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WHEN WORDS GO TO COURT

by Marion Lee Wasserman

Author’s Note: This article is adapted from materials prepared for the Fall 2010 Family Mediation Institute of the Massachusetts Council on Family Mediation.

When mediators and family lawyers reduce their clients’ understandings to writing, the words they choose may wind up being closely scrutinized in court. This is one of many reasons why their words matter so much. Their words will need to hold up under a judge’s scrutiny at the divorce hearing — and, beyond that, may become critical in court proceedings after the initial hearing.

The following three post-divorce cases illustrate what can happen when words go to court. Each of these cases turns, at least in part, on the language of the parties’ Separation Agreement.

Bell v. Bell, 393 Mass. 20 (1984)
– cohabitation
Foster v. Hurley, 444 Mass. 157 (2005)
– life insurance
Johnson V. Johnson, 2010 Mass. App. Unpub. LEXIS 582 (June 2, 2010)
– property division; QDRO language

Another post-divorce case on point is Fawzi v. Elaskalani, 2010 Mass. App. Unpub. LEXIS 602 (June 4, 2010). The opinion in Fawzi is interesting for its discussion of ambiguity and for its implications regarding so-called “nondisparagement provisions.”

Taken together, these four cases demonstrate that imprecise language is like the proverbial loose cannon. It is difficult to know where the damage will be inflicted. Fawzi and Bell demonstrate, ironically, that imprecise language is not necessarily unenforceable. A court may enforce even an imprecise provision, to the pleasure of one party and the dissatisfaction of the other. Foster and Johnson demonstrate that provisions which are imprecise or in some way incomplete may lead the Court to fill in the blanks in a way that one party finds unfair (Johnson) or may lead the Court to a conclusion that the Court would have preferred to avoid (Foster). The subject matter of the Foster case is life insurance obligations incident to divorce, and the opinion of the Court is in some ways a blueprint for the drafting of life insurance provisions in future Separation Agreements. The Court seems to be saying to all mediators and family lawyers, read this, please, before you sit down to write. When words go to court, they matter!

WHY I LOVE DIVORCE MEDIATION

By Marion Lee Wasserman

Author’s Note: This article is an excerpt from “How I Found Divorce Mediation and Why I Love It.” The full article appears in the Fall 2010 issue of the Family Mediation Quarterly (“FMQ”). The FMQ is available online at www.mcfm.org .

Today my practice is dedicated to family law. About half of my cases are mediation cases, while the other half are cases where I am legal counsel, helping clients reach a settlement and also reviewing mediated agreements. Fortunately, I do not have to choose between the two sides of my practice. My clients make that choice.

Not every client getting divorced chooses mediation, but for those who do, the choice is almost always a wise one. Here are four reasons why I love doing divorce mediation and why it works so well.

Simplicity

There is a common-sense simplicity to the idea of divorcing spouses sitting down together to discuss their settlement with the assistance of a trained, neutral third party. This three-way model is the one I use. In my divorce mediation practice, the three-way meetings are the primary vehicle for achieving settlement. Because this model is so simple, it is easy to explain to potential clients; and couples usually do a good job of self-selecting — that is, recognizing whether or not this process will be a good fit for them. Although the parties may have lawyers working with each of them in the background of the mediation process, the primary dialogue in the process is the couple’s own dialogue, at three-way meetings and between meetings, if possible. The divorce is their divorce. The dialogue is their dialogue. The mediator’s humble role – apart from educating the couple about the legal context of divorce – is to facilitate the negotiation, to give the couple an assist. Though the three-way model is a simple one, the mediator’s role is endlessly interesting and challenging.

Flexibility

The spareness of the three-way model makes it easy for the couple to decide, with the mediator’s guidance, whether additional professional assistance is required. Professionals with special knowledge and skills — for example, financial planners, accountants or child development specialists — can be brought into the process on an as-needed basis. By agreement, the couple can decide whether to work with an outside expert individually or as a couple; and the expert can provide reports and spreadsheets shedding light on complex financial issues. The expert can attend one or more mediation sessions if this will be helpful and cost-effective. Decisions about the use of experts grow dynamically out of discussions at the three-way meetings. The divorce mediation process is never “one size fits all” but is instead an inherently adaptive and flexible process.

Cost-Effectiveness

The three-way model makes for a highly cost-effective process. This is an unquestionable up-side for the divorcing couple and their children.

