One question we are often posed with when negotiating marital settlement agreements when there is a division of assets to be determined is what date is to be used to value those assets – date of separation or date of divorce. The question is not a simple one to answer.
Md. Family Law Code Ann. §8-203 supports the idea of assets being designated as marital property up to the date the judgment of absolute divorce is executed. Additionally, a formula established by case law, the Bangs formula, uses a numerator that includes time that runs up until the date of divorce.
However, an equitable argument can be made, and usually is made, that after a parties’ separation, neither party is contributing to the assets of the other party and is therefore not adding any value to those assets, which supports the date of separation as the date used to value marital assets. Parties can be separated for several years prior to filing a divorce petition or their divorce litigation can continue for a protracted period of time. Many assets, including retirement and investment accounts, will continue to accrue value during the time period between a parties’ separation and judgment of absolute divorce, and a fair and equitable argument can be made that the valuation date for these assets should be the date of the parties’ separation.
Cynthia H. Clark and Associates LLC is an Annapolis-based family law firm serving clients throughout the state of Maryland. If you and your spouse are considering a divorce, please contact our firm to reserve a consultation time at our office.