Monetary Award in a Maryland Divorce

What Is It and How Does It Work?

When a Maryland marriage ends in divorce, the division of marital property is rarely as straightforward as splitting assets down the middle. When dividing marital property, Maryland law dictates that such property must be divided equitably – which can be quite different than dividing the marital property equally. In order to fashion an equitable division of the marital property, courts frequently use a monetary award, a powerful equitable remedy that can have a significant impact on the financial outcome of a divorce case.

This article explains what a monetary award is, how Maryland courts analyze and calculate monetary awards, and which cases are more likely than others to include a monetary award. If you have questions about how a monetary award may apply to your specific circumstances, contact Greenberg Legal Group LLC at (410) 237-6558 to schedule a consultation.

Frequently Asked Questions

FAQ 1: What Is a Monetary Award in a Maryland Divorce?

A monetary award is a direct payment that a Maryland court may order one spouse to pay to the other as part of the property distribution process in a divorce. A monetary award is not alimony and it is not a division of a specific asset. Rather, it is a mechanism that allows the court to correct an inequitable result that would otherwise arise from the way Maryland property law works. The authority for a court to grant a monetary award is set forth by statute in Md. Code Ann., Fam. Law § 8-205.

Maryland appellate courts have clearly explained the underlying purpose of a monetary award. “When the division of marital property by title is inequitable, the [court] may adjust the equities by granting a monetary award.” Brown v. Brown, 195 Md. App. 72, 109 (2010). A monetary award is “intended to compensate a spouse who holds title to less than an equitable portion of that property.” Ward v. Ward, 52 Md. App. 336, 339 (1982). The necessity of a monetary award arises when a “a division of the parties’ property according to its title would create an inequity which could be overcome through a monetary award.” Id. at 340. Put simply, a monetary award is a remedy that the court uses in divorce cases to ensure an equitable division of the marital assets.

FAQ 2: What Analysis Does the Court Use to Determine a Monetary Award?

Maryland courts follow a sequential, three-step analytical framework when evaluating a potential monetary award. The court must strictly adhere to this three-step analysis and may not skip any step of the analysis. The analysis for a monetary award is as follows:

Step 1: Determine What Is Marital Property

First, the court must determine which property is marital property and which is non-marital property. Marital property is defined by Md. Code Ann., Fam. Law § 8-201(e)(1) as “property, however titled, acquired by 1 or both parties during the marriage.” However, there are certain exceptions to the marital property rule which may render certain property non-marital in nature. As specifically set forth in Md. Code Ann., Fam. Law § 8-201(e)(3), marital property does not include property: (i) acquired before the marriage; (ii) acquired by inheritance or gift from a third party; (iii) excluded by valid agreement; or (iv) directly traceable to any of these sources.

The distinction between which property is marital and which is non-marital can be complex, depending on the facts of the case. In many cases, particularly in longer marriages where property acquired “prior to the marriage” was acquired many years or even decades before the divorce, proving that certain property is non-marital can be a difficult task. Notably, the burden of proving the non-marital nature of the property falls on the party asserting its non-marital nature and such property is not presumptively non-marital. Noffsinger v. Noffsinger, 95 Md. App. 265 (1993).

Step 2: Determine the Value of Marital Property

Once the marital property has been identified, the court must determine its fair market value. To determine the fair market value of marital property, courts consider a wide variety of evidence including appraisals, expert testimony, financial statements and other documents.

Common assets requiring valuation in Maryland divorce cases include:

• The marital home and any other real estate.
• Retirement accounts, including 401(k) plans, IRAs, and defined benefit pension plans.
• Business interests and professional practices.
• Investment portfolios and brokerage accounts.
• Deferred compensation and unvested stock options.
• Personal property, vehicles, and collectibles.

Oftentimes, the parties will disagree about the valuation of one or more pieces of marital property. At trial, each party will present evidence as to why the court should accept their valuation. However, courts are not required to accept either party’s valuation and may arrive at their own figure based on the totality of the evidence presented.

Step 3: Determine Whether a Monetary Award Is Equitable

The third step of the monetary award analysis is determining whether to grant a monetary award, and if so, in what amount. As the Court of Special Appeals of Maryland has stated, the court “must decide if the division of marital property according to title would be unfair, and if so, it may make a monetary award to rectify any inequality created by the way in which property acquired during marriage happened to be titled.” Wasyluszko v. Wasyluszko, 250 Md. App. 263, 280, 250 A.3d 271, 282 (2021). In order to make this decision, the court must consider the factors set forth in Md. Code Ann., Fam. Law § 8-205(b):

1. Contributions, monetary and non-monetary, of each spouse to the family unit.
2. The value of all property interests of each spouse.
3. The economic circumstances of each spouse at the time the award is to be made.
4. The circumstances that contributed to the estrangement of the parties.
5. The duration of the marriage.
6. The age of each spouse.
7. The physical and mental condition of each spouse.
8. How and when specific marital property was acquired, including the effort made by each spouse to acquire such property.
9. The contribution by either party to the acquisition of real property held by the parties as tenants by the entireties.
10. Any award of alimony and any award or other provision that the court has made with respect to family use personal property or the family home.
11. Any other factor that the court considers necessary or appropriate to consider in order to arrive at a fair and equitable monetary award.

This step of the analysis vests the court with broad discretion to consider the evidence presented before the court and make a decision based on the factors set forth above. Notably, the monetary award is not necessarily half the value of the marital property. Instead, the monetary award represents the court’s view of an equitable adjustment given the specific facts of the case.

FAQ 3: Is There a Monetary Award in Every Maryland Divorce Case?

No. A monetary award is not automatic and will not be granted in every divorce case. There are a number of circumstances in which a monetary award may not be appropriate.

When There Is No Marital Property

If the parties have very little or no marital property — for example, in a very short marriage where neither spouse acquired any assets after the wedding date — a monetary award would be very unlikely. The monetary award is linked to the existence marital property. Without marital property to value and balance, the court has no foundation for an award.

When the Parties Reach a Settlement Agreement

Many Maryland divorces are resolved through negotiated settlement agreements rather than contested litigation. When spouses reach a comprehensive marital settlement agreement that addresses the division of marital property, the court will generally incorporate that agreement into the divorce decree. In that scenario, the parties may agree to a monetary award or payment from one spouse to another, but the court would not substitute its own judgment for that of the parties.

Parties have great flexibility to structure property settlements as they see fit, including agreeing to monetary payments, asset transfers, or other arrangements that differ from what a court might order. Maryland courts encourage settlement and will enforce valid agreements in the absence of fraud, duress, or unconscionability.

When a Valid Marital Agreement Governs

Prenuptial and postnuptial agreements can validly waive, limit, or define the parties’ respective rights to a monetary award. Maryland courts will enforce such agreements if they are entered into voluntarily, with full financial disclosure, and are not unconscionable at the time of enforcement. See Cannon v. Cannon, 384 Md. 537 (2005).

Speak With a Maryland Divorce Attorney

The monetary award analysis is one of the most complex and fact-specific areas of Maryland family law. The value of marital property, the characterization of assets, and the equitable balancing required by Md. Fam. Law § 8-205 can all significantly affect the financial outcome of your case. An experienced Maryland divorce attorney can help you identify marital property, gather and present valuation evidence, and advocate for an equitable result.

Greenberg Legal Group LLC represents clients in divorce, property division, and related family law matters in Anne Arundel County, Howard County, and throughout the State of Maryland. Call us today at (410) 237-6558 to schedule a consultation.