In the Middle

The first few times I entered a room as a mediator for a divorcing couple, I had to screw up my courage. Sitting down at a table with two people going through wrenching, life-changing conflict was scary. Often, the spouses were angry and hurt and could barely abide being in a room together. But in a surprisingly short period of time, my trepidation at being in the middle disappeared completely — a tribute to the transformative power of the mediation process, not only for clients but also for mediators themselves. I began meeting each new couple eagerly, with confidence in the mediation process. Whatever the couple’s emotional dynamic, I welcomed the opportunity and the privilege of creating a safe space they could enter, where they could work through conflict and get divorced in a cooperative, mindful way. Now I thoroughly enjoy the special challenges of being in the neutral middle.

STOCK OPTIONS AND DIVORCE IN MASSACHUSETTS

by Marion Lee Wasserman

A version of this article has been published in the Family Mediation Quarterly of the Massachusetts Council on Family Mediation, Summer 2009 issue.

Assume you have a friend going through a divorce in Massachusetts after being married for twenty years. Your friend has stock options accumulated during the last ten years of his marriage, and he tells you he is hoping to keep them out of the property division. For one thing, his stock option plan indicates that the options are non-transferable. For another, his options are not worth very much today, but he anticipates them growing significantly in value after the divorce. Furthermore, one third of the options have not vested yet. Your friend has worked hard at his job, and he tells you that his options are a reward for his hard work. He associates his options with everything he loves about his work and his long-term employer. You listen, but you remember that in your Massachusetts divorce you had stock options too, and they were treated as marital property subject to division, along with the house and the investment accounts. And even those options that would not vest until after divorce were treated that way. Should they have been?

Under Massachusetts divorce law, stock options are, generally speaking, treated as marital property, whether vested or not prior to the divorce. In the key case on this subject, the Massachusetts Supreme Judicial Court stated that although the Massachusetts statute governing property division upon divorce (General Laws c. 208, § 34) “does not expressly mention stock options, the language in the statute that a party’s ‘estate’ includes ‘all vested and nonvested benefits, rights and funds’ clearly indicates that both vested and unvested stock options may be treated as marital assets.” Baccanti v. Morton, 434 Mass. 787, 794-795 (2001). Regarding unvested options, the Baccanti opinion points out that just as unvested retirement benefits are assets that may be treated as part of the marital estate, so unvested stock options are assets that may be treated as part of the marital estate.

The Baccanti opinion recognizes the special nature of stock options — in particular, the uncertain value of unvested options. The vesting of the options may be contingent on continued employment. Also, the value of the stock when the options vest may be less than the price at which the options can be exercised. But Baccanti makes clear that any uncertainty in value is not an impediment to dividing the property incident to a divorce. In lieu of determining a present value for the options, it is possible for the options to be apportioned between the parties as part of the property division. Then, as the options vest and are exercised, the parties will share the proceeds of a sale of the options, according to the pre-determined apportionment (either 50-50 or according to another specified ratio). This “if and when received” approach is deemed acceptable by the Court in Baccanti. To provide for the possibility that the employee-spouse may choose not to exercise the options when they vest, or may choose not to sell the shares when the non-employee spouse would prefer to do so, the non-employee spouse can be given the power to exercise the options apportioned to him or her by acting through the employee spouse; similarly, the non-employee spouse can be given the power to sell his or her shares through the employee spouse. (If the stock option plan permits the options to be signed over to the non-employee spouse at the time of the divorce, the non-employee spouse can act directly rather than through the employee spouse.) Each party can be given responsibility for the tax consequences resulting from the sale of his or her shares.

With respect to unvested stock options, the above picture is complicated by an additional element discussed in the Baccanti opinion. If the employee spouse can prove that the options were awarded for future service (that is, service to be performed after the marriage ends), and if the employee spouse can further prove that the non-employee spouse “did not contribute to the employee spouse’s ability to acquire the unvested options,” then a judge may decide, in light of all factors under General Laws c. 208, § 34, that a portion of the unvested options should not be included in the marital estate. The burden of proof is on the employee spouse. If the burden is met, the judge has discretion in determining what portion of the unvested options should be omitted from the property division and what portion should be included in the marital estate; and, with respect to the latter portion, what the appropriate division is. The Baccanti opinion sets out a so-called “time rule” as an “effective and straightforward means” of determining what portion of the unvested options to omit from the marital estate in these cases. Judges have the discretion to modify the Baccanti time rule or to use another approach that achieves an equitable division.

