Division of Marital Debts in a Divorce in Maryland

In Maryland a Court is not allowed to transfer debts from the name of one party to another. However marital debts are still actively considered in division of marital property because it may reduce the value of a marital asset or may put one party in a much worse off circumstance then the other. Therefore marital debts will be considered for the purposes of determining an alimony award and in determining the equitable distribution of property. However marital debts are only relevant as it affects the distribution and valuing of assets and when deciding whether or not to award alimony or a monetary award. Debts solely in the name of one party that were required acquired during the course of the marriage for the benefit of both parties can not be transferred.

Prenuptial Agreements in Maryland

In order for a prenuptial agreement to be held as valid there are several requirements that must be fulfilled.

• These requirements are that the agreement:
• Is in writing
• That the parties have made full disclosure as to their holdings (either by the parties knowledge through being the one to handle the finances or through disclosure of the assets)
•  The intention of the contract be that it is a full discharge of rights of inheritance and waiver of marital rights upon divorce
• That there has been fair and reasonable consideration
• That each spouse has had the advice of an attorney (or was given the opportunity but chose not to seek the advice of counsel)

To prove that a prenuptial agreement is valid in Maryland the court stated in Cannon v. Cannon, 865 A.2d 563 (2005), that the party seeking to enforce the prenuptial agreement must prove that there was no overreaching by the party. To prove this the party must show that that the agreement was not unfairly disproportionate at the time that it was entered into, or that if there was a substantial waiver of rights that the agreement was procured fairly and entered into voluntarily, freely, and with full knowledge of the meaning and effect of the agreement.

Marital Property Division in a Divorce in Maryland

For division of marital property in Maryland the courts will use an equitable distribution for the division of marital property. The presumption for equitable distribution is that property should be divided 50/50 however there can be arguments that achieving an equitable division requires increasing or reducing one of the party's shares in the property. In Maryland the process of equitable distribution is a three step process. The first step is:  

• Classify property as marital and non-marital 
•    Maryland 
•  All property acquired by the parties during marriage is marital
• Doesn't include property:
• Any property acquired before marriage
• As gifts or inheritance from third party
•  Any property excluded by valid agreement, and
•  Property traceable to any of the above
• A piece of property can be mixed marital/non-marital– to determine this look at the source of the funds 
• Co-mingling of property type
• Mixing non-marital/marital property – marital if proper records aren’t kept to confirm the non-marital nature 
•  Appreciation of Property Value
•  If non-marital property, appreciation that is active is marital
• Spouses contribution to appreciation doesn’t have to be direct (like actual labor for the business) for the appreciation to count as marital property or to have an interest 
• Active Appreciation
•  Increase in value attributable to efforts of one or both spouses – then marital property 
•  Focus on value of the property, not the amount that was paid for it
• Passive Appreciation
•  Value increased due to market forces – non-marital

The second step is for the court to value the property

• Value the Property, MD 8-204
• Court determines value
• (a) Except as provided in subsection (b) of this section, the court shall determine the value of all marital property.
• Value of pension, retirement, profit sharing, or deferred compensation
•  (b)(1) The court need not determine the value of a pension, retirement, profit sharing, or deferred compensation plan, unless a party has given notice in accordance with paragraph (2) of this subsection that the party objects to a distribution of retirement benefits on an “if, as, and when” basis.
•  (2) If a party objects to the distribution of retirement benefits on an “if, as, and when” basis and intends to present evidence of the value of the benefits, the party shall give written notice at least 60 days before the date the joint statement of the parties concerning marital and non-marital property is required to be filed under the Maryland Rules. If notice is not given in accordance with this paragraph, any objection to a distribution on an “if, as, and when” basis shall be deemed to be waived unless good cause is shown

The final step is for the court to divide the property:

• The Court Divides the property using statutory factors outlined in MD 8-205
•  Grant of award or transfer ownership of an interest in property
• (a)(1) Subject to the provisions of subsection (b) of this section, after the court determines which property is marital property, and the value of the marital property, the court may transfer ownership of an interest in property described in paragraph (2) of this subsection, grant a monetary award, or both, as an adjustment of the equities and rights of the parties concerning marital property, whether or not alimony is awarded.
•  (2) The court may transfer ownership of an interest in: 
•  (i) a pension, retirement, profit sharing, or deferred compensation plan, from one party to either or both parties;
•  (ii) subject to the consent of any lien holders, family use personal property, from one or both parties to either or both parties; and
• (iii) subject to the terms of any lien, real property jointly owned by the parties and used as the principal residence of the parties when they lived together, by:
• 1. ordering the transfer of ownership of the real property or any interest of one of the parties in the real property to the other party if the party to whom the real property is transferred obtains the release of the other party from any lien against the real property;
• 2. authorizing one party to purchase the interest of the other party in the real property, in accordance with the terms and conditions ordered by the court; or
•  3. Both

The courts goal in dividing marital property is to compensate for the investment in marriage instead of the emphasis that is placed on need that is used in determining alimony awards. 

