduct in this process today doesn't have a lot of weight with the probate court. Extramarital relationships, as such, don't really carry a lot of influence one way or another. It's when the parties take their decision making to a financial level that is affecting the other party. So let's say that one party is counting on an extramarital relationship and that party is spending, say, a substantial amount of money traveling with this other person or buying gifts and such. In that circumstance, it would matter, but the act itself, the conduct itself, not that significant. The probate court and the laws in the commonwealth do say that parties' conduct is one criteria that the courts use in determining how they're going to divide marital assets, how they're going to determine whether alimony is appropriate or not, but it really goes to the financial aspect of the relationship.
Brendan Sheehan: Got it. Okay. One of the things that's on the slide here is social media, so I'm curious to see if social media is starting to play more and more of a role in these proceedings. Whether or not someone is a little bit too open, and the other party actually uses that against them. Have you had any experience with that?
Russell Schwartz: Yes. We find that social media is a positive and a negative thrust. We tell all of our clients that once they start this process they keep their comments to themselves, they don't spread rumors, they don't talk negatively about the other spouse, particularly on social media. Now, when we are looking into backgrounds, into people and their behavior and their history, the very first place we look is on social media because people tend to either exaggerate their lives or depict their lives, whether it's drinking or activities that would be questionable, the first place that we look and it's the first place that it pops up. So I guess the rule of thumb is stay off the social media when you're going through this process. There's absolutely no good that comes of it, and if anything, it would help me if they were on the other side.
Brendan Sheehan: Interesting. Okay. Yeah, that's something I thought would be the case, but it's interesting to actually hear that it plays a role.
Russell Schwartz: Not only that. Some of the dating websites that people think it's a good idea to go onto, they have their own profile, and there are folks who tend to either fabricate or bolster their financial circumstances, their marital relationship circumstances, and we take all of those off the social media.
Brendan Sheehan: Interesting.
Russell Schwartz: Then we take them and at the time of the trial that's the first thing we ask people about, the very first thing we ask, so stay off of social media.
Brendan Sheehan: It's a great segue to our next slide. So the next slide is organization, so logistically, what I've mentioned to Russ prior to this meeting is that when we're meeting with folks in a financial planning setting, usually the financial role of the family is usually on one person. I actually call them the CFO, the chief financial officer of the family, and then the other person I jokingly say has to be the CEO, the chief executive officer. In some cases, that chief financial officer is the enemy, and you are the CEO who doesn't really know that much about finances. So logically, if you're not the person that handles the finances day-to-day, what are some of the things that they should do to ... Because obviously the act of getting all of the financial information is very important to this process. How does someone go about doing that?
Russell Schwartz: The probate court, the laws in the commonwealth, require parties to exchange all of this documentation that you'd be talking about. When clients come to me, whether they're prepared or not, we talk about organization, because as you say, and as the slide indicates, being organized is incredibly helpful. It's helpful to the process. It's helpful to the lawyers. It's helpful to getting a quick and efficient understanding of the case.
Russell Schwartz: So what we say to our clients is that when they come to us, either before the first meeting during our initial consultation or after the first meeting, they should try to accumulate as many documents as they can, at least within the first year's worth, if not up to three years worth of tax returns, pay stubs, bank statements, canceled checks, retirement account statements, qualified, non-qualified retirement account statements, anything that they can accumulate so that we can get a sense as to what their initial financial baseline is. It also gives us a sense as we're running through credit card statements and canceled checks as to what people are spending money on, what they shouldn't be spending money on, and it gives us a direction as to where we go. So being organized is incredibly helpful in the process. As I said to you, we are hourly wage earners, and the more that a client can do to help us, the more efficient and the more effective we can be. And of course we pass that savings right on to the client.
Brendan Sheehan: So that's a really good point. So let's say that we have a situation where, once again, you are not the chief financial officer of the family and you're concerned that the person who is the chief financial officer is hiding assets or doing something where they're trying not to disclose everything. How do you handle that in that situation?
Russell Schwartz: Well, ultimately it is my job to take off my lawyer hat, put my investigator hat on and start to drill down and figure out where the assets are, where they have gone, and where they come from. Sometimes we hire forensic accountants to do it. Sometimes we start simply by looking at a federal income tax return. Ironically enough, the non-CFO often doesn't realize that the dividends that are created from assets that they have are shown on the tax returns. So we start with tax returns, if we can get them. Oftentimes, once we look through a checkbook register or bank account, we see automatic transfers that are going into or out of accounts. Those accounts show up on the checkbook [inaudible 00:16:12] different spots. Oftentimes we'll say to our clients, "When you receive things in the mail that appear to be from a financial planner or a holding house, make a photocopy of them and bring them in." Oftentimes we will send out a subpoena to that company and ask for all the documents that that referencing either one party [inaudible 00:16:35].