The Baccanti time rule works this way: “The number of unvested shares of stock options is multiplied by a fraction whose numerator represents the length of time that the employee owned the options prior to dissolution of the marriage (i.e., the length of time that the employee owned the options prior to and during the marriage), and whose denominator represents the time between the date the options were issued and the date on which they are scheduled to vest. The resulting product is the number of shares subject to division.” This sounds confusing, but when the formula is applied to a set of facts in a particular case, it actually is quite straightforward.¹

Although the part of the above discussion regarding burden of proof applies only to litigated divorces, consideration of the underlying questions — namely, why were the unvested options awarded, and what did the non-employee spouse contribute to the acquisition of the options — may be important in uncontested divorces as well. Mediators and collaborative lawyers should not overlook this part of the Baccanti opinion.

The entire Baccanti analysis, including the time rule, establishes the context for dealing with stock options and divorce in Massachusetts, whether or not the divorce is contested. In cases where the parties are able to cooperate, including mediated divorces, Baccanti provides essential guidance for reaching a fair and reasonable resolution of the stock option problem.

¹ The Baccanti opinion, in footnote number 10, provides the following example of how to apply the time rule: “… we hypothesize that an employee was given one hundred shares of unvested stock options; that they were issued three years before dissolution of the employee’s marriage; and that they will vest two years after dissolution of the marriage. The time that the employee owned the options prior to dissolution of the marriage would be three years, and the time between the date the options were issued and the date that they vest would be five years (three years before dissolution plus two years after). The portion of the options that could be included in the marital estate would be three-fifths. The one hundred shares are then multiplied by three-fifths, which equals sixty. Therefore, sixty of the one hundred shares of unvested stock options may be subject to division between the spouses. The judge would then make an assignment of those sixty shares of stock options in accordance with G. L. c. 208, § 34. The remaining forty shares would not be included in the marital estate and thus would belong solely to the employee spouse.”

The above article is provided for general informational purposes. This article is based on Massachusetts case law and applies to Massachusetts divorces only. Furthermore, it is not intended to apply to any specific facts or circumstances and should not be construed or applied as legal advice or legal opinion or as tax advice or as establishing an attorney-client relationship.

PRENUPTIAL AGREEMENTS

by Marion Lee Wasserman

An overview of prenuptial (also called “premarital”) agreements.

What is a Prenuptial Agreement?

Prenuptial agreements, unlike cohabitation agreements, are entered into in anticipation of marriage. They are most often used to confront in advance the very possibility which marrying couples least like to consider — the possibility of marriage ending in divorce. The prenuptial agreement may establish how the couple’s property will be divided and how spousal support, if any, will be determined, if a divorce occurs. Some prenuptial agreements set the precise amount of spousal support in advance.

Why Have One?

For some couples, a prenuptial agreement makes good sense. Depending on the circumstances, a couple may find that a well-considered prenuptial agreement is essential for promoting peace of mind in contemplation of marriage and during marriage. Individuals embarking on a second marriage are often good candidates for a prenuptial agreement, particularly when they already have children. Whether previously married or not, when one or both individuals are entering marriage with substantial property or income, a prenuptial agreement may be desirable.

Are They Recognized in Massachusetts?

In Massachusetts, prenuptial agreements are legal and binding contracts, provided they meet certain standards the courts have established. Parties entering into a prenuptial agreement should each consult with independent legal counsel knowledgeable in this area of the law. Regardless of whether mediation is used to reach an agreement, independent legal advice is critical, in order for each party to protect his or her interests and in order to meet the standards for enforceability of the agreement. (Bear in mind … if a party to a prenuptial agreement really does not want the agreement to be enforceable, he or she should not enter into it!)

The above article is provided for general informational purposes. This article is not intended to apply to any specific facts or circumstances and should not be construed or applied as legal advice or legal opinion or as establishing an attorney-client relationship.

MARITAL MEDIATION

by Marion Lee Wasserman

The following article by Ms. Wasserman discusses the application of marital mediation to one particular set of issues.

If you are interested in marital mediation for other issues, read this article for its general principles. Consider how the process of marital mediation might assist you. Focus on the five underlined sub-headings and bold-type statements. Do these “five ways mediation can help” apply to resolving the conflict in your marriage?

Moving Beyond Infertility and Pregnancy Loss: Five Ways Mediation Can Help

Couples experiencing infertility or pregnancy loss often begin to feel like the walking wounded. Not only are they coping with feelings of loss and frustration — a pervasive sense of “why me?” … not only are they facing medical risks and complications associated with infertility treatments, pregnancy and miscarriage … not only are they finding that family and friends don’t understand what they are going through … but on top of all that, their own loving relationship may be strained, as they struggle to make sense of their situation and to resolve the many difficult questions confronting them.