Determining what is Income for the Purpose of Calculating Child Support in Maryland

In order to calculate child support in Maryland one must first determine the amount of income of the party paying support. To determine what is income one must look to MD 12-201 of the Family Law Code.
This says:

Actual income

• (b)(1) “Actual income” means income from any source.
• (2) For income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation, “actual income” means gross receipts minus ordinary and necessary expenses required to produce income.
• (3) “Actual income” includes:
• (i) salaries;
• (ii) wages;
• (iii) commissions;
• (iv) bonuses;
• (v) dividend income;
• (vi) pension income;
• (vii) interest income;
• (viii) trust income;
• (ix) annuity income;
• (x) Social Security benefits;
• (xi) workers' compensation benefits;
• (xii) unemployment insurance benefits;
• (xiii) disability insurance benefits;
• (xiv) for the obligor, any third party payment paid to or for a minor child as a result of the obligor's disability, retirement, or other compensable claim;
• (xv) alimony or maintenance received; and
• (xvi) expense reimbursements or in-kind payments received by a parent in the course of employment, self-employment, or operation of a business to the extent the reimbursements or payments reduce the parent's personal living expenses.
• (4) Based on the circumstances of the case, the court may consider the following items as actual income:
• (i) severance pay;
• (ii) capital gains;
• (iii) gifts; or
• (iv) prizes.
• (5) “Actual income” does not include benefits received from means-tested public assistance programs, including temporary cash assistance, Supplemental Security Income, food stamps, and transitional emergency, medical, and housing assistance.

Income

• (h) “Income” means:
• (1) actual income of a parent, if the parent is employed to full capacity; or
• (2) potential income of a parent, if the parent is voluntarily impoverished.

Potential income

• (l) “Potential income” means income attributed to a parent determined by the parent's employment potential and probable earnings level based on, but not limited to, recent work history, occupational qualifications, prevailing job opportunities, and earnings levels in the community.

From this definition of income money made from working overtime could be determined to be income however this would be determined based on the courts discretion, which would look to the amount of overtime worked and how readily overtime is available to the party. Income can also be based on continuing payments such as grants for education, unemployment benefits, disability payments, etc. If a party who is ordered to pay child support is not currently employed the court can impute an income on that is determined based on the factors outlined in 12-201(l).

Establishing and Disestablishing Paternity in Maryland

There are multiple ways for a party to establish paternity however these methods vary depending on whether or not the parents are married at the time of the child's birth. The goal of paternity statutes is to protect the child by establishing legal fathers who will be required to support their minor child. When parties are married there is a presumption that any child born during the marriage is a result of that marriage, this is to avoid illegitimacy and to protect the stability of the marital family, and this presumption will be placed before the rights of the biological father. However for cases of unmarried parents establishing paternity can be done either through a Judicial Declaration as a result of a paternity lawsuit or by voluntary acknowledgement of the father through which paternity can be established without having to go to court. To disestablishing paternity in Maryland is governed by statutory provision 5-1038, Finality of Orders, Modification. This statute says that paternity can be disestablished through genetic testing where the results exclude the individuals named as the father from being the biological father. In Maryland once paternity has been disestablished an individuals obligations to the child are terminated however this does not have any retroactive effect and will not result in the repayment of support paid to the child or erase arrears that have not yet been paid. 

Third Party and Grandparent Visitation in Maryland

The issue of third party visitation for grandparents in Maryland is outlined in MD 9-102 Petition by Grandparent's for Visitation. This statute states that a court may (1) consider a petition for reasonable visitation of a grandchild by a grandparent; and (2) if the court finds it to be in the best interests of the child, grant visitation rights to the grandparent. Therefore in Maryland the court will look to the best interests and apply the best interest test when determining whether or not visitation should be granted to a grandparent. The issue of third party visitation was addressed in the Supreme Court Case Troxel v. Granville, 530 U.S. 57,120 S. Ct. 2054,147 L. Ed. 2d 49 (2000). In Troxel, the court determined that State courts must give deference to a fit parent’s reasonable visitation decisions and that there is a presumption that parents will act in the best interests of their children. The Court also outlined that in order to overcome the presumption in favor of the a child's parents the petitioning party must show parental unfitness, exceptional circumstances that demonstrate a detriment to the child. The burden to overcome the presumption is on the petitioning party which will be faced with the Court providing preference to a fit parent's decision.

Modification of an Alimony Award in Maryland

In Maryland in order for an award of rehabilitative alimony to be extended the party seeking the extension must show that there will be a harsh and inequitable result if not extended. However a court may extend the alimony award as long as the agreement that establishes alimony doesn't limit the court's ability to modify and if there are circumstances that are not foreseeable or anticipated arise during alimony period that would lead to harsh and inequitable results without an extension of the alimony award. If a party meets these criteria they must petition for a modification within the period which alimony has been awarded. A court may modify the amount of alimony awarded as the circumstances of the situation and justice may require. However upon remarriage a no modification clause will terminate unless there is an explicit statement that this does not terminate upon remarriage.

Use and Possession in a Divorce in Maryland

When a provision that concerns the family home or family use personal property, such as a use and possession order in a divorce in Maryland,  terminates the court shall treat the property as marital property if the property qualifies as marital property, and the court can adjust the equities and rights of the parties concerning the property is set forth in Family Law Article 8 – 205. See also Barr versus Barr 473 A 2d 1300. As such in the event there is a marital home that is subject to a use and possession order then at the end of the use and possession order the court can transfer title of the property to one or the other of the spouses consistent with Family Law article 8 – 205. If you have questions regarding divorce in Maryland or use and possession orders in a divorce in Maryland please feel free to call my office and we will discuss your case over the phone at no cost to you 1-888-760-7339.