Brendan Sheehan: We've seen that with some of the clients that we've worked together with.
Russell Schwartz: It is not that easy, but if you know what steps to take, and we've done this for a long time, more often than not we can find the missing links.
Brendan Sheehan: Mm-hmm (affirmative), got it. Okay. Let's keep moving along. We're making some good progress. In the middle of this, feel free to raise your hand and/or there is a question and answer button at the bottom of the screen. If we do see that flash up, we will answer that question for you on the fly. I do know that one of the attendees actually asked a question prior to the event, so we'll get to that in the question and answer section of the meeting. But feel free if anything comes up to ask those questions. All right, so next slide here. Taking responsibility. This here is something that I think Russ and I share in our professions as financial planner for me, divorce attorney here, is the procrastination piece.
Brendan Sheehan: At the end of the day, procrastination sidetracks a lot of this, and one of the things that's very common, especially again going back to that non-CFO person, you may feel overwhelmed by this whole process. It's tempting just to kind of put your head in the sand and just hope that things get better, when deep down you kind of know that things really won't get better. So Russ, talk to me a little bit about being proactive, trying to just take the bull by the horns, especially as it comes down to the kids and the impact that two warring factions have on the family and development and things like that, and just kind of taking the bull by the horns. The first question is when is somebody ready to get divorced? What makes them ready?
Russell Schwartz: There's no real answer, although I say to my clients, when they come to see me for initial consultation, I'll ask them if they're ready, and they will either stare at me with a kind of a blank stare or kind of say, "Yeah, well, I'm not really sure." What I say to them is, "When you're 99% sure you're ready to be divorced, you're not ready." So you have to be 100% ready to go because the process is a long process. It can be a long process and, in some circumstances, difficult. The beginning of your case starts here, and the end of the case starts here. So if this is our time frame and we start him today, here's the end. But if we wait another year, we start here and we end here. That's something that we have to really put into perspective.
Russell Schwartz: So at least when you're on the ropes about making the decision as to whether you go forward, it's always good to buy an hour of a lawyer's time, kind of scrimmage the ideas. We often say to our clients that knowledge is power, and this is a good opportunity kind of scrimmage the issues with your lawyer. More often than not, what we find is that our clients come out of the meeting feeling much more enlightened.
Brendan Sheehan: Empowered, sure.
Russell Schwartz: They feel more confident. They feel more empowered, and more often than not, they either retain our firm that day or within a week or so after they contemplate the decision.
Brendan Sheehan: Got it. Okay. Just looking at some of these notes here.
Russell Schwartz: Oh, let me just say one more thing, and we're talking about one of the slides.
Brendan Sheehan: Mm-hmm (affirmative).
Russell Schwartz: There are lawyers who believe that they're completely in control of the process and their clients should not have much to say about things. I think our world has changed dramatically in the last 10 years. I think our clients should and do have a fair degree, a high degree of control as to the outcome. Whenever clients have the opportunity to control their own destiny, whether they try the case or settle the case, they make the final decision. So clients, people who participate in this process, should not be passive observers. They should be actively involved. They should tell their lawyers and articulate to their lawyers what they want, why they want it, even if it doesn't make sense to the lawyer, because to some extent, sometimes being happy is better than being right. More often than not, when we have a client who is in control of their destiny, cases often settle faster than if they don't know. Because once they put it in the lawyer's hands, then it takes on a life of its own.
Brendan Sheehan: Sure. I think that's another good segue to the next slide, which is focusing on the big picture. One of the things that Russ and I sometimes joke about, and well, actually I've probably heard you say this almost 10 times or so, is that he's got to go to curt today to fight over pots and pans. He jokes about it, but it sounds like that actually happens a lot, where people get really kind of hung up on the minutiae of the divorce proceedings. So talk to me a little bit about focusing on the big picture and trying to stay away from getting mired in those pots and pans.
Russell Schwartz: The pots and pans analogy is a fair one. We really don't fight over pots and pans anymore.
Brendan Sheehan: Anymore, anymore.
