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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.

 

 

Federal law prohibits the assignment and attachment of social security benefits. What does that mean for your divorce case?

The U.S. Supreme Court had a chance to examine similar provisions regarding railroad retirement benefits in Hisquierdo v Hisquierdo.  In that case, the Court said a state divorce court may not treat railroad retirement benefits as marital property due to federal preemption.  Further the court said the state court could not award an offset against other marital property on account of the benefits.

In Dapp v Dapp, 211 Md. App. 313 (2013). the Maryland Court of Special Appeals (CSA) considered whether a trial court could enforce an agreement dividing Husband’s railroad retirement benefits between the spouses.  The CSA held that the federal legislation referred to above preempted the Maryland divorce court’s jurisdiction and the trial judge had no power to enforce the agreement to divide these benefits.

So will the Maryland Court of Appeals, the states highest court, allow an offset for social security benefits in Milton E. Jackson v Gayle S. Jackson, a case that is currently pending before it? Stay tuned.

by Michael F. Callahan

In Pleasant v Pleasant Maryland’s Court of Special Appeals (CSA) held that social security benefits cannot be treated as marital property and it affirmed the trial court’s decision taking no account of them.

But the court’s opinion includes this footnote 3 that seems contrary to the court’s decision:

“In an appropriate case, of course, it may be that a court could consider the fact that a party is receiving, or will receive, social security benefits, as ‘any other factor’ in determining whether to make a monetary award.”

Maryland’s divorce law provides that the judge must consider certain factors in distributing property, the last of which is any other factor the court considers appropriate.

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).

 

Although President Obama promises taxes will be lower for 95% of taxpayers, a question I get from time to time is, “Can I save taxes by getting a divorce and just living together?”

Many two-income family taxpayers pay more taxes as a married couple than they would by filing separate tax returns as single individuals.  That’s called the marriage penalty.

The answer is you might save a little bit on taxes, but how much will a divorce cost you, both in terms of dollars and the good will of your spouse?

First, Congress has eliminated the marriage penalty for married couples making less than $132,000 and roughly equal incomes.

If a married couple earns $150,000, with equal incomes and a standard deduction, the marriage penalty is $500.

If they earn $200,000 under the same circumstances, they will pay a marriage penalty of about $787.

And there are other financial benefits to staying married, including inheritance taxes, insurance and Social Security, that you would lose if you got a divorce.  Finally, if you divorce in one year and remarry in the next, the IRS may disregard the divorce and require you to file as married anyway.

Source:  Post by Sue Shellenbarger