Other than the marital residence, a pension is often the most valuable asset acquired during a marriage. This is why it is at issue during a divorce. In Maryland, a pension can be declared a marital asset and may be subject to division between the spouses.
Any property acquired during a marriage is considered a marital asset, according to Section 8-201(e) of the Maryland Code. This includes any income earned, even when deposited into a separate bank account; any property purchased, even if only one spouse's name appears on the deed or title; and either spouse's pension. The only exception is if one spouse receives an inheritance during the marriage. The inheritance will be declared separate property, unless it is deposited into a joint account or used to purchase property jointly. Such commingling turns the inheritance into a marital asset.
Read More: How Is Marital Property Divided in Maryland If You Divorce?
A Maryland court can divide one spouse's pension between the spouses during a divorce. A pension is a marital asset, but only to the extent that was earned during the marriage. This means that if a spouse has earned a pension for 20 years, but has only been married for 10 years, the non-earning spouse would only be entitled to a percentage of the half of the pension earned during the 10 years of marriage. Additionally, if the spouses have other marital assets, a court can award the non-earning spouse another asset (such as the funds in a joint savings account or a vacation property) with the value of her share of the pension instead of dividing the pension.
The ultimate goal when dividing marital property is fairness. Maryland is an "equitable distribution" state. This means that under 8-205 of the state's code, property is not divided equally, but instead fairly, based on several factors. All marital assets, including a pension, are distributed after a court considers the spouses' ages, the length of the marriage, each spouse's income, each spouse's role in acquiring the asset (an especially important factor for pensions), the value of all marital assets and whether either spouse's conduct (i.e., abuse or adultery) led to the divorce.
If a pension is to be divided, the court must issue a Qualified Domestic Relations Order. The QDRO must set forth the court's decision as to each spouse's rights to the pension. It must be submitted to the plan's administrator for approval before any funds are disbursed. When the pension vests, each spouse will receive monthly payments in the amounts ordered by the court. If no QDRO was submitted, the administrator is not required to distribute any funds to the non-earning spouse.