Russell Schwartz: Because we have ways and methods now with conciliation and mediation that we can send folks. If we're litigating over values of businesses or custody cases or really important issues in the middle of a divorce, who gets the coffee pot or the silly pan that came from Aunt Josie is really not something that we're going to spend a lot of time on at X dollars an hour. So what we end up doing is sending those issues out to be resolved. In this day and age we see a transformation in terms of people putting all of those things in perspective. We don't get a lot of that anymore. We don't see people really fighting about those issues in any great detail. But the truth of the matter is that we do have our clients often think about putting things in perspective and recognizing that sometimes it's better to be happy than it is to be right because right just costs a lot more money and oftentimes there's no better result. So once clients can put it in perspective, allow their lawyer to give them opinions, make informed decisions, and then they take control of their own destiny, the cases move in a much more effective, more efficient [crosstalk 00:22:52].
Brendan Sheehan: Really? Okay. So a big part of this slide is about the impact on children. Just got a question about child support payments. So the question is under what circumstances could the child support payment's amount be changed?
Russell Schwartz: The law in Massachusetts says that all child support payments are modified by law. In order to modify a child support payment, I'm assuming that there's a judgment of the court. In order to modify that, if someone were to come to me and say, "Well, when do I modify it?" We suggest that a modification takes place when there is what is called a substantial and material change in circumstances. Now, the courts can define that a lot of different ways. Sometimes it needs a substantial raise in the payer's income, or a substantial raise in the recipient's income, or a decrease in the payers income, or a custody change.
Russell Schwartz: The best way to answer it is if you believe that there's been a substantial and a material change in circumstance, it's a custody change, or that you haven't been to court in a number of years and you're just wondering what the Massachusetts guidelines would now say, you can go online, project out the payer's income and the recipient's income. There's a calculator right online that will give you a rough idea as to what you would anticipate. If that's substantially different than what is being paid or received, then you should see a lawyer and get a consult to determine whether or not it's worth doing. Sometimes it is and sometimes it isn't. Lawyers are not cheap these days. When you are spending $150, $200, $300 an hour to litigate an issue that's going to save you $5 a week, it might not be worth it. So to buy an hour of a lawyer's time to get a census is really super helpful.
Russell Schwartz: So I can't really give you a specific answer on when child support changes. The change in circumstance is the thing to really think about. It has to have been a substantial and material change from the last time that you were in court.
Brendan Sheehan: Got it. I think those last two bullets right there, decisions will affect you and your children for years to come, don't get bogged down into fighting over who's right, who's wrong, and nobody wins in a divorce, focusing on what's most important. Talk to me a little bit about the impact on the kids, because I think that again one of the biggest places where people procrastinate is they're worried about what kind of impact this is going to have on the kids. In your experience, obviously I think it can go either way. Obviously the kids could be really upset by the divorce, between it could also be a blessing in disguise. So any feedback on that piece?
Russell Schwartz: I can only speak to my experience over the last 30 years, and I can't speak as a psychologist or as a counselor, although I have spoken to many, many counselors and psychologists. They call say the same thing, generally, and that is does the initial divorce have an impact on the children? Of course it does. Children don't like change initially. They don't like to see their mothers and fathers splitting. Their world changes. But then the experts then say that more often than not, children are resilient.
Brendan Sheehan: I was going to say, I was thinking resilient would be the word.
Russell Schwartz: They tend, more often than not, to bounce back. That resilience is based on a number of things. It can be based on the parents' relationship moving forward. It can be based on the child alone, the personality of the child. Is the child resilient? Is the child open to change? More often than not, we see a positive result with respect to children for both parents, and they tend to kind of fall into a daily routine. Ironically enough, these children will often say to their parents, "I know a lot of friends of mine whose parents are divorced," because of the divorce rate. So they're not alone. Oftentimes, more often than not, we have our clients consider counseling for the kids. There's very little downside to it. Not all children need it, but it never hurts. So for the most part, and again there are always exceptions to the rule, but for the most part children are resilient, they tend to bounce back. As they get older, they start to speak with their feet, and they make their own decisions. But for the most part, they'll bounce back.
Brendan Sheehan: Got it. Okay. We got one more question right now. Where would you find the best child support calculator? I know you had mentioned something in Massachusetts.
Russell Schwartz: You should go on to the Massachusetts probate and family court website. It has a child support guideline calculator. Mass.gov, I believe it is, probate court. You can simply google it and type, for example, what's the probate court child support guideline calculator, and it will give you a Excel-based sheet that you can fill out. You can print it, and I think you can even save it [inaudible 00:28:14] reference.
