Articles Posted in Separation Agreements

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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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 →

Maryland separation agreements can waive the parties’ right to have the court assume jurisdiction over modifications to spousal support. Removing the court’s power to modify a separation agreement can prove problematic in the event that one of the parties regrets the terms of the original separation agreement.

In a 2010 case, a husband and wife were married for about 32 years before getting a divorce. They agreed through a separation agreement that the husband would pay permanent alimony of $4000 per month until he terminated his employment at which point the wife would continue to get 50% of his post-employment income.

The couple agreed to waive the right to have the agreement modified. In exchange for permanent alimony, the wife waived her interest in a particular property. They also agreed that the alimony provision of the agreement would be merged into the divorce decree. Continue reading →

In Maryland, courts scrutinize attacks to prenuptial agreements carefully. They interpret prenups as they would any other contract between two consenting adults. In a recent case, a twenty-six-year-old woman had married a father of three. In 1988 when they married, she was working in a daycare center for minimum wage. The man was a successful construction company owner, not yet divorced with $2 million in assets.

Once the man divorced his former wife, he told the woman he wouldn’t marry her unless she signed a prenuptial agreement that his attorney had prepared, waiving any interest in certain items of his property. She signed it four days before their wedding, though later on the pair disagreed about when he had given it to her.

The prenup stated that both parties had the opportunity to consult counsel. The agreement listed various property that the wife would not have any ownership interest in. However, the agreement didn’t mention certain items of property, such as the man’s IRA. Continue reading →

The Maryland Court of Special Appeals recently determined in Dapp v. Dapp that certain retirement benefits may not be assigned or split in a divorce agreement. The case arose from a dispute between a couple who married in 1968. Amtrak employed the husband starting in 1981 and the couple separated about five years later. Two years after the couple separated, the wife was granted a divorce. The judgment of divorce incorporated the couple’s Marital Separation and Property Settlement Agreement.

The Agreement mutually waived alimony and other spousal support, but one paragraph provided that if the wife did not remarry within five years of the divorce, she would be entitled to half of the husband’s pension accrued with Amtrak. The wife did not remarry.

The husband had worked for Amtrak for 88 months before the divorce and 243 months after it. When he retired, he started to receive monthly retirement benefits as required by the Railroad Retirement Act (RRA) of 1974. $1950 of that monthly sum was “Tier 1” benefits. The Tier 1 benefits that the RRA provides are structured to substitute for Social Security benefits. $1163.13 was “Tier II benefits” and supplemental annuity payments. Mr. Dapp did not inform Mrs. Dapp of his retirement when he retired and she did not receive any retirement benefits.

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This month, a Maryland Court of Special Appeals ruled on Li v. Lee, a case with several family law issues. The facts are complex, but are briefly as follows.

A husband and wife met in 1977. In spite of a brief romance, they married other people. Years later, their romance was rekindled while they were still married to those people and the wife was living in Canada. Both divorced their partners. The U.S. Government was the husband’s employer and he was a naturalized U.S. citizen.

The couple wanted to change the wife’s immigration status to “lawful permanent resident” status and hired the immigration attorney Yu Gu, who was recommended by one of the wife’s friends. Gu prepared all the paperwork for the couple. The husband provided his tax return information and bank statements in order to complete the paperwork. Continue reading →

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