Maryland’s Court of Appeals, the highest Court of our state, issued an opinion on July 19, 2016, which directs trial courts to consider Social Security benefits when making a monetary award relating to the equitable distribution of marital property, notwithstanding that the benefit itself cannot be divided and that there can be no direct set off of Social Security payments against the other party’s marital assets or retirement benefits. In this new case Jackson v. Sollie, No. 62, Sept. Term, 2015, the court determined by Writ of Certiorari, that it would hear the case on the following question:
Should Maryland adopt the position of a majority of states and require a trial judge to consider whether social security benefits should be offset against the marital portion of a CSRS pension upon dividing assets as a result of a divorce?
The high court, noting that this is an issue of first impression in Maryland, answered its question by stating:
1. In a divorce proceeding, a trial judge is preempted by federal law from dividing Social Security benefits (including its hypothetical value) directly or by way of an indirect offset when determining the equitable distribution of marital property; and
2. On the basis of the evidence presented, a [trial] judge must consider a party’s actual or anticipated Social Security benefits as a relevant factor under Family Law Article, Section 8-205 (b), Anno. Code, Md., when determining whether to grant a monetary award to adjust the equities and rights of the parties concerning marital property.
The Maryland Court of Appeals noted that unlike CSRS pensions, Social Security benefits are not considered property, but instead are considered non-contractual benefits, relying on the Supreme Court’s decision in Flemming v. Nestor, 363 U.S. 603, at 610 (1960), while Civil Service Retirement Benefits, Federal Employees Retirement System benefits, and survivor benefits are each marital property and Maryland Courts may either grant a monetary award, or transfer ownership of an interest in a pension, retirement, profit sharing, or deferred compensation plan, from one party to either or both parties.
Although the facts and circumstances under review by the Court of Appeals dealt with a proposed offset of Social Security Benefits against a Federal pension benefit (CSRS), it appears that the holding is sufficiently broad that Social Security benefits cannot be offset against any retirement benefits or other marital property, because distribution of Social Security benefits is prohibited directly or indirectly. The court also noted that any attempt to value hypothetical Social Security benefits allegedly located within a CSRS pension would be speculative. However, our highest court went on to say that the federal Preemption Doctrine does not apply to the general consideration of Social Security benefits by the trial court. Citing Pleasant v. Pleasant, 97 Md. App. At 720, the court agreed that “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.” Citing the case of In re Marriage of Zahm, 978 P.2d 498, 503 (Wash. 1999, the Court of Appeals mentioned that a fair and equitable division by a trial court does not require mathematical precision, but rather fairness, based upon a consideration of all of the circumstances of the marriage, both past and present and an evaluation of the future needs of the parties. A trial court may still properly consider a spouse’s social security income within the more elastic parameters of the court’s power to formulate a just and equitable division of the parties’ marital property, including the determination of the parties’ relative economic circumstances.
The court’s holding indicates that consideration of the actual or anticipated Social Security benefits is mandatory, but the granting of a monetary or marital award is left to the sound discretion of the court.
Of course, Maryland has already held that a trial court must consider social security income when determining an alimony award. Brewer v. Brewer, 156 Md. App. 77, 101 (2004) and that Social Security Benefits are subject to enforcement proceedings for the collection of a judgment for unpaid spousal support and child support.
ABOUT RON OGENS
Mr. Ogens is a past president of the Maryland Chapter of the American Academy of Matrimonial Lawyers, an association of the nation’s top matrimonial lawyers from the 50 states who specialize in all issues relating to marriage and divorce. The Academy conducts local continuing legal education programs, participates in the legislative process and engages in a variety of other activities to serve the public and improve the practice of matrimonial law.
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