Author: Cynthia H. Clark

Marital Property

Is a Gift from Family “Marital Property”

We are just 2 days away from Halloween when kids all across America will venture out “trick or treating”. If the truth is to be told, I probably went “trick or treating” longer than most. I remember being well into my high school years donning a costume of some sort (“punk rocker” one year, as I recall) and knocking on neighbors’ doors scoring tons of great candy and treats. After my evening of trick or treating was over, my sister and I would dump out our bags and survey our spoils, swapping some goodies for others. For me, I was willing to trade almost anything for Reese’s Peanut Butter Cups! My goodness, it was like a little bit of Heaven dipped in chocolate and wrapped in a gold seal! When I think back on those years it fills me with such joy. But these happy childhood memories would be altogether different if the day after Halloween I awoke to discover that half my candy had been taken from me and given to my sister. Cue the scary music and the shiver-inducing SCREAM!!!

Well it is just this kind of tale of woe that has inspired this week’s question. What if a special treat that was meant just for you somehow overnight becomes a gift that you are forced to share with someone else? You’d be wondering how this horrible injustice happened.

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Question: If one spouse receives a cash gift from a family member during the marriage is that gift treated as non-marital property under the Maryland Family Law Code?

Answer: It depends. Generally speaking, a gift of cash that one spouse receives from a family member that is made solely to that spouse will be considered non-marital property. However, this non-marital property can be converted into marital property if the giver of the gift and the receiver of the gift are not careful. For example, if the giver of the gift does not make it absolutely clear that the gift is made solely to one spouse (e.g., by writing the check solely in that spouse’s name) there may be an argument as to whether the monies was not intended to be a gift to both spouses. Moreover, the receiver of the gift may muddy the analysis by depositing the funds in a joint bank account. Then a court may wonder whether a “second” gift was made from the spouse who received the gift from his or her family member to that person’s spouse. To make matters worse, if the account into which the money was placed is one in which both spouses deposit their paychecks and other funds that the couple receives, the “gift money” will have commingled with marital money – making it difficult to “trace” the gift (which is claimed to be non-marital) from the other marital funds in the account.

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I have seen first-hand how clients have inadvertently forfeited their right to hold on to non-marital assets by failing to keep monetary gifts or inheritances separate from marital funds. In several cases, down payments for home purchases were “gifted” by one party’s parents and then placed in joint bank accounts with other household funds until the closing date. In another case, a father of one client provided a loan to the parties to purchase a home. Upon the death of the client’s father several years later the father’s estate forgave the debt of the parties, thereby making a “gift” to both parties rather than a gift or inheritance to his son solely. As you might imagine, it was a bitter pill to swallow for the client whose father’s gift that purchased a lot of equity in the couple’s marital home was shared equally by the father’s soon to be former daughter-in-law.

This Week’s Takeaway: Mind your goodie bags lest you find that you’ve sprung a hole in the bottom and half your treats have been lost.

General Interest

Maryland Emancipation Day is November 1

Last night, John Stauffer lectured about the parallel lives of Frederick Douglas and Abraham Lincoln described in a book he wrote, “Giants.” Not only was he the best lecturer I have ever experienced in a long life of geekiness…..but I learned many things.

I learned that the Emancipation Proclamation did not free Maryland slaves — the Emancipation Proclamation that Abraham Lincoln signed on January 1, 1863, only freed slaves in the rebelling states. Since Maryland remained loyal to the union (at least as a “border” state), Maryland slaves were not freed until November 1, 1864, when a new Maryland constitution was adopted which freed slaves and outlawed slavery. Apparently, the initial vote on adopting the constitution had failed to adopt it and was extremely close. A second election was held for the returning Maryland union troops to vote for passage and the second vote was successful.

There are things I learn about our Maryland history that fill me with pride from time to time. For example, our constitution provided for much more dramatic civil liberties than the US constitution. Last night I learned that Maryland was the first state to vote for ratification of the 13th amendment. The amendment was passed by Congress on January 31, 1865, and the Maryland House of Delegates voted for ratification the same day.

The substance of the lecture about Douglas and Lincoln was fascinating. By way of example, Douglas was born a slave and secretly learned to read. Lincoln had no formal education and had a father who discouraged and belittled education. Consequently, both were “self-made” men. Both, in their youth, self-read and self-studied the same six core books: the Bible, Shakespeare, Aesop’s Fables, Robert Burns, Lord Byron, and The Columbian Orator. I also learned that the definition of “self-made men” meant only self-educated and successful but also included going on to help others. (I just ordered Aesop’s Fables from Barnesandnoble.com to see what I missed from many years ago).

