Maryland Divorce Lawyer Blog
Calculation of pension division can be challenging. Typically a formula called “the Bangs formula” is used, but application of the formula can be complicated. In a 2010 case, a husband and wife divorced and reached a settlement agreement about all child custody, child support, and property division issues. The agreement was incorporated into the judgment of absolute divorce. The wife appealed with regard to the post-judgment entry of orders related to domestic relations and the husband’s pension. She claimed that her share of the pension was miscalculated.
The couple had married in 2000 and had a child two years later. They divorced after seven years. Before they married, the husband was in the Maryland National Guard, and he was serving on reserve status when they married. During the marriage, he worked as a paramedic for a city and had to contribute 6% of his salary to the Fire & Police Employees’ Retirement System. Later he became full-time in the army and served full time from then on, although he was on a paid military leave of absence at the time of the appeal. Meanwhile, the wife was a pharmacist employed by CVS.
The husband filed for divorce, and the wife filed a counter-complaint in 2006. During a merits hearing, the parties entered into an agreement. The parties agreed that the wife had an “if-as-when interest” in half of the marital share of the fire department benefits and the military pension. The court advised that the pension rights were set based on the number of months of the marriage, so as the pension rights increased, the wife’s share would not necessarily increase. The husband expressed he understood. Divorce was granted, and qualified domestic relation orders were supposed to be submitted. However, the parties could not reach agreement about the terms of the orders for the city pension and military pension. The wife filed a motion with regard to these orders, and the husband filed oppositions.
The proposed orders on both sides differed in how they calculated the wife’s share of the pensions. The court entered the orders proposed by the husband. The wife appealed.
The husband moved to dismiss the appeal, arguing the wife could not appeal from a consent order and that she had agreed to the judgment by accepting benefits. The wife explained she was appealing not from the divorce terms, but from the terms of the two orders related to pensions.
The appellate court explained that the wife’s argument was that the orders entered by the court had failed to effectuate the agreement she and the husband had reached. The wife was seeking to enforce the terms of the divorce, not challenge the judgment.
The wife had argued that she was entitled to a share of the husband’s pensions as determined by the Bangs formula. The husband argued that the agreement never intended that they use the Bangs formula. The court had assigned the wife 50% of the marital property portion of the husband’s contributions accumulated since 2008. The wife believed that she deserved 50% of the member’s total benefit under the plan. Similarly, she believed she was entitled to a percentage of the military retired pay as computed by multiplying 50% times the applicable fraction.
It can be difficult to value prospective benefits. One method is the Bangs formula, in which the marital portion is the fraction of which the length of the marriage is the numerator and the length of employment credited towards retirement is the denominator. The wife’s share in that case would be determined by applying an agreed-upon fixed percentage. If the parties were married 100 months and the pensions accrued for 1,000 months, the marital portion would be 10%.
In this case the phrase “if, as and when” had a specific meaning that required use of the Bangs formula as asserted by the wife. The husband had believed the trial judge’s comments altered its terms, but the judge was merely explaining that the numerator in the Bangs equation was frozen. The parties had agreed the wife was entitled to 1/2 of the martial portion on an if, as and when basis. She was entitled to a percentage of the benefit paid, not a percentage of his contributions.
Family law issues require not only sensitivity, but also an understanding of finances and property division. Contact an experienced Maryland family law attorney for representation and legal guidance.
More Blogs:
Failure to Pay Child Support, Maryland Divorce Lawyer Blog, May 22, 2014
Is There Palimony For Cohabiting Partners in Maryland, Maryland Divorce Lawyer Blog, May 7, 2014