ALIMONY

Ayca Celikkol Gazelle v. Guy Scott Gazelle, Massachusetts Appeals Court, (2023) No. 22-P-829.

Summarized by Jessica Landry, Esq.

How do foreign assets and exchange rates impact Alimony and Property Division in a Massachusetts Divorce?

The Massachusetts Appellate Court recently affirmed a trial judge's decision concerning a couple's Turkish assets in an alimony award. The Wife challenged the currency exchange rates used by the trial judge to convert the value of Turkish assets into US dollars for the division of assets and the calculation of alimony. The Wife argued that the judge should have used exchange rates from the date of judgment in 2020, instead of applying rates from 2016 or 2017, as the lira's value had significantly declined. The Wife contended that this resulted in her receiving less than her intended share of the marital estate, leading to an incorrect alimony calculation. Additionally, she requested that the alimony be periodically adjusted based on changes in exchange rates. The Court held that the Wife's arguments were based on a flawed assumption that changes in exchange rates fully accounted for differences in asset values.

Currency exchange rates can impact the calculation of alimony in cases where one of the parties owns assets or receives income in a foreign currency. Alimony is typically determined based on both spouse's financial needs and ability to earn an income. When dealing with international assets or income, currency exchange rates can introduce additional complexity into the alimony calculation process. For example, currency exchange rates can impact alimony and/or asset values in the following situations:

1. Income Conversion: If one party earns income in a foreign currency, the Court may need to convert that income into the local currency to calculate alimony. Fluctuations in exchange rates can lead to variations in the converted income. If the local currency strengthens against the foreign currency, the converted income may increase, potentially affecting the amount of alimony to be paid or received.

2. Asset Valuation: Similar to income, the value of foreign assets must be converted into the local currency for alimony calculation purposes. Changes in exchange rates can directly impact the value of these assets in the local currency. If the foreign currency weakens against the local currency, the value of the foreign assets in the local currency may decrease.

3. Rental or Investment Income: If a party owns rental properties or investments in a foreign country, the income generated from these sources will need to be converted into the local currency. Fluctuating exchange rates can lead to changes in the converted income, which can affect alimony calculations.

4. Lifestyle Considerations: In cases where one party is living in a foreign country and the other party is in the United States, exchange rate fluctuations can impact the cost of living and the standard of living of both parties.

5. Periodic Adjustments: In some cases, parties may request that alimony payments be adjusted periodically based on changes in exchange rates. However, courts may be cautious in approving such arrangements due to the uncertainty and potential complexity of tracking currency fluctuations over time.

It's important to note that the impact of exchange rates on alimony calculations can vary based on the case's specific circumstances, including the stability of the foreign currency, the duration of the alimony obligation, and the overall financial situation of the parties.  In this case, the Court did not amend the judgment to reflect these fluctuations, but the Court leaves open the possibility that it could in other situations.