Articles Posted in Division of Property

The marriage of two people is a joyous event. A couple that decides to marry is expressing hope for their future lives together. Despite their love and devotion for each other, spouses sometimes enter into a “prenuptial” or “ante-nuptial” agreement prior to their wedding day. Such agreements may include various terms, depending on the circumstances of the parties, but they typically set forth the distribution of certain assets in the event of a divorce. Entering into a prenuptial agreement may be considered a prudent course of action, especially if one party has a significant amount of wealth at the time of the marriage. To determine whether a prenuptial agreement is right for your circumstances, you are encouraged to consult with a Maryland family law lawyer as soon as possible.

Essentially, a prenuptial agreement is a contract. And while there are no specific Maryland laws that govern prenuptial agreements, the formation and enforceability of such a document is subject to general principles of contract law. For instance, the parties must mutually agree to the terms of the agreement, which should be in writing. If a couple with a prenuptial agreement seeks to divorce, courts are often called upon to determine the validity of the document. In so doing, courts will look at whether:  1) the agreement was fair and equitable; 2) the parties each gave a full, complete, and truthful disclosure of their assets prior to document signing; 3) each party entered into the agreement freely, voluntarily, and knowingly; and 4) each party sought independent legal advice prior to signing the agreement.

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Maryland is an equitable distribution state. This means that in divorce, property and debts acquired during the marriage are subject to “fair and equitable” division (subject to limited exceptions). The law does not guarantee that marital property will be divided equally. For the most part, marital property includes items such as bank accounts, businesses, homes, automobiles, stocks, jewelry, furniture, retirement plans, pensions, and other property acquired during the marriage. Interestingly enough, Maryland does not include the value of professional degrees or licenses earned during the marriage.

Based on this list, it should be clear that a couple’s marital property potentially could be worth a great deal at the end of a marriage. If you are considering separating from your spouse, it is important to preserve your interests in, and rights to, assets acquired during the marriage. One of the best ways to protect your legal and financial rights is to speak with an experienced Maryland family law attorney as soon as possible.

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In most states throughout this country, including Maryland, when a couple seeks to divorce, they may agree to divide up marital property or otherwise be subject to the court’s division of any assets and debts accumulated during the marriage. A critical stage in every divorce case involves the identification and characterization of property subject to division. One hopes that the parties will be honest and disclose all marital assets. But in some cases, spouses may not be completely forthcoming and actually attempt to conceal certain assets. For these reasons alone, it is important that anyone considering a divorce take steps to protect their financial future. One way to do that is to consult with an experienced family law attorney who handles divorce and separation cases on a daily basis.

Under Maryland law, marital property is all the property that you or your spouse accumulated during the marriage, including your bank accounts, houses, cars, furniture, businesses, stocks, bonds, pensions, retirement plans, IRAs, and jewelry. While some states also include the value of professional licenses and degrees, Maryland does not. Some items that are not considered marital property, even though they were acquired during the marriage, are gifts from a third party, something inherited by one spouse alone, or something that the couple mutually agreed would remain separate property.

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Under Maryland law, “marital property” is a term used to identify property that was acquired during the length of a marriage. In contemplation of divorce, spouses often seek to divide up marital property by virtue of a settlement agreement. Under Section 8-105 of the Maryland Family Code, courts have the power to enforce the provisions of such agreements. The statute provides that a settlement agreement that has been incorporated, but not merged into the final decree, may be enforced as a judgment or as an independent contract. It is important to understand how these legal rules can affect your divorce proceeding. For assistance and guidance on how to prepare and present your case, you are encouraged to contact a local Maryland divorce attorney as soon as possible.

In a recent divorce case, a Maryland court of special appeals was confronted with a dispute over the terms of a settlement agreement purporting to divide the couple’s pension and retirement benefits. Here, the couple got married in 1989 and separated in 2006. The wife filed a complaint for absolute divorce in 2008. In February 2009, the husband filed a counter-complaint for absolute divorce, custody and other relief. On July 30, 2009, the court issued a judgment of divorce, incorporating the parties’ agreements – resolving all remaining issues. As part of this judgment, the court referenced the parties’ agreement concerning all of the property issues related to this case, which included a division of the couple’s pension interests.