Brendan Sheehan: So something you could actually do I preparation for meeting with your attorney, and again to save some time with [crosstalk 00:28:21].
Russell Schwartz: You could. It is helpful in putting things in perspective because for the most part, when people are coming to us, we talked about the non-CFO person, coming to us with very little background in terms of their spouse's earnings or the cost of health insurance or daycare cost or dental insurance, optical insurance, all these criteria that play into the calculation, they can only have a general number. Once we start to do our homework as attorneys, get all the information necessary, that general guideline starts to sharpen and we get a better handle on the guidelines. In Massachusetts, child support guidelines generally are considered for parties whose incomes together do not exceed $250,000. Any income in excess of $250,000, in those circumstances the courts then have the discretion to reallocate that additional money, so it really behooves both parties to make sure that they have a really good handle on the income on the parties, healthcare costs, daycare costs, dental coverage, those type ...
Brendan Sheehan: Mm-hmm (affirmative), got it. Okay. Well, that's pretty much the pre-prepared part of the presentation. We'll ask for some questions. As I mentioned, there was a question submitted prior to the workshop starting, and I'll just read it to you, Russ. In the meantime, anyone who has any additional questions, feel free to click on that question and answer section on the bottom of the screen. Type in the question. No one else can see it. We're the only ones that can see it. But the question here is what to consider when negotiating a house buyout. Would you exchange retirement assets for equity? I think what her concern is is that if she were to refinance the house that she would have a higher rate than what had negotiated a few years ago, so she'd like to actually keep the mortgage and everything as is and potentially exchange a 401(k) or something like that in exchange for that. So can we talk a little bit about that?
Russell Schwartz: First I'll say anything is possible as long as two parties can agree, but let's assume they can't agree for a minute. Now we're standing in front of the judge, and one party wants to keep the home and says to the other party, "I'd like to buy you out." So the first thing that comes to my mind is, well, if one party's going to keep the home and both people are on the mortgage, how are we going to get the other person's name off the mortgage? So you go to the bank and you say, "Mr. Bank or Mrs. Bank, I'd like to take my spouse's name off the mortgage. Could you give me the document that allows me to do that?" And the bank says, "No." They say you have to refinance because the other person, who doesn't have the house, should have an opportunity to acquire their own home. Without their name being taken off of the mortgage, refinancing, there's no opportunity to do that because their loan to asset ratio or whatever that calculation is is too high, and most banks aren't particularly interested in taking that chance. But assuming that happens and assuming they can refinance, take out a little extra equity and buy the spouse out, that's one way to do it.
Russell Schwartz: Now to answer your question, it becomes a little bit more complicated when you trade retirement accounts for equity in a home. I call it trading apples for oranges. So when we have a retirement account, let's say a 401(k) and we want to liquidate that 401(k) to buy something, the first thing that happens, unless we're of a certain age, is what? We get penalized for liquidating it, get 10% penalty, and there's a tax associated with that liquidation. So if you were to liquidate your retirement account, you'd have a tax. You'll know better than me. It's about 10%.
Brendan Sheehan: To just jump in, if you're younger than age fifty-nine-and-a-half, then there's a 10% penalty for liquidating assets that are retirement assets like 401(k) and IRAs.
Russell Schwartz: So if I were to trade $100,000 of retirement money in exchange for $100,000 of equity in a home, although the number is 100,000 versus 100,000, it may not be fair because that 100,000 turns into 90,000 and then take off a tax of, I don't know, 30%. Now you're at $60,000 for a $100,000 asset. Now it may be good for the person who is keeping the house, but it's not really a fair trade. Now, your lawyer would know this, presumably, and we would what would be called in our profession [inaudible 00:33:06] the account by increasing the amount that would have to be paid in order to get an effective net payout of, let's say in that example, $100,000. So you have to be really careful when you're exchanging apples for oranges, as we say.
Brendan Sheehan: Mm-hmm (affirmative), gotcha. So couple other questions that I've experienced or I've encountered along the way when it comes to divorce is one, once the divorce is negotiated, once the judge signs off on it and it's [inaudible 00:33:37] at this point, and six months, a year later goes by and you feel like you didn't get a fair shake. Talk to me a little bit about going back and trying to do a do-over, mulligan.