There are Emancipation Day celebrations that remain this week. Thursday, October 30, there is an interpretative acting event at Maryland Hall. Friday at noon a “Libation Ceremony” at the city dock. Saturday, at 10 am at the State House, Emancipation Day will be proclaimed and a quilt prepared by people from all over the state will be unveiled. The quilt is reputed to be a fabulous item and everyone is encouraged to attend.

I am quite eager to read the book and hope that it is at least half as engaging as the lecture. I learned about the lecture from Cynthia Clark, who said she was attending. There was no sign of Cynthia at the lecture. In an abundance of enthusiasm, I got her a book for Christmas despite her absence.

General Interest

Voting

Early Voting Ends Today.  Election Day is November 4, 2014

Cynthia Clark accompanied our office assistant, Morgan Dietz, to the polls to vote for her first time.  We are all so proud of Morgan and the work she did studying the candidates.    We can all remember the first time we were old enough to vote and what an event it was for us.

Property Division

Property Division Disputes in Maryland

Aside from child custody disagreements, usually the most difficult issue that divorcing couples face involves property division. Indeed, property division proceedings can make or break an individual’s financial circumstances depending on the outcome. For that reason, Maryland residents will want to be as informed as possible going into such proceedings.

During your Maryland property division proceedings, the Law Offices of Paula J. Peters, P.A. will assess each party’s contribution to your marital estate — both in monetary and non-monetary terms. We will also look at any kind of misconduct that caused the dissolution of the marriage. The duration of the marriage, both spouse’s ages and health conditions and a variety of other factors will also be important to review in a property division case.

The more experienced a divorce attorney is, the more he or she will be able to help you protect your rights and ensure that you are fairly treated in the property division process. A lawyer must also have the ability to create a good attorney-client relationship of trust and confidence. Indeed, attorney-client communication and trust are essential in promoting favorable outcomes in any family law proceeding.

Sometimes, one side may try to argue that certain assets are marital assets when they are actually not. Other times, a spouse may try to argue the opposite. Depending on which side you are on, this could have a dramatic impact on your finances. It is important that individuals are aggressively represented in cases like this, whenever their property division rights are being threatened in divorce proceedings.

Alimony

Alimony in Maryland

Since I broached the scary topic of ALIMONY last week, I thought we’d might as well continue down the haunted trail and address all our fears once and for all. Consider it Fear Therapy!

Perhaps one of the greatest misconceptions that separating spouses have when it comes to alimony is that it is awarded as a matter of right in most cases, especially where one spouse earns significantly more than the other. I have lost count of the number of clients that have come to an initial consultation expressing certainty about either their entitlement to receive alimony as the financially subordinate spouse or their requirement to pay alimony as the financially dominant spouse. This misconception which leaves some clients buoyant and others completely dispirited is the subject of this week’s discussion.

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Question: If one spouse earns more money than the other spouse, is the lower-earning spouse entitled to alimony?

Answer: Not necessarily. While the court will consider the disparity of income as a factor in deciding alimony; it is not the only factor to be considered.

The court will also consider the ability of the spouse to be self-supporting as well as the time needed for the spouse to find suitable employment. For example, a spouse that has been unemployed or underemployed for some time by agreement of the parties is not likely to suddenly be stripped of all financial support of a former spouse if to do so would pose an unfair hardship on the party that has been out of the workforce.

In addition, the court will consider the standard of living that the parties maintained during the marriage. The court does not intend that upon divorce, one party will be living in the “lap of luxury” while the other is eking out a “hand to mouth” existence when the parties enjoyed an upper middle-class lifestyle during the marriage. On the other hand, the court does not expect that parties will have equal incomes/lifestyles post-divorce.

Also, the duration of the marriage is an important factor. A couple that has been married for just a few years with both parties working prior to (and especially during) the marriage should not have high hopes or great fears, depending on your perspective, that an alimony award is likely.

Moreover, the contributions (both monetary and non-monetary) the low-earning spouse made to the family will be considered. For example, if a spouse stayed at home to care for the parties’ children and therefore earned less income, the court will factor in that childcare as a contribution weighing in favor of alimony for that spouse.

Fault for the breakdown of the marriage is also considered by the court in deciding alimony. Certainly, a spouse that blows up a marriage through infidelity, abusive conduct, and other unreasonable and unacceptable behavior should not expect that he/she can walk away from the carnage without any consequence. While the consequence may not necessarily show up in an alimony award it may show up as a monetary award (a topic of a future posting).

