English Soccer Star Claims Special Contribution in Divorce

by James J. Gross

Ryan Giggs will ask an English divorce court for more than 50% of millions that he has acquired during his marriage due to his special skills in football, or soccer as we call it in America.  The argument failed last week in Randy Work’s “genius” claim.

We have something similar in Maryland which you can argue if you have made special contributions in your marriage.

In Maryland,when distributing marital property: the court must consider, among other factors;

— the contributions, monetary and nonmonetary, of each party to the well-being of the family.  Section 8-205 (b)(1) of the Family Law Article of the Md. Code

and

— how and when specific marital property or interest in property was acquired, including the effort expended by each party in accumulating the marital property or the interest in property.  Section 8-205 (b)(8) of the Family Law Article of the Md. Code

/by James J. Gross

Extra Credit for Being Smart?

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by James J. Gross

Randy Work, an American financier, is appealing an award that the English Courts made to his wife, Mandy Gray, last year of 140 million pounds, which was half the martial estate.  He claims that he should get two thirds because it was his financial genius that created the wealth.

Under English law, a court can make less than an equal division if it would be unfair to disregard the conduct of one party to the marriage.

In Maryland, the court can adjust the equities of property distribution by making a marital award based on certain factors that must be considered.  One of the factors includes the efforts of each party in accumulating marital property.

But another factor is the contributions of each party, either monetary or non-monetary, to the well-being of the family.  If one spouse took care of the home and children while the other spouse advanced his or her career, who is to say those contributions are not equal?  How would you divide this estate?

 

/by James J. Gross

Maryland Court Rules on Social Security in Pension Case

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by Michael F. Callahan

The Maryland Court of Appeals has issued its ruling in Milton E. Jackson v Gayle S. Jackson., the case we have been discussing in this last series of articles.

Mr. Jackson was a federal employee with retirement funds under the CSRS system – a large pension, and no social security.  Ms. Jackson was a state government employee – covered by social security and a smaller pension.

Mr. Jackson’s argued that a part of his pension should be treated as social security benefits and not counted when equalizing the pensions of each party.

The Court of Appeals ruled that:

(a)  a state court could not divide social security benefits of a spouse in divorce because federal law establishing social security preempts that.

(b)  The trial court may not calculate and offset the value of a spouse’s future social security benefits from the other spouse’s pension benefits before division of that pension between the spouses in a divorce.

(c)  However, the trial court must consider the spouses’ respective entitlements to social security benefits in determining a martial award as an “other factor” under Maryland divorce law.

So in the end, the Court left a way around the prohibition against dividing or offsetting social security benefits.  It left it to the judge’s discretion to determine a marital award based on “other factors” including social security.  And the judge doesn’t even have to show how the marital award is calculated.   The judge just needs to say that all factors were considered.

 

 

/by Michael Callahan

Comparison of Child Support: Maryland, Virginia and D.C. Guidelines

Here is a comparison applying the child support guidelines of each local jurisdiction to a typical case: two children, sole custody, $0 health insurance and $0 child care costs and combined monthly income of $10,000, non-custodial parent’s income is $7,500 and custodial parent’s income is $2,500:
District
total support $25,174/12 = $2,098
custodial % of income .75
recommended support order $1,573

Maryland
total support $1,811
custodial % of income .75
recommended support order $1,358

Virginia
total support – $1,567
custodial % of income .75
recommended support order $1,175

Again, applying the child support guidelines to a case with the same facts except combined monthly income of $15,000, non-custodial parent’s income is $11,250 and custodial parent’s income is $3,750:
District of Columbia recommended support order – $2,197

Maryland recommended support order – $2,135

Virginia recommended support order – $1,541

And the same facts except combined monthly income of $20,000, non-custodial parent’s income is $15,000 and custodial parent’s income is $5,000
District of Columbia: recommended support order – $2,714

Maryland recommended support order (extrapolated)- $2,847

Virginia recommended support order – $1,765

And now with combined monthly income of $30,000, non-custodial parent’s income is $22,500 and custodial parent’s income is $7,500
District of Columbia: recommended support order – $2,714

Maryland recommended support order (extrapolated)- $4,271

Virginia recommended support order – $2,144

As you can see, at higher incomes, child support is much lower in Virginia than in Maryland or the District, just as it was in 2011. At incomes over $20,000, recommended support in Maryland using extrapolation is much higher than in DC or Virginia.

/by Michael Callahan

Post-Separation Strategies in Maryland Divorce Cases

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A 2013 Virginia case, Wright v Wright, 61 Va. App. 432; 737 S.E. 2d 519; 2013 Va. App. LEXIS 53 prompted me to observe that a high earning spouse can increase what he, or she, gets to keep by paying expenses out of marital property and banking the post –separation earnings because in Virginia those earnings are not marital property. Conversely, if you are the lower earning spouse you want prompt filings, quick hearings and, if the stakes justify it, an injunction on expenditure of marital property. See The “Wright” Strategy for Increasing What You Keep in Your Divorce, April 2014.

