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The State of Maryland is an “equitable distribution” state, which means that family law courts divide marital assets in a manner which ensures fairness. Importantly, fairness doesn’t always mean “equal,” and in Maryland there is no standing presumption that marital assets should be divided equally, in a 50% / 50% fashion in every case. In some cases, ensuring fairness means that courts have to give monetary awards to one party to “balance out” the distribution of marital assets. That is, courts will actually order one party to pay the other party a cash lump sum as a way to guarantee equity. That was the case with Sposato v. Sposato (2018), a relatively recent case which involved a lump sum award. However, as we will see, a lump sum award may be wiped out on appeal if proper procedure isn’t followed. Let’s examine this case in detail.
Summary of Sposato v. Sposato (2018)
The couple in this case had been married for nearly 30 years. The trial court determined that, to ensure fairness in the distribution of marital assets, the husband should be required to make a lump sum payment of $54,000. The basis of this determination arose from the fact that the court decided to allow each party to keep its own pension; both parties had pensions, but instead of dividing up both pensions according to the marital share, the court simply allowed each party to keep its own in its entirety. The husband appealed this decision, arguing that the trial court had not followed proper procedure.
Outcome & Discussion
On review, the appellate division concurred with the husband and overturned the trial court’s order to make a lump sum payment. Whenever a lump sum award is provided, the court follows certain procedural steps, otherwise the award itself may be thrown out. In this case, because the court ordered a monetary award in response to the division of pension benefits, the court was supposed to develop a valuation of each pension. The reason for this valuation requirement is that the court divided the pensions by assigning each pension to its holder, rather than dividing according to proportionate share. The court had the ability to use one of two methods to determine valuation: (1) calculate the value based on the contributions, including the accrued interest, or (2) calculate the value based on actuarial tables.
In this case, the trial court didn’t use either of these methods to develop valuations of the pensions, and consequently the appellate division determined that the monetary award had to be thrown out on this basis.
Contact the Murphy Law Firm for Additional Information
If you want to learn more information about property division or another family law topic, connect with one of the attorneys at the Murphy Law Firm today by calling 240-219-8963.
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