Russell Schwartz: Yeah, mulligans are not really popular in probate court. The judges, the lawyers, the process is made and set up to make it fairly difficult for do-overs. So that Monday morning quarterback concept, or the I should've, could've, would've done it differently if I had. Oftentimes, in fact in every time with parties getting divorced, the judge asks the parties a number of questions. Did you understand what you signed? Did you sign it freely? Did you sign it voluntarily? Did anybody make you sign this? Do you think it's fair? You don't have to go forward today. You can have a trial. Do you want a trial? The record is pretty loaded with information to make it really difficult. Now, there are those circumstances where sometimes people will be given a second chance. When there's fraud. When there's misrepresentation. When there's lying on the financial statements. When there's an asset that never cropped up in the divorce process where the parties forgot about it or one party potentially hid it and it got discovered. So there are circumstances where it happens. It can happen with child support, as we talked about, is always modifiable.
Brendan Sheehan: Sure.
Russell Schwartz: In certain circumstances it can happen with alimony. It can happen with health insurance and life insurance. In Massachusetts, once you divide your marital assets, they're divided, and once you divide your debt, that's also divided. It can't be reconsidered. Under no circumstances short of fraud or misrepresentation will those assets be recalculated, so you got to be really, really careful about spending the money to do it. There are occasions where people will try and more often than not be disappointed that they ... They may hire a lawyer, spend a fair amount of money to get in front of a judge, and ultimately not prevail. So be real careful when you're thinking about that [crosstalk 00:35:51].
Brendan Sheehan: [crosstalk 00:35:51] the other slides prior to get organized. Don't be just 99%. Be 100%. You really have to take this seriously because for all intents and purposes, barring fraud or some kind of misrepresentation, you got one bite at the apple and that's about it. Another question I have for you, Russ, and this I think will be our ... Oh, we do have another question that just popped up. Well, I'm reading that in a second, but one of the things that has come up is let's say that one party in the couple is in line for an inheritance. Does that influence ... Again, I think what a lot of people think about when they think about divorce is that for all intents and purposes it ends up as close to a 50/50 split. So If there's an inheritance, whether it's minimal, whether it's pretty substantial, does that throw off that scale so that it's factored into the conversation about the 50/50 split?
Russell Schwartz: I feel like this is a bar exam question because it's loaded.
Brendan Sheehan: Sorry, man.
Russell Schwartz: That's okay. So Massachusetts says that they divided marital assets equitably, fairly. It doesn't mean equally, and there are about 17 factors that the courts use to divide these assets. Now, there's a presumption in Massachusetts that you start with a 50/50 split. It doesn't mean it ends that way. Now, among the 17 or 15 or so factors that we look at seriously, contribution to the marriage and likelihood for future assets is one of them, which brings us to the issue of inheritance. Inheritance is a tough one because there are a number of issues that go into whether or not we're going to consider it. I guess the first issue would be whether the inheritance is vested. So if we have two people and let's just say husband is in line for an inheritance with two very healthy parents who have a will that says everything is going to go to their son but there's no imminent likelihood that it's going to come to him, that inheritance is not vested.
Brendan Sheehan: That makes sense.
Russell Schwartz: Now, let's say 10 years prior to the divorce, the inheritance comes in, and let's say that inheritance gets commingled into the marital state in some way, shape, or form. Question one, is it a marital asset? It is. Question two, will it be divided equally? Not necessarily. So it really depends on is it vested? Did it come in during the marriage? If it did, when did it come in? When we look at marriages, particularly long-term marriages, I remember when I first started practicing a judge saying to me, "In a long-term marriage, people should come in and out in equal comfort or discomfort." So taking that long-term marriage with an inheritance that came in perhaps early in the marriage, it would be likely to be divided equally. Now, you take a short-term marriage where the inheritance came in either a week before or a week after the filing of the complaint, maybe not 50/50, maybe not at all. It depends on the lawyer. It depends on the [crosstalk 00:39:05]-
Brendan Sheehan: The judge.
Russell Schwartz: And the judge. The case law in Massachusetts is clear. It says that if an asset is vested, if that inheritance has been vested, if it's irrevocably vested into a trust where the recipient is a beneficiary irrevocably vested, it will be considered. That beneficial interest will be considered. So a lot of things [inaudible 00:39:27].
Brendan Sheehan: Got it. Looks like got one more question. This one's a long one, so it's what remedy is there when the other party isn't producing documents as requested and that there's some hidden money involved, and how important is it to detail where the money was spent in order to recover that moneY?
