Marital Property verse Non Marital Property

Maryland Rule § 8-201(e) defines "marital property" as property, however, titled, acquired by one or both parties during the marriage. Property acquired by gift, inheritance, prior to the marriage or subject to a valid agreement between the parties in not marital property.  Once the Court determines what is and what is not marital property, the Court then determines the value of the property before making a marital award.

In Zanford v. Wiens, 314 Md. 102, 549 A.2d 13 (1988), the Court held that “the critical question is not whether marital property is encumbered by a secured debt; it is whether the debt is traceable to the acquisition of marital property, or whether (put otherwise) the debt’s “economic effect” is to reduce the present value of the marital property” (emphasis added).  See Zanford, 314 Md. at 108 (citing Niroo v. Niroo, 313 Md. 226, 240-41, 545 A.2d 35, 42-43 (1988)).

 It is well established that marital debt reduces the value of the marital property.  Schweizer v. Schweizer, 301 Md. 626, 636-37, 484 A.2d 267, 272-73 (1984); Zanford, 314 Md. at 107-08; Niroo, 313 Md. at 240-41. A “marital debt” is a debt which is directly traceable to the acquisition of marital property, and a “nonmarital debt” is a debt which is not directly traceable to the acquisition of marital property.  Schweizer, 301 Md. at 636-37.  The present value of marital property in the parties’ possession at the time of trial must first be established in order to reduce a marital debt from it.  See Zanford, 314 Md. at 108; Niroo, 313 Md. at 240-41.

Furthermore, Maryland courts have held that marital property cannot have a negative value.  Kline v. Kline, 85 Md.App. 28, 45, 581 A.2d 1300 (1990).  If the marital debt exceeds the value of the marital property acquired as a result of incurring the debt, the result is a zero value for the marital property so acquired…” Id. (citing Green pv. Green, 64 Md.App. 122, 146-47, 494 A.2d 721 (1985)).  Marital debt only reduces the present value of the marital property as it exists and does not create a situation in which a monetary award is made for property with no value.

Qualified Domestic Relations Orders (QDROs)

What is a Qualified Domestic Relations Order or QDRO?

Some marital assets may be transferred to one spouse by another spouse in Maryland via a court order known as a Qualified Domestic Relations Order (QDRO). A QDRO can divide a pension, an ESOP or other retirement account.  A QDRO is a court order which recognizes the rights of the non-participating spouse, an alternative payee, who can receive a portion of, or even all of, a pension or retirement plan belonging to another individual.  

How Does a QDRO Work?

Dividing pension and retirement plans between spouses can get complicated. A qualified domestic relations order facilitates dividing the payout of those plans.  Timing can be extremely important when it comes to preparing and entering the qualified domestic relations order with the court in relation to both a retirement or a divorce.

What is the Purpose of a Qualified Domestic Relations Order?

A QDRO can be utilized for assigning current or future retirement or pension benefits as part of the dissolution of the marriage and division of assets. Any alternate payee may receive just a portion or all of the benefits in their entirety.

It is important to speak with a legal professional should the need for a QDRO arise.  The above statement is not legal advice, no legal relationship is created herein, and the above statement is not meant to take the place of consultation with a licensed attorney.  You should always speak with a licensed attorney before taking any legal action.