Approximately a month later, the military informed husband that he would be relieved of duty and afforded “retired pay” that would be calculated based upon a 60% disability rating. In January 2010, the trial court issued a Marital Property Consent Order, which identified the parties’ agreement regarding the division of marital property, namely that wife would be entitled to 50 percent of the marital property portion of husband’s monthly pension. Throughout a series of court proceedings, wife argued that husband was in contempt for failing to divide his military pension. Husband argued that he was now only receiving disability payments, which are not subject to division under federal law.

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Couples who file for divorce have an opportunity to prepare a settlement agreement that will address and resolve all issues arising out of their marriage. This means that they may divide up the marital property in a manner suitable to both parties. Once a court issues the final judgment of divorce, this agreement may be included in the record, and the judgment will contain its terms. Under Maryland law, spouses may identify and allocate “pension benefits” as part of the settlement agreement. Like many aspects of a divorce proceeding, this phase is governed by case law and statutory provisions. In order to adhere to these laws and protect your financial interests in divorce, it is imperative that you contact an experienced family law attorney from the Maryland area.

In a recent case, Pulliam v. Pulliam, the divorcing couple disputed whether their settlement agreement and consent judgment incorporated a voluntary Deferred Retirement Option Program (“DROP”). Here, the parties married in 2005 and filed for divorce five years later in 2010.  During the uncontested divorce hearing in 2012, the couple placed their settlement agreement on the record. Pertinent to this case, the agreement addressed the husband’s membership in the Law Enforcement Officers’ Pension System (“LEOPS”).  Under the terms of the agreement, which purported to resolve all issues arising out of their marriage, the wife was entitled to one half of the “marital share” of the husband’s entire pension benefit.  In March 2012, the court entered a judgment of absolute divorce and included the parties’ agreement as part of the order.

In August 2013, the wife moved the court, seeking an Eligible Domestics Relation Order (“EDRO”) because the husband refused to sign the order.  Essentially, the wife was seeking to include the DROP benefits as part of the husband’s pension, of which she would be entitled to a share.  The husband opposed the motion, arguing that at the time of the divorce, he was not even eligible to participate in the DROP program.  The trial court concluded that the DROP benefits were to be considered retirement assets within the meaning of the EDRO.  The husband appealed.

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In many divorce cases, a couple is able to reach an agreement concerning some of the key contentious issues, such as the division of marital property, alimony, child support, and the like. Of course, the parties are encouraged to find some middle ground on these fundamental matters, since it tends to save time, money, and unnecessary heartache. But even in cases where the parties initially agreed to a settlement that is incorporated in the divorce judgment, there is no guarantee that circumstances won’t arise in the future that will prompt one spouse to seek the court’s involvement. No matter how agreeable a family law case seems, the spouses are strongly encouraged to seek their own counsel, especially when children are involved. An experienced Maryland family law attorney can help protect your financial and logistical rights in a dissolution of marriage case at every step of the way.

In a recent Maryland case stemming from a divorce judgment granted in 2010, Baker v. Baker (Md. Ct. of Special App. 2015), the ex-husband sought to restrict his ex-wife’s entitlement to a “capital-loss carry-forward” resulting from activity in the couple’s jointly held investment accounts. During the original dissolution proceedings, the parties entered into a Voluntary Separation and Property Settlement Agreement (the “Agreement”), which was incorporated into the judgment of divorce. Among other items, the Agreement addressed matters of alimony, child custody and support, and the division of marital property. At issue in this case was one particular clause in the Agreement that allocated the couple’s investment accounts.

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Each state in the country has the authority to enact laws governing marriage and divorce. These laws can vary a great deal, especially when it comes to the acceptable grounds for divorce. The Maryland Family Code identifies two types of divorce that couples may pursue:  absolute and limited. When seeking an absolute divorce, the couple must establish legal grounds for separation. State law provides the following acceptable scenarios:  a 12-month separation period, desertion, adultery, cruelty, excessively vicious conduct, certain criminal convictions, and insanity.