The age and health of the parties, the ability of the financially dominant spouse to pay alimony, any agreements, other financial resources and obligations of the parties, and retirement benefits available to the parties, are all factors Maryland courts will consider when deciding what, if any, alimony should be awarded and for what length of time.

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Unlike child support, there is no magic formula that Maryland courts must adhere to when deciding alimony. So long as the court considers all of the factors that are outlined above, the court is well within its discretion to assign whatever weight he/she deems appropriate to the individual factors.

Hopefully, understanding that alimony is not automatic and doesn’t hinge on a single fact tempers some of the enthusiasm of some and the sheer dread of others so frequently associated with the issue.

Final Thought: A review of Maryland case law on the subject of alimony makes it clear that alimony when awarded is not intended as a lifetime pension but rather as a bridge to financial independence.

General Interest

Early Voting Starts Today

BE SURE TO VOTE IN THE YEAR’S IMPORTANT ELECTIONS.

EARLY VOTING STARTS TODAY.

This year we elected state and county offices, and Congressional offices, as well as decided on some ballot questions. Early voting starts today and runs through October 30, 2014. This is the link to determine the locations of early voting places.

Alimony

Defending Against and Pursuing Rehabilitative Alimony in Maryland

Alimony is common in divorces where there is a significant difference in the financial situation of one spouse compared to another. Particularly, if one spouse is not employed and the other spouse is, then alimony may be required in a Maryland divorce. Alimony is commonly intended to provide a less affluent spouse with temporary financial assistance so that he or she can get back on steady financial feet again following a separation.

In some cases, alimony will be assigned to help an ex-spouse pay for the education and/or professional training necessary to become financially independent. This type of spousal support is referred to as rehabilitative alimony and it can be very helpful to a spouse who is put in a difficult financial situation as a result of a separation. The amount and size of rehabilitative alimony payments are determined as a percentage of the “moneyed” — or more affluent — spouse’s income.

Regardless of what side of the debate a Maryland spouse is on — if you are the payee or the recipient – the Law Offices of Paula J. Peters, P.A., is ready to use our expertise and experience to help you navigate your legal proceedings relating to spousal support. Most individuals want an immediate answer to the question: How much and for how long? We are highly familiar with the benchmarks, percentages and other factors that Maryland family law courts use when making decisions relating to alimony payments, and we can provide you with an accurate idea of what to expect in your case.

Settling an alimony dispute out of court is usually preferable to taking the matter to trial. Not only is settling a more cost effective solution, but if an out-of-court agreement can be made, it tends to be less taxing on individuals on an emotional and psychological level. At the Law Offices of Paula J. Peters, P.A., the initial consultation with our firm is completely free of charge. Contact us, and we will be happy to discuss your rights with you.

Sex and Marriage

Adultery: Impact on Custody?

One of the more surprising revelations as a new family law practitioner was how little sex couples were having in their marriage. Sure I had heard all the jokes about marriage (and kids)being the death knell of sex and so I was certainly prepared for couples contemplating divorce to speak wistfully of the passionate sex lives that marked their early years with their partner. I assumed, naively, that a loss of romance and passion among couples in a marriage resulted in a zero sum loss in the amount of sex occurring between the parties. WRONG!! What was surprising to learn is how frequently married people were getting their sexual needs met outside their marriage without their spouse’s knowledge or consent.

Infidelity is as old as the ages. Nevertheless, when infidelity comes to your door it can feel like a betrayal the likes of which have never been seen or experienced. One of the more immediate reactions to learning that a partner has shared intimacies with someone outside the relationship is hurt, quickly followed by anger. When the marriage has produced children, thoughts quickly turn to what impact a spouse’s infidelity will have on the children — which brings me to this week’s question.

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Question: Does adultery affect who gets custody of the children?