In Maryland, a spouse’s earnings after separation are marital property in the absence of an agreement to the contrary. So there is no advantage to paying expenses with accumulated marital property and banking post-separation earnings in Maryland. What then is the proper strategy for a high earning spouse in Maryland in a case with a relatively long separation?

First, if there is any existing non-marital property, don’t spend that. And remember that from separation to divorce you are earning marital property, increasing the marital proportion of retirement accounts, and adding to the duration of marriage, which is a factor in determining both alimony and marital property distribution. So it pays to settle early because a Separation and Property Settlement Agreement will exclude subsequent earnings from marital property.
Getting to settlement usually requires making a good offer. Getting to settlement early may require making a good offer early. This runs directly contrary to many negotiator’s instinct to make a low ball offer and move up in baby steps to wear down the adversary and get a “good deal”.
For high earners the good deal achieved by extended negotiations may be at the cost of hundreds of thousands of extra dollars added to the marital estate, and then divided. Sometimes it makes sense to make a really good offer early.
What about the Maryland financially dependent spouse? Certainly this spouse wants to settle temporary support and custody, visitation and access early, if possible. But what about the final settlement distributing marital property? It may pay to delay. But the advantage of dividing a bigger pie later must be balanced against the obligation to negotiate in good faith. Also, the additional costs and stress of getting-to-yes later rather than earlier are big negatives. Perhaps a bigger issue is that if the moment for settlement passes, it may not come again.

/by Michael Callahan

The “Wright” Strategy for Increasing What You Keep in Your Divorce

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In a post titled “Determining Marital Property in Maryland, Virginia and the District Of Columbia” (June 17, 2011), I said:

“This article is about when the accumulation of marital property ends. It starts at the time of the marriage. When you return from the honeymoon and go to work the next Monday morning you are earning marital property – the stuff the divorce judge divides. When is the first day you can go to work and earn separate non-marital property? It depends on the jurisdiction.”

And after reviewing the applicable statutes, I said:

“When you and your spouse have separated, intending to remain separated, and do not have a property settlement agreement, in Maryland and the District of Columbia the property you acquire from the date of separation until the date of divorce is marital property. In Virginia such property is not presumptively marital, and in general is determined to be separate property, unless special facts and circumstances are established to overcome the presumption.”

In a recent case, Wright v Wright, 61 Va. App. 432; 737 S.E. 2d 519; 2013 Va. App. LEXIS 53, the Court of Appeals of Virginia considered whether Mr. Wright’s strategy in the two plus years between the date of separation and date of the divorce hearing required a finding to bring post-separation expenditures of marital property back into the marital pot to be divided with Mrs. Wright.

Husband had certain marital accounts totaling about $2,800,000. Husband earned approximately $1,500,000 per year; Wife was a homemaker. During the post-separation period, the marital accounts declined to about $1,415,000 on account of Husband’s payment of joint income taxes, real estate taxes on the marital home, tuition and school expenses for a child of the parties, spousal support to Wife and his own attorney’s fees and expert witness fees. Husband deposited the money he did not spend on these expenses to his separate accounts which, of course, were not marital.

The Court of Appeals said none of those expenditure were improper so they did not amount to “marital waste.” They explained that there are only two categories of expenditures of marital funds “proper” and “waste.” If your spending of marital funds falls into the “proper” categories it’s okay even if that permits a big decline in marital assets to be divided and a big increase in the separate funds of the party following the strategy.

The result in Wright provides a road map for the higher earning spouse to skew the division of marital property in his or her favor in some Virginia cases. If you are the lower earning spouse you want prompt filings, quick hearings and, if the stakes justify it, an injunction on expenditure of marital property.

Also, for multi-state or potentially multi-state cases, Wright is another reason that in a case with a relatively long separation, all other things being equal, the higher earning spouse probably wants the divorce case to be heard in Virginia. As I’ve said here before, a little planning and a little audacity can get you into the Court you want to be in. And a little more planning during separation can increase the property you get to keep.

Some of the facts here are from an article by one of the lawyers involved in the case. What’s wrong with Wright, Ronald R. Tweel (Virginia Family Law Quarterly, Spring 2014)

/by Michael Callahan

Where to File for Custody and Support in Virginia

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When separated spouses in Maryland and the District of Columbia require the aid of the court to resolve issues of support or custody they know where to file their case – in the local Circuit Court in Maryland and in Superior Court in the District of Columbia. And if they have been separated for less than the period required for an absolute divorce, they can include a request for limited divorce (legal separation in DC) in the support and/or custody suit.

