Step 3: the Trial Court's Consideration of Factors and Determination of the Monetary Award

• Jurisdiction: Maryland

IV. STEP 3: THE TRIAL COURT'S CONSIDERATION OF FACTORS AND DETERMINATION OF THE MONETARY AWARD

A. Overview

The third step in the three-step process requires the trial judge to decide whether to grant a monetary award, the amount to grant, and method of payment. The trial court must determine whether the allocation of property according to title is inequitable.³⁵⁶ If so, the court may make a monetary award to rectify the inequity. To do so, it must consider relevant factors, including both specific factors set forth in the Code, and other factors the court may deem relevant. Whether to grant a monetary award, and the amount of the award, is reviewed for abuse of discretion.

Family Law § 8-205(b) identifies the required ten factors plus a catch-all 11th factor:

Factors in determining amount and method of payment or terms of transfer-The court shall determine the amount and method of payment of a monetary award, or the terms of the transfer of the interest in property described in subsection (a)(2) of this section, or both, after considering each of the following factors:

(1) the contributions, monetary and nonmonetary, of each party to the well-being of the family

(2) the value of all property interests of each party;

(3) the economic circumstances of each party 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 party;

(7) the physical and mental condition of each party;

(8) how and when specific marital property or interest in property described in subsection (a)(2) of this section, was acquired, including the effort expended by each party in accumulating the marital property or the interest in property described in subsection (a)(2) of this section or both;

(9) the contribution by either party of property described in § 8-201(e)(3) of this subtitle to the acquisition of real property held by the parties as tenants by the entirety;

(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; and

(11) any other factor that the court considers necessary or appropriate to consider in order to arrive at fair and equitable monetary award or transfer of an interest in property described in subsection (a)(2) of this section, or both.

The trial judge must consider these factors and must evidence having done so.³⁵⁷ It is not necessary that the judge separately articulate every factor he or she considered.³⁵⁸ It is sufficient for the judge to say he or she considered the statutory factors.³⁵⁹ The factors require that the trial judge make findings of fact. The trial court's factfindings at this stage are reviewed under the clearly erroneous standard.³⁶⁰

Consideration of the statutory factors is mandatory; failure to consider them is error.³⁶¹ There must be some indication that the judge considered the statutory factors; silence on the subject is cause for reversal and remand.³⁶² Provided the trial judge considers the factors, his or her decision about which to weigh more heavily in a given case and how the factors lead to a particular result is discretionary, subject to reversal only for abuse of discretion.³⁶³ No single factor necessarily predominates in the decision-making. Sometimes a factor that substantially favors one spouse is offset by one or more other factors that favor the other spouse, resulting in an equal division of marital property.³⁶⁴ If a monetary award is reversed on appeal and remanded, the trial court must consider all of the Section 8-205(b) factors anew.³⁶⁵

The statutory mandate for an equitable result does not necessarily require an equal division of marital property.³⁶⁶ "[T]here is no presumption in favor of an award that would totally equalize the position of the parties."³⁶⁷ In fact, the General Assembly rejected statutory language that would have created a presumption of equal division of marital property.³⁶⁸ However, courts have observed that, after a long marriage, equal division, though not required, is a common practice.³⁶⁹ And while the trial court must provide evidence that it considered the statutory factors, when it makes an award that approximately equalizes the marital property, it need not go into an extended elaboration of how it arrived there. By contrast, when the monetary award is extremely unbalanced, the court must do a better job of explaining the rationale for the disparity.³⁷⁰

The requirement that the trial court exercise discretion means it cannot simply hold that a spouse is entitled to a particular percentage of the marital property as if entitlement is a mandate.³⁷¹ The trial court abuses its discretion when it fails to recognize that it has discretion and rules as if the outcome-for example, equal division of marital property-is automatic.³⁷² When the outcome is an extreme disparity in marital property disposition, unless the trial court makes adequate fact-findings and explains its reasoning, its decision is vulnerable to reversal for abuse of discretion.³⁷³ When one spouse has a substantial nonmarital estate, a disproportionate award to the disadvantaged spouse can be appropriate.³⁷⁴

