Are Social Security Benefits Divided in Maryland Divorce Cases?

Are Social Security Benefits Divided in a Divorce?

Under Maryland law, retirement plans are considered marital property while Social Security benefits are considered non-contractual benefits and thus non-marital property. Previously, Social Security benefits could not be distributed or assigned in a divorce proceeding but could be utilized to pay child support and alimony.

In Jackson v. Sollie, a trial judge of the Circuit Court of Howard County considered whether Social Security benefits could be offset against traditional retirement benefits such as the Civil Service Retirement System (CSRS) pension when dividing property in a divorce case.

Case Summary: Jackson v. Sollie

When Mr. Jackson decided to divorce Ms. Sollie, the ex-couple could not figure out a reasonable way to divide their respective pension plans. As a federal employee with the Social Security Administration (SSA), Mr. Jackson was a participant in the CSRS pension plan which required him to forego Social Security benefits since the SSA did not withhold Social Security tax from his salary. Mr. Jackson was entitled to a small Social Security benefit from his previous employment in the private sector. Ms. Sollie, however, was participant in the Maryland State Retirement Service (MSRS) plan, and was, therefore, entitled to a pension as well as full Social Security benefits.

Mr. Jackson argued that since a portion of his salary was withheld to fund his CSRS pension just as if his employer was withholding Social Security taxes, that amount should be considered non-marital property and thus exempt from an equitable distribution to Ms. Sollie. Ms. Sollie argued that any attempt to value Mr. Jackson’s hypothetical Social Security was speculative since the CSRS and Social Security were separate and distinct. Additionally, she argued that state courts were prevented by federal law from interfering with Social Security benefits and that her soon-to-be ex-husband was attempting to violate federal law by suggesting that the trial court could offset the value of his pension by a hypothetical Social Security benefit and thus reduce her marital share.

The trial court agreed with Ms. Sollie and determined that the parties’ retirement would be divided in accordance with the Bangs Formula, which resulted in a 50/50 split of the other party’s retirement. Mr. Jackson appealed the case to the Court of Special Appeals.

The Appeal: Should the Marital Portion of a CSRS Pension Offset Social Security Benefits in a Divorce Case?

On appeal, the Court considered whether Maryland should 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 Appellate Court reasoned that the trial court correctly followed Family Law Sections 8-202 and 8-203. The opinion stated that the Howard County Circuit Court properly classified the parties’ anticipated Social Security benefits as non-marital property and that under federal law, the trial court was prevented from dividing those benefits directly or by way of an indirect offset when determining the equitable distribution of marital property. The Appellate Court also determined that the trial court was correct in determining that the portion of each party’s pension that accrued during the marriage was marital property and thus subject to the 50/50 distribution.

However, the Appellate Court went on to state that a trial judge must consider a party’s actual or anticipated Social Security benefits as a relevant factor under Family Law § 8-205 (which enables a trial court to consider any other factor that the court considers necessary or appropriate) when determining whether to grant a monetary award to adjust the equities and rights of the parties concerning marital property. Thus a trial court is authorized to speculate as to future Social Security benefits and may base a monetary award in a divorce action on such an estimate. The Appellate Court did not give any hard and fast rules as to how a trial judge should go about calculating future Social Security benefits.

Attorney Fred L. Coover of Coover Law Firm, LLC has been handling difficult legal cases for Howard County residents and beyond for over 30 years. If you are facing a divorce, contact us today at (410) 995-1100 to schedule a consultation in our Columbia, MD office to discuss your options.

Disclaimer: The information in this blog post is provided for general educational & informational purposes only. It is not intended to convey legal advice or serve as a substitute for legal counsel on any subject matter.