Russell Schwartz: That's kind of a two-part question. When we start with the party not producing documents, there's generally a paper trail that leads to a certain spot in the process. Where let's say we have checks written to a certain account, and we request that account to be produced by the other party. They start to produce the records, and inevitably what happens is the month that is of significance never seems to show up in the records. So we're going from January, February, March, April, and all of a sudden June is missing. The account has gone up and then down, and nobody knows where it is. So the very first thing we do is we subpoena the records right from the source. That generally gives us a better idea as to where things go.
Brendan Sheehan: So just to be clear for everyone, and I don't know how people are versed in subpoenaing, what does that actually mean?
Russell Schwartz: Once a lawsuit is filed in Massachusetts, a civil lawsuit, the law of the commonwealth gives the parties involved in the litigation the right to send out properly drafted, properly executed subpoenas. It is a command for a party to come to court or to submit to a deposition as part of litigation. So oftentimes, and frankly in my firm it is my office policy that once we get involved with a case, before we walk into court the very first time, more often than not, now not on every case, but more often than not, it's nice to have the other side's financial statements saying how much they earn or what their assets are. But if I'm going into court, I'm not necessarily going to rely on that financial statement.
Russell Schwartz: If I know that Mrs. or Mr. Jones works at a certain company and they tell me that that's their income, let me find out from the company itself. So I'll send out a subpoena to the keeper of records of that company commanding them to come to court and give me the documents in front of the judge. Now, they know and I know, more often than not, they don't want to go to court. They say to me, "Well, do I really need to come to court? Is there another way to do this?" And I say, "Sure. There's an affidavit. Sign the affidavit. Attach the documents that you would have given to the judge. Hand them to me. I'll hand them to the other side and to the judge, and now everybody has their cards on the table." Oftentimes I will do that and send a copy of the subpoena to the other side, the other lawyer, letting them know that their financial statement better be right because if it's not, I'm going to show the judge what is right and what's not right.
Russell Schwartz: That's the best way to start off a case. There's no question. There's no misunderstandings, and everybody knows that we're right on the trail. We're going to move forward.
Brendan Sheehan: Is that common practice? I was just about to say that, because I've spoken with other folks who use other attorneys. Sorry Russ, but I've used another attorney, and that doesn't seem like a common practices to go out and subpoena those records and get them straight from the source as opposed to from the divorcing party.
Russell Schwartz: The probate court forms require the parties sign their financial statements under the pains of penalties of perjury. Now I'm not saying that everybody lies because that wouldn't be accurate, but there are oftentimes the folks are not accurate either because they don't understand their own pay stubs, their own financial statements, their own tax [crosstalk 00:43:01].
Brendan Sheehan: Sure.
Russell Schwartz: Just because line one on their W-2 the year before said they make $50,000, the probate courts say that's not their gross income. They look on line five, for example, on their W-2, which is their total Medicare wages, their income is much higher.
Brendan Sheehan: Sure.
Russell Schwartz: So what they will do oftentimes is they'll look at their pay stub and say, "This is my year-to-date income." They won't take off retirement accounts and such, so I send out a subpoena. The very first thing I ask for in the subpoena is W-2 wage statements for that employee for the last three years, and then I know exactly what their income was, what their history was, what their actual income is. Credibility in the probate court means everything. So if I am able to show, for example, that the other side isn't being accurate for whatever reason, then I have an advantage. My client recognizes that we have the advantage. There's nothing illegal about it. It's completely appropriate. So frankly, I say to all the young lawyers in my firm that it isn't an option. We do it in probably seven, eight out of 10 cases, and let the other side know we mean business.
Brendan Sheehan: Yeah. All right. I think that's a good place to finish. Russ, any final thoughts on this? It doesn't look like we have any other additional questions, so I think we'll wrap up here. But any final thoughts on ...
Russell Schwartz: No. I want to thank you for having me here. This was great. If you folks need any help or you have any questions in the future, you're certainly welcome to call us. We're happy to schedule an appointment. We're at 300 Main Street in Worcester on the second floor. You can contact us by calling 508-752-0112, or if you're meeting with Brendan and you want a second opinion or want me to add my two cents for whatever it's worth, I'm happy to come down and help out.
Brendan Sheehan: Okay, fantastic. All right, Russell, thank you for your time today, and I think we'll conclude there. So thank you everyone for attending.