Answer: No. It comes as a big surprise to many clients that a spouse’s infidelity has no bearing on a court’s custody determination. While it can be easily argued that an unfaithful spouse has failed in many respects to be a worthy life partner, one cannot extend such logic to the spouse’s worthiness as a parent. Just because a spouse has had an extramarital affair does not mean that such spouse is a poor parent per se in the same way that a good parent is not necessarily a faithful and trustworthy spouse. This is not to say that a spouse’s infidelity may not be evidence of some graver issues that may have implications for the spouse’s caretaking. For example, if there are substance abuse or mental health problems that are underlying the adulterous conduct, that is certainly an issue to be examined to the extent that these problems pose a risk to the parties’ children. However, infidelity alone will not tilt the balance in favor of one party and against another when it comes to deciding custody.
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The fact that Maryland family law courts will not consider a parent’s adultery in determining custody does not diminish its impact on a marriage and the children. Spouses who have been devastated by infidelity should seek the advice of a counselor to process the range of emotions that attend such a betrayal. The importance of doing so cannot be overstated. Failure to make peace with the infidelity and move beyond the pain can make the sting of adultery last so much longer and be felt by more than just the adults but the children too.

Health Insurance

Health Insurance After Divorce?

One of the primary reasons that have historically kept estranged couples together is a desire to maintain the family unit for the sake of the couple’s minor children. More recently, health insurance and the desire to maintain health insurance coverage has become a major consideration of parties when deciding how to structure a legal separation and when to file for divorce.

It is not uncommon for one spouse to provide insurance coverage for the entire family. When a couple is contemplating a divorce, parties immediately begin to consider all of the consequences of the legal separation and, ultimately, the dissolution of marriage. Whether you are the spouse providing the insurance coverage or the one who has been covered under a spouse’s employer-based group plan, the question that is the subject of this posting is frequently asked.

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Question: How long must a spouse that is providing health insurance for the other spouse continue to insure the spouse from whom he/she is seeking a divorce?

Answer: Upon the entry of a judgment of divorce, the insurance coverage for the former spouse will terminate. This is required by the terms of the insurance policy and not Maryland divorce law. Nevertheless, the former spouse may obtain an extension of insurance coverage under COBRA (federal law) for up to 36 months; however, it requires the former spouse to pay an insurance premium that can be quite costly. The former spouse seeking COBRA coverage must notify the group health plan within 60 days of the issuance of the divorce decree of his/her intention to obtain an extension of insurance.

Many insurance plans will not allow a change in insurance coverage outside of “open enrollment” unless there is a “qualifying life event.” Each insurance plan has its own rules and requirements regarding when and how one may make changes to health insurance coverage.

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Even if a party can drop a spouse from insurance coverage prior to the entry of a divorce decree does not mean that a spouse should do so. There are other considerations. One consideration is the “optics” of making such a change during the pendency of a divorce. A spouse that deigns to take such action risks looking like a complete cad in front of the judge.

Instead, many parties negotiate a provision in their separation agreement, wherein the party providing insurance coverage agrees to continue such coverage until a divorce is granted, provided that the other party pays the premiums for such coverage.

If at all possible, parties are often best served by reaching an agreement on the host of issues that come up as part of a legal separation or divorce. The knee-jerk reaction when one is in pain is to lash out and inflict some pain in return. However, the satisfaction from doing so is often short-lived and the consequences may be more enduring. It is always advisable to consult with a family law attorney to assist one in crafting a legal solution that protects your rights but also preserves your dignity.

Marital Property

Engagement Rings: Who Gets to Keep it in Maryland?

Many of us can relate to the inordinate amount of time shopping for the perfect engagement ring. There is so much pressure involved in choosing the ring as it seems to symbolize more than just the intention to marry your special someone.

Whether we like it or not, in many cases the engagement ring is seen as a measure of success and wealth on the part of the ring-giver. Sometimes, the engagement ring is viewed as a reflection of how highly the ring-giver esteems and cherishes the ring recipient. Personally, I think it’s a lot of “hogwash” designed to get people to spend a lot of their hard-earned money even before the “I do’s” are said.

Now if you have ever watched “Judge Judy” you probably have seen her tackle the question of what happens to the engagement ring if the engagement falls apart and the couple never marries. Well, this week’s question explores what happens to the engagement ring once the marriage has soured and the couple decides to divorce.

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Question: Is an engagement ring considered “marital property“?

Answer: Generally speaking, it is not. Typically, engagement rings are given prior to the marriage and are considered to be gifted by one party to the other in contemplation of marriage. Upon divorce, the engagement ring would generally be excluded from the marital property division. However, a wedding ring would be treated differently by Maryland courts.

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As with all things related to marriage, do not let your emotions trick you into making an impulsive decision. The consequences can be costly. Make sure that your greatest investments in the marriage are your, love, patience, commitment, and fidelity — not your money on the engagement ring purchased long before the marriage begins.

Cynthia Hawkins Clark regularly posts to this blog, her “What’s on Your Mind Wednesday” blogs which address questions we are frequently asked by our clients.