Dividing Bank Accounts in a Divorce

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Here is an interesting case we argued in the Maryland Court of Special Appeals about dividing bank accounts in a divorce.

The parties had two savings accounts at the time of their Maryland divorce, worth $86,075.66 and $23,228.33. The accounts were in the husband’s name. Since they were acquired during the marriage, they were marital property.

If you were the judge, you might be tempted to say the savings accounts “shall be equally divided between the parties.”  That is indeed what the trial judge said.

But you would be wrong.

Dividing Bank Accounts in a Maryland Divorce

The starting point to remember in Maryland for dividing property is that the court may not transfer ownership of property (with two exceptions — pensions and “family use” property).

The court did not have authority to divide the savings accounts.  That would require transferring assets from the husband’s name to the wife’s name.  And it breaks the rule that the court may not transfer ownership of property.

Section 8-202(a)(3) of the Family Law Article of the Maryland Code says:  “Except as provided in Section 8-205 of this subtitle, the court may not transfer ownership of personal or real property from one party to the other.”

The Court of Special Appeals reversed the decision.  It sent the case back to the trial judge with instructions.  The trial judge needs to count the savings accounts as belonging entirely to the husband.

Adjustments Are Made in the Marital Award

The court then uses the Marital Award to adjust the equities.  That means to make things more fair but not necessarily equal. A Marital Award is like a judgment in favor of one party against the other.  In our case, for example, the wife can use her marital award to attach the husband’s bank accounts if he doesn’t pay her voluntarily.  The appeals court said the trial court should adjust the marital award by half the total of the two savings accounts, adding approximately $55.000 to the wife’s marital award.

So the process is:

(1)  Don’t transfer ownership of property.

(2)  Indentify who owns what

(3)  Adjust the result through the marital award.

(4)  Don’t short cut these steps or take them out of order.

Zanini v. Abdullahi, Case No. 2390 (2019)

/by James J. Gross

The Acquiescence Defense in Divorce Appeals

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A review of acquiescence in divorce appeals

Here’s a look at the acquiescence defense in divorce appeals.

Say you’ve done everything right on your appeal from a divorce order that didn’t go your way.

  • You filed the notice of appeal on time and in the right court.
  • You ordered the transcript.
  • You filed the index.
  • You wrote the brief, kept it within the word limit, formatted it correctly, cited the right standard of review, used the right font, had it printed with a cover page in the right color, and filed it by the deadline.

Then your spouse deposits $100,000 in your bank account, which is the amount of the monetary award. You need the money so you keep it. You may have just waived your right to appeal.

Exceptions to Acquiescence Defense in Divorce Appeals

There are exceptions.  In Dietz vs Dietz, 241 Md. 683 (1998), Mrs. Dietz accepted and deposited a check for a portion of the martial award after she filed an appeal. The Maryland Court of Special Appeals held that was not inconsistent because she was seeking an increase in the marital award on appeal and the husband had not appealed. So the only issue on appeal was an increase in the martial award.

The Court of Special Appeals held otherwise in Chimes v. Michaels, 131 Md. App. 271 (2000), cert denied, 359 Md. 334 (2000). There the appellant accepted the entire monetary award and filed a statement of satisfaction with the court.

Another exception to the acquiescence defense in divorce appeals is waiver. In a recent case we argued, the husband waived the right to raise acquiescence on appeal, then filed a motion to dismiss the wife’s appeal based on acquiescence. We presented the waiver as  Exhibit Number 1 and the husband’s motion was denied. Abdullahi vs Zanini, Court of Special Appeals of Maryland, No. 2390, September Term 2017.

/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

Federal Preemption

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by Michael F. Callahan

In 1993, The Maryland Court of Special Appeals (CSA) held that the court could not divide social security benefits because they were not martial property under state law but rather governed by federal law.  Therefore the CSA affirmed the trial court’s decision equally dividing the marital portion of husband’s pension when received but not dividing the wife’s social security benefit.  The court made no other adjustment to the equitable distribution of marital property for social security.  Pleasant v Pleasant, 97 Md. App. 711, 632 A.2d 202 (1993).

 

/by James J. Gross