Federal employees play a significant role in Baltimore’s economy, working in agencies such as the VA, USPS, and the Department of Defense. However, when a federal employee divorces, federal severance pay and benefit packages can quickly complicate the process.
Severance packages can be large, and whether they are divisible during a divorce could impact the spouses’ financial future for years to come. This post explains how Maryland courts view severance packages in divorce cases, how timing and purpose affect the outcome, and what individuals & a family law attorney in Baltimore can do to protect their interests.
Why Severance Packages in a Divorce Are a Legal Gray Area
A severance package is a combination of benefits and money employers often pay employees when they terminate their employment. Sometimes, a severance package is a lump sum payment; other times, it is a continuation of the employee’s salary and benefits for a few months. Either way, it can be a sizable asset.
A severance package can complicate the division of assets during a divorce because whether it is divisible is not always clear. To make this determination, Maryland courts often ask a few important questions:
- When did the spouse receiving the severance package negotiate it? If the agreement happened during the marriage, the package is likely divisible.
- What is the severance package for? Is it meant to replace future earnings or reward past service?
- What does state law say? Is a severance package subject to division under Maryland family law?
These questions make the division of a severance package during a divorce a legal gray area, with the outcome depending on the circumstances and how well the spouses present their cases in court.
Maryland Divorce Law: What Counts as Marital Property?
In Maryland, not everything gets divided in a divorce. The law looks at what qualifies as marital property under Md. Code, Fam. Law § 8-201.
Essentially, any assets acquired by either spouse during the marriage, regardless of whose name is on the title, are usually divisible. This includes wages, retirement accounts, real estate, and sometimes severance packages.
How Do Courts Divide Severance Packages During a Divorce
A severance package can be marital property if the spouse receiving it earned or negotiated it during the marriage. Courts will also ask whether the package relates to work done during the marriage or future wages after separation.
For example, if the receiving spouse earned or negotiated the severance during the marriage, and it relates to past services, the court may decide to divide it. However, if the spouse negotiated it after separation, or it is a replacement for future income, the receiving spouse might keep it all.
Judges also consider other factors including each spouse’s financial need, contribution to the marriage, and future earning potential.
Special Considerations for Federal Employees
Federal employees have access to a different set of benefits than most private-sector workers. These include unique severance packages, pensions, and other retirement options.
During a divorce, the division of these benefits can become complicated and must often follow strict federal guidelines. Some federal benefits also require a court order or a Qualified Domestic Relations Order (QDRO) for spouses to divide them appropriately. Nevertheless, state courts still have the authority to decide if and how to divide them.
How to Protect or Pursue Severance in Divorce
The first step for the spouse receiving the severance package is to gather all the paperwork. This includes the employment contract, the severance agreement, and any emails or memos explaining why the employer offered the payout.
Also be prepared to:
- Show whether the severance is for future unemployment or past work
- Note the signing date of the severance agreement and whether it was part of a larger package
- Talk to a family law attorney in Baltimore before finalizing the divorce agreement
On the other hand, the spouse claiming a portion of the severance should take the following steps to support their claim:
- Request complete financial disclosures as part of the divorce
- Ask their attorney to explore the severance’s origin and purpose
- Push for discovery if the other party will not provide precise details
Whether trying to keep or claim a share of a federal severance package, the more evidence a spouse has regarding when it was earned and its intent, the stronger their position.
Why Hire an Experienced Baltimore Family Law Attorney?
This process can become complicated when complex assets such as severance packages, pensions, and federal benefits are involved in divorce negotiations. Add in Maryland’s equitable distribution rules, and one can easily see why specialized legal guidance is necessary.
An experienced family law attorney in Baltimore can help present the right evidence to support or challenge a severance claim, explain complicated benefits like pensions or federal leave payouts, and ensure a fair outcome through negotiation or litigation.
Contact Milstein for a Trusted Family Law Attorney in Baltimore
If you are going through a divorce in Maryland, especially if one of you works for the federal government, understanding your rights and risks is key. A federal severance package can shape your financial future, but your claim to all or a portion of it can be lost without the right legal support.
The Baltimore family law attorneys at Milstein Siegelunderstand how to work with government employment records, federal benefit rules, and complex compensation structures. We also know that a clearly defined legal strategy makes all the difference. That is why we leave nothing up to chance.
Whether protecting marital assets or ensuring that courts divide them fairly, the Baltimore family law attorneys at Milstein Siegel help divorcing spouses understand their rights and options.
Contact Milstein Siegel today for personalized guidance and strong legal representation that protects your interest and achieves the best possible outcome.