Not so in Virginia. The circuit courts are the trial courts of general jurisdiction, and are the trial courts preferred by lawyers, including family lawyers. But the court with jurisdiction of minors, including custody and support of minors, and support of spouses, is the Juvenile & Domestic Relations District Court (“JDR”). The Circuit Court only has concurrent jurisdiction over these matters if there is a divorce case pending. And, unlike in Maryland and DC, when the spouses have been separated for less than the required period (one year in general, six months with a written separation agreement and no minor children), a complaint for limited divorce is often not an option because in Virginia there aren’t any no fault grounds for limited divorce (called divorce from bed & board or, in Latin, a mensa et thoro ).
In this situation, the spouse needing custody or support relief faces a choice. He or she can:

1. File a petition requesting custody and/or support relief in JDR;

2. Assert fault grounds and file a complaint for divorce from bed and board and for the custody and/or support relief in Circuit Court; or

3. Wait the one year period and then file a complaint in Circuit Court for final divorce (called divorce a vincula matrimonii) on separation grounds and for the custody and/or support relief.
Each of these choices has advantages and disadvantages which I will address in my next post.

/by Michael Callahan

Pendente Lite Relief in Virginia

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There are many divorce cases where only one spouse is employed and there are no significant liquid assets or those assets are all under the control of the employed spouse.

In such cases, the financially dependent spouse can seek an award of pendente lite support.  “Pendente lite” is Latin for “pending the litigation”.  It means temporary support until the divorce trial.

Pendente lite support hearings are short and the only issues considered are need for support and ability to pay.  Some jurisdictions have established guidelines for  pendente lite spousal support.

For example the Fairfax County formula is:

When child support is also payable – monthly spousal support equals 28% of the payor’s monthly gross income minus 58% of the payee’s monthly gross income.

When child support is not payable – monthly spousal support equals  30% of the payor’s monthly gross income minus 50% of the payee’s monthly gross income

Child support is generally determined under the child support guidelines. Those guidelines are also used to determine child support pendente lite.

Virginia Courts can also enter pendente lite orders on maintaining health insurance coverage for a spouse or children, responsibility for debt payments during the case, exclusive use and possession of the family residence during the case, payment of attorney’s fees and other costs of the suit, and custody of the children pendente lite . However, most courts are reluctant to rule on custody pendente lite.  This is because custody matters have scheduling priority and will soon be heard as a final matter so pendente lite relief is not necessary unless there is an emergency.  And the judges do not like emergencies, so if you claim you have an emergency it better be a real emergency.

The Court’s ruling on any issue at a hearing on pendente lite relief can be reviewed and modified at the final hearing.

/by Michael Callahan

New Notice Required in Virginia Divorce Orders

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In a prior post here I said: You should review your will and all beneficiary designations post-divorce to ensure that you do not unintentionally include a gift to your former spouse. A new notice required in Virginia divorce orders may help you out.

There are statutes that provide that the judgment of divorce eliminates prior bequests or certain beneficiary designation to the former spouse.

  • Va. Code Sec. 20-111, 20-111.1, 64.1-59
  • Md. Code, Estates and Trusts Article, Sec. 4-105(4)
  • DC Code Sec. 18-109 and Estate of Roscoe H. Liles, 435 A.2d 379; 1981 D.C. App. LEXIS 355.

The effect of these statutes on the treatment of a now former spouse in an estate plan is uncertain and incomplete and may be frustrated by federal law spousal protections. The savings statutes are no substitute for a careful review of estate planning documents and beneficiary designations and corrective action based on the divorce settlement or judgment.

The Virginia legislature recently ensured that the Virginia circuit courts tell all divorcing parties what we’ve been telling our clients and the readers of this blog. They added section E to Va. Code § 20-111.1. Revocation of death benefits by divorce or annulment. It provides:
… E. Every decree of annulment or divorce from the bond of matrimony entered on or after July 1, 2012, shall contain the following notice in conspicuous, bold print:

Beneficiary designations for any death benefit, as defined in subsection B of § 20-111.1 of the Code of Virginia, made payable to a former spouse may or may not be automatically revoked by operation of law upon the entry of a final decree of annulment or divorce. If a party intends to revoke any beneficiary designation made payable to a former spouse following the annulment or divorce, the party is responsible for following any and all instructions to change such beneficiary designation given by the provider of the death benefit. Otherwise, existing beneficiary designations may remain in full force and effect after the entry of a final decree of annulment or divorce.

Once you are divorced, review your beneficiary designations and your will and make changes as necessary.

/by Michael Callahan

Legal Separation and Limited Divorce in Virginia

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There is no such term as “legal separation” in Virginia law.  Sometimes people may refer to themselves as legally separated after they have signed a Marital Settlement Agreement with their spouse and are waiting out the required separation period until they can file for an uncontested divorce.

However, you can obtain a limited divorce, also called a “divorce a mensa et thoro” (from bed and board) if you have grounds. The grounds for a limited divorce are different than the grounds required for a final divorce.  They are as follows:

Desertion or abandonment – no minimum duration

Cruelty – no required duration after the act of cruelty.

Note that, unlike for final divorce, there are no “no fault” limited divorce grounds in Virginia.

In Virginia, the reason for filing a limited divorce is usually to get your support or custody case into Circuit Court rather than Juvenile & Domestic Relations District Court when you need a court order regarding support or custody and you do not have grounds for a final divorce.  If you think you have this situation, ask us about it.

/by Michael Callahan