DIVORCE IN MARYLAND: PAYMENT TO YOUR DIVORCE LAWYER OUT OF MARITAL FUNDS DOES NOT CONSTITUTE DISSIPATION OF MARITAL ASSETS

In a case of first impression in 2004, the Court of Special Appeals of Maryland decided that a spouse who pays reasonable attorney’s fees connected with a divorce proceeding out of marital funds cannot be found to be dissipating marital funds. Allison v. Allison, 160 Md. App. 331 (2004.)

Citing a law review article, the Court of Special Appeals concurred that as the law permits divorce, it should permit parties to spend funds for legal services in divorce proceedings from marital assets. Spouses do not often have their own separate funds to pay their lawyers. In Maryland, as income earned during separation is also marital property, it would be difficult to pay legal fees without spending marital funds.

Dissipation of marital assets was defined in a previous case in McCleary v. McCleary, 150 Md. App. 448, 462-63 (2002) where the Court said:

“Dissipation may be found where one spouse uses marital property for his or her own benefit for a purpose unrelated to the marriage at a time where the marriage is undergoing an irreconcilable breakdown.” Citing Sharp v. Sharp, 58 Md. App. 386, 401, 473 A.2d 499 (1984). The Court stated “[W]e have defined dissipation as expending marital assets “for the principal purpose of reducing the funds available for equitable distribution.” Citing Jeffcoat v. Jeffcoat, 102 Md. App. 301, 311, 649 A.2d 1137 (1994).

In the Allison case, the Court found that the husband’s attorney’s fees of $13,665.71 did not meet the definition of “dissipation as set forth in the Jeffcoat case viz: expenditures of marital funds “for the principle purpose of reducing funds available for equitable distribution.” The Court of Special Appeals found that the amount of attorney fees that the husband paid appear to be entirely reasonable, and there was no indication that his expenditures were made with the goal of reducing the amount of monies available for a monetary award. Mr. Allison, after the separation, lived modestly, but after paying his wife $1,400 per month in pendente lite alimony and making mortgage payments of over $1,300 monthly on the house where his wife lived lived, he had little left over from his net monthly income of $4,911.09 to pay for his own everyday expenses. Unless he sold his personal belongings or was willing to pay a large tax bill for early liquidation of a non-marital IRA worth $18,779.48, Mr. Allison had no choice but to pay his attorney’s fees (and those of his wife’s that the court ordered) out of marital property. The same is true with many other couples that divorce.

The Allison Court noted that the obvious purposes for expending the funds for legal services were two: (1) to avoid representing himself in a case where his spouse sought, among other things, an award of indefinite alimony and (2) to obey a lawful order to pay a portion of his wife’s attorney’s fees. Thus, the Court concluded that Mr. Allison’s $13,665.31 expenditure did not meet the definition of “dissipation” set forth (and as stated above) in Jeffcoat v. Jeffcoat, 102 Md. App. 301, 311 (1994), and reaffirmed recently in McCleary, supra, 150 Md. App. at 462-63.

DIVORCE PROCEDURE IN MARYLAND

The Circuit Courts of Maryland decideissues of divorce, marital property division, alimony, child support, custody and visitation in a divorce proceeding. If a case is decided by a Judge, the Court hears evidence of the specific facts of the case and then decides the relevant issues based upon statutes and precedent cases. However, an experienced family lawyer will exhaust all other possibilities prior to submitting a case for a Judge’s determination. This is primarily accomplished by negotiating a settlement agreement (also known as a Separation Agreement) after the complaint is filed and discovery is completed.

In Maryland, the divorce proceeds generally as follows: Each person hires a lawyer to handle the divorce. Whether a person is negotiating a settlement or presenting a case to the court, he or she needs a knowledgeable, experienced and local family lawyer in order to gain the most benefits that the law has to offer. The divorce lawyer represents one spouse in the traditional attorney-client relationship that may, result in a negotiated settlement, involve litigation or a combination of both. Litigation in court is costly, both financially and emotionally. However, certain family matters can only be resolved through litigation.

In order to litigate or negotiate a successful resolution as an attorney specializing in matrimonial litigation, Constance A. Camus, has extensive knowledge in business valuation and dissolution, pension and retirement benefits, valuation of advanced degrees and licenses, and child support and custody arrangements. Additionally, she is familiar with the different procedures for each and every county in Maryland.

The laws of equitable distribution of marital property in Maryland are complex, dynamic and constantly changing. Each case presents it own set of facts and must be properly prepared and presented. Before agreeing to a property settlement or before asking the court to divide property, it is very important to conduct financial disclosure to determine how and when the specific property and all other assets were acquired. This is done either through an informal or formal discovery process. When discovery is done correctly, it is possible to find assets hidden by the other spouse, evidence of an adulterous affair, etc. Unfortunately, the discovery process can be is very time consuming and costly. The client should always weigh the costs of doing discovery versus the benefit of such extensive discovery. Again, a good divorce lawyer can advise you as to the extent of discovery to use. Ultimately, only the client can decide how much discovery should be done.

Separate property is generally not subject to equitable distribution by the court. An experienced and skillful divorce lawyer will help to guide a client through the maze of the laws and disclosure devices which may affect the client’s financial rights, obligations and the division of property.

Seriously pursuing alternatives to litigation, such as mediation or negotiation, will make the difference between getting a divorce and surviving a divorce. When a child’s best interests are at stake, seeking peaceful co-parenting solutions to custody and visitation disputes will positively affect a child for the rest of his or her life.

March 8, 2009 6:25 AM