According to the Maryland Courts’ website, the most commonly used ground for divorce is the 12-month separation. In order to satisfy the legal requirement, parties must live separately for 12 uninterrupted months. (In a recent blog post, we discussed a controversial Maryland case where there was some question as to whether the couple seeking a divorce maintained 12 uninterrupted months of separation.) In a limited divorce action, while courts have the authority to resolve significant family issues, this proceeding alone does not end the marriage. Generally, parties who file for a limited divorce do so in order to resolve certain issues, financial and otherwise, that cannot wait until the court grants an absolute divorce. Furthermore, a limited divorce may suit couples who do not qualify for an absolute divorce. Continue reading →

In any divorce matter, it is important for each spouse to consult with his or her own attorney, who will seek to protect that person’s separate rights going forward. One of the most important documents that divorcing spouses often agree to is a marital settlement agreement or “MSA.” In many cases, the MSA will purport to resolve any number of issues, such as property division, alimony, child support, custody, and other matters. That agreement can be made part of the ultimate divorce judgment, depending on the circumstances and the parties’ wishes. At each step in the proceedings, there are many decisions to be made that could affect the outcome of a case. For this reason, parties are encouraged to secure their own family law attorney, who is experienced handling such cases in the state of Maryland.

In a recent case, the husband and wife had hired an attorney to handle an immigration matter. Some time later, the couple decided to divorce. They discussed separation and agreed to a variety of terms to be incorporated in a marital settlement agreement. In 2005, the wife asked that same attorney to handle memorializing the terms related to the division of marital property. The attorney drafted the document, the husband provided some revisions, and the parties signed the agreement on October 18, 2005. The document contained a clause titled “Independent Counsel,” wherein the husband acknowledged that he signed the agreement without his own attorney, freely and voluntarily.

Despite signing the agreement, the couple did not separate at that time. In 2007, the wife discovered that the husband was having a second extramarital affair, and they decided to prepare another settlement agreement to address issues not covered by the 2005 agreement. Based on their discussions, the wife asked the same attorney to draft another document. The husband was involved in reviewing the document and making certain changes. In 2008, the parties executed the final MSA, which also included an independent counsel provision. In 2009, the husband filed for divorce and simultaneously tried to allege that the 2005 and 2008 agreements were void and unenforceable and should be set aside. He claimed that they were entered into when the parties were still in a confidential relationship with the attorney who handled the previous immigration matter. Continue reading →

One of the most significant financial aspects of a divorce is the division of marital property. Under Maryland law, courts have the authority to identify marital property, assess its value, transfer ownership between the parties, and issue a monetary award in order to even out the rights of the parties. Depending on the case and the nature of the relationship between the spouses, the couple may be able to enter into an agreement specifying the allocation of property, instead of relying on the court to do so. In any case, because this part of the divorce proceeding can significantly affect the parties’ lifestyle going forward, it is important to consult with an experienced Maryland attorney as early in the process as possible.

One of the items subject to property division in divorce is a spouse’s interest in retirement plan benefits earned during the marriage. In a recent divorce case, the couple entered into a property settlement agreement that included a clause allocating future benefits from the retirement plan sponsored by the husband’s employer. The agreement incorrectly implied that the plan was governed by federal law (ERISA), even though it was exempt from that law, and further stated that the divorce judgment would serve as a QDRO (a Qualified Domestic Relations Order). Neither party took any steps to obtain a QDRO for submission to the pension plan.

The husband remarried and designated his new wife as the beneficiary under the retirement plan. Upon the husband’s death, a dispute arose between the former wife and the second wife as to the entitlement of the retirement benefits. In accordance with the property settlement agreement, the former wife applied to the pension plan for a portion of the benefits that accrued during the marriage. The pension plan rejected her request, arguing that it never received a QDRO indicating that the ex-wife was a beneficiary of the husband’s death benefits. Next, she filed a complaint against the current wife, alleging that she had been unjustly enriched by receiving all of the pension and death benefits. Furthermore, she requested the imposition of a constructive trust on the portion of the pension and death benefits that the second wife received. Continue reading →

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