Such couples need all the understanding and support they can get. Traditional counseling — individual counseling, couples counseling and group counseling — can be a tremendous help, as couples struggle to come to terms with their disappointment and losses. Feelings of failure, anger, resentment and loss can be explored in counseling. Mediation is never a substitute for counseling. Rather, mediation is a supplemental source of support. Provided the mediator is knowledgeable about and sensitive to the special stresses, questions and concerns facing the couple in this situation, mediation can help the couple move forward, providing them with a safe, comfortable, confidential forum for reducing conflict and making considered choices together.

Here are five ways mediation can help:

Finding agreement:

In mediation, the couple will identify areas of agreement and disagreement, and they will identify those areas of disagreement they particularly need to address in order to move forward. Perhaps they are having trouble agreeing on whether to keep “trying” or to adopt; perhaps he likes a particular domestic adoption program while she is more taken with a program handling Latin American adoptions; or perhaps one of them wants “time-out” while the other wants to move ahead quickly. Because mediation is a practical, agreement-oriented process designed to help people move beyond conflict, mediation can help the couple work together to create a pragmatic, realistic plan that works for each of them individually while preserving and strengthening their relationship. A mediated agreement can assist the couple in addressing and distinguishing short-term and long-term issues; in finding common ground; in reaching compromise; and in determining the best use of available sources of support.

Focusing on the future:

Mediation is an inherently future-oriented rather than past-oriented process. This makes mediation a good forum for the couple on the road to parenthood asking, “What do we do now?” When there is conflict over the answer to this question, the couple may feel as though the future will never arrive. Mediation is about addressing the future. When the subject of past loss is raised in mediation, it will be acknowledged but will not become the focus of the session. The couple will be encouraged to discuss past losses in counseling and to use mediation time for reaching agreement on what to do next.

Making informed choices:

Mediation is a process that emphasizes the need to make informed choices. Couples experiencing infertility and pregnancy loss are faced with choices that require considerable information-gathering. One couple may be exploring IVF programs and costs. Another may just be starting the intensive process of researching adoption programs. Mediation can help couples make a practical plan for gathering and sharing information so couples feel less overwhelmed. Once information is gathered and shared, mediation can provides an effective forum for sorting through information and using it to reach mutual agreement.

Discussing finances:

In mediation, couples are encouraged to discuss financial concerns that may be adding to their stress. The mediator can assist the couple in determining whether they need to obtain additional information regarding program fees, insurance and other costs. As part of the mediation process, the couple can make a plan for obtaining the information required, including consultations with third party professionals who can advise them on financial issues. The mediator’s practical orientation and emphasis on informed decision-making are well-suited to assisting couples in resolving disagreements related to finances.

Preserving relationships:

Mediation is designed to resolve conflict while preserving relationships. Progressing at a pace in tune with the needs of the couple and right for them, the mediation process will encourage the couple to communicate constructively, to respect each other’s perspectives and to keep shared goals in mind as they sort through their differences. The couple, while making practical choices, will preserve and even strengthen their bond.

DIVORCE MEDIATION

by Marion Lee Wasserman

An informational article originally prepared by Ms. Wasserman for a workshop presented by her at the Harvard Medical Center of Harvard University.

How Does Divorce Mediation Work?

In divorce mediation, the couple sits down together in a cooperative spirit instead of using lawyers to one-up each other in an adversarial contest. To their great benefit, the couple avoids the cost, inefficiency and bitterness of the traditional divorce process. Following mediation ground-rules agreed upon at the outset, the couple uses the mediation process to reach agreement on issues requiring resolution for their divorce. The mediator does not judge the couple or act as a therapist. The mediator encourages the couple to engage in balanced, forward-looking negotiation and to achieve compromise that is fair and practical. An experienced, qualified mediator knows what issues need to be covered in a divorce agreement and guides each couple accordingly.

How Does the Actual Divorce Follow?

Part of the mediator’s role is to put the agreed-to terms into a written agreement, so that the couple can file the agreement with the appropriate court. In general, provided the agreement is “equitable” and provided it is consistent with the best interests of any children of the marriage, the agreement will be approved by the court and incorporated into a divorce decree. Ms. Wasserman is knowledgeable regarding court-applied standards of what is “equitable,” enabling her to assist the couple appropriately as they negotiate matters of property division, support and parenting.