The treatment at divorce of college savings accounts created under I.R.C. § 529 presents a special problem in determining equitable division of marital property but has not yet gotten much attention from Maryland courts. A Section 529 account, if funded with marital monies, is marital property.³⁷⁵ Thus, a parent who is the custodian of such an account holds sole title to a marital asset, albeit one that was created specifically for the benefit of a child. In Abdullahi v. Zanini,³⁷⁶ the wife was custodian of two accounts for a child of the parties. The trial court correctly held that the accounts were marital property, as having been acquired during the marriage, but erred when it treated them as belonging to the wife for purposes of determining an equitable monetary award.

B. Consideration of the 11 Statutory Factors

1. Factor (1): The contributions, monetary and nonmonetary, of each party to the well-being of the family

In including consideration of both monetary and nonmonetary contributions to the family as part of its recommendations for a law providing for equitable distribution of property, the Governor's Commission on Domestic Relations Law said:

the equitable distribution of property upon divorce is grounded in the duty of each spouse to contribute his or her best efforts to the marriage for the benefit of the family unit. . . .³⁷⁷

In Alston v. Alston,³⁷⁸ the Supreme Court of Maryland noted that, in recommending consideration of nonmonetary contributions to the marriage, the Governor's Commission "was particularly concerned with giving recognition to the nonmonetary contribution of one spouse to the acquisition of property by either or both spouses during the marriage."³⁷⁹ The Supreme Court noted further:

The history of the statute indicates that the General Assembly was primarily concerned with achieving equity by reflecting non-monetary contributions to the acquisition of marital assets, and this principle should be a major consideration in a trial judge's analysis.³⁸⁰

Nonmonetary contributions can include caring for children and a home.³⁸¹ That the parties had domestic help does not preclude a finding that a spouse made non-monetary contributions that were substantial.³⁸² Nor does a spouse's complaint that the other spouse failed to keep a tidy home necessarily mean the homemaker will be denied acknowledgement of homemaker contributions.³⁸³

A spouse's nonmonetary contributions to the family can include working to support the family while the other spouse goes to school.³⁸⁴ A spouse who both worked at a job and took primary, or sole, responsibility for home and children should have those contributions considered.³⁸⁵ There are a variety of ways that a spouse can make nonmonetary contributions that further the other spouse's ability to pursue a business or career. For example, in Rosenberg v. Rosenberg,³⁸⁶ the wife contributed to the husband's success in a family business by maintaining close relationships with his family members, including her mother-in-law and others who held leadership roles in the company. Under some circumstances a court may deem a spouse's nonmonetary contributions to have been greater than the wage-earner's monetary contributions.³⁸⁷

2. Factor (2): The value of all property interests of each party

This factor and the third factor (each party's economic circumstances) are closely linked and somewhat overlapping. It requires the court to consider what each party will end up with before any monetary award, including his or her nonmarital property, the value of jointly titled property that may be sold and where parties have stipulated to disposition of some items of property, the effect of that disposition.

a. Value of nonmarital assets

The trial judge must consider the value of each party's nonmarital assets.³⁸⁸

Consideration of two factors, the value of all property interests of each party and the economic circumstances of each party at the time the award is to be made, obviously requires the court to be aware of any non-marital property and have some idea of its worth. We do not believe that the statute requires the court to evaluate non-marital property in the same manner as marital property. It is enough if the court is generally aware of the relative wealth of the parties, in order that it can determine whether it would be equitable to award a greater share of marital property to the spouse owning less of the total property and having less wealth because of that spouse's greater need and the wealthy spouse's lesser need for additional assets.³⁸⁹

That one spouse has substantial nonmarital property may justify a disproportionate award of marital property to a spouse with little or no nonmarital property.³⁹⁰

b. Expected proceeds of...