Should the Mediator Be A Lawyer?

If the mediator is a lawyer, the mediator is permitted to prepare the agreement — the so-called “Separation Agreement”– in its complete and final form. Non-lawyer mediators, and some lawyer mediators, prepare a memorandum rather than a final agreement. The couple then asks a lawyer to put the memorandum into court-ready form, containing clauses covering certain legal points not included in the memorandum. The couple should be aware of this distinction, and the couple should also make certain that the mediator they select — whether lawyer or non-lawyer — has a thorough knowledge of and understanding of divorce law and procedure, because divorce mediation takes place within a legal context and divorce agreements have legal consequences.

Will Husband and Wife Each Need Their Own Lawyer?

The mediator is acting as a neutral third-party, not as legal counsel. Whether or not the mediator is a lawyer, each party is advised to have individual, mediation-friendly legal counsel for consultation on issues of special concern and for looking over the agreement in order to suggest any necessary changes. If the lawyer is present in the background, and if the lawyer is indeed mediation-friendly, then the lawyer’s involvement will be efficient and limited and will serve to enhance the mediation process.

Will the Mediator Really Be Neutral?

Each party to the mediation will have an opportunity to explain his or her individual perspective on the issues. It is part of the mediator’s role to allow time for this, to listen attentively to each party and to help the parties listen to each other. Ms. Wasserman has extensive training on the subject of neutrality, including gender neutrality, and she knows how essential it is that she not judge the parties or choose sides. She appreciates the emotional and financial complexities of each couple’s situation and uses the mediation process to gain an understanding based on real issues, not surface impressions.

Will the Mediator Answer Financial Questions?

Although the mediator is not acting as an accountant or financial advisor, the mediator should be knowledgeable about tax and financial issues that arise in connection with divorce. Ms. Wasserman has the knowledge and experience to answer many questions in these areas and also provide appropriate referrals to other professionals, as specific issues arise that require outside expertise. Such professionals may include accountants, business or real estate appraisers, pension actuaries or financial advisors. One advantage of the mediation process is that the couple uses outside professionals on a limited, as-needed basis, in order to gain specific information or advice contributing to positive negotiation — a major departure from the costly, inefficient use of professionals as adversarial experts in traditional divorce contests.

MEDIATION BASICS

by Marion Lee Wasserman

An informational article originally prepared by Ms. Wasserman for a workshop presented by her at the Harvard Medical Center of Harvard University.

What is Mediation?

Mediation is a process for settling disputes. The dispute may involve two parties or multiple parties, and the role of the mediator is to act as a neutral third-party guiding the parties to a resolution of their differences.

Why Choose Mediation Rather than Litigation?

Entering into the mediation process is a cooperative step in itself. Sitting down together at the mediation table, the individuals in conflict are making an effort to resolve their conflict cooperatively — to find a solution without escalating the conflict. In family situations, where relationships extend beyond the particular dispute — and, indeed, last a lifetime — mediation helps the parties to the dispute preserve what they can of their relationship. Also, as the mediation progresses, with the mediator’s guidance and encouragement, the parties find a resolution that comes from their own ideas and hard work. The resolution they finally reach is their own. It is not imposed upon them by a court. Mediation is also a cost-effective process, as it encourages dispute resolution and discourages time-consuming, money-consuming dispute escalation.

Are Mediators Specially Trained?

There is currently no state licensing of mediators in Massachusetts. Most mediators take at least a thirty-hour basic training course from one of various training providers. This training enables a mediator to meet one of the key requirements of the state statute governing the confidentiality of communications during mediation. Mediators may also take advanced, specialized training. Ms. Wasserman has taken advanced divorce and family mediation training and has met the certification requirements of the Massachusetts Council on Family Mediation.

How Does the Mediation Process Work?

Mediation sessions follow certain ground-rules that are explained by the mediator in the first session. These ground-rules promote constructive, balanced, respectful discussion between the parties. The parties agree to listen to each other and to disclose to each other all information relevant to the fair resolution of the dispute. The mediator is trained to create a non-judgmental, balanced environment. The mediation process is voluntary and its continuance is voluntary at all times. Agreements reached by the parties are entered into voluntarily.

Copyright © 2002-2011 Marion Lee Wasserman. All rights reserved.
The above article is provided for general informational purposes. This article is not intended to apply to any specific facts or circumstances and should not be construed or applied as legal advice or legal opinion or as establishing an attorney-client relationship.