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Md. high court: Spouses can decouple property without calling it ‘non-marital’

A married couple can agree that property they buy as husband and wife belongs solely to him or her without expressly stating in the agreement that the property is “non-marital,” Maryland’s top court has ruled.

The Court of Appeals decision overturned lower court rulings that held all property acquired during marriage belongs to both spouses in divorce unless they had reached an agreement while married clearly stating that a certain property should not be considered marital.

The high court rendered its decision Thursday in holding that an ex-wife is entitled outright to a home in Virginia that her ex-husband had deeded to her during their marriage as an apology for having taken money from her premarital stock account. The court deemed it irrelevant that that he had never expressly stated that the property should be reclassified as non-marital.

The Court of Appeals said its ruling should clarify confusion wrought by the intermediate Court of Special Appeals’ 1985 decision in Falise v. Falise that property is non-marital only if the couples’ agreements “specifically provide that the subject property must be considered ‘non-marital’ or in some other terms specifically exclude the property from the scope of the Marital Property Act.”

But Maryland law does not require such specificity if the intent of the spouses is manifest, as was the case with the agreement between Ann and Michael McGeehan, the high court said.

A Howard County Circuit Court judge presiding over the McGeehans’ divorce had acknowledged the validity of the transferred deed but concluded the land in Mason Neck, Va., remained marital property because their agreement accompanying the transfer had not expressly stated the property was now non-marital. The Court of Special Appeals upheld the judge’s decision last year, citing its Falise decision.

The ex-wife sought high-court review.

In ruling for Ann McGeehan, the Court of Appeals cited Family Law Article Section 8-201(e), which states that marital property does not include property “excluded by valid agreement.” The statutory provision does not require that the agreement specifically state that the property is “non-marital,” the high court said.

It was sufficient that the McGeehans’ agreement used the phrases “sole,” “separate” and “sole owner” to express Ann’s interest in the Mason Neck property, the court added.

“With respect to the Mason Neck property … the trial judge found that the parties intended that the property would be wife’s,” wrote retired Judge Lynne A. Battaglia, sitting by special assignment. “The judge then neutralized that agreement by requiring the Falise reclassification language. In so doing, the trial judge obviated her original finding by requiring that the parties insert the reclassification language of nonmarital as mandated in Falise. In this, she erred; the Falise dictates are inapplicable to negate the McGeehans’ postnuptial agreement to transfer Mason Neck and its value to the wife.”

Ann McGeehan’s attorney hailed the high court’s decision.

“The Court of Appeals correctly recognized that a deal is a deal in family law as well as in contract law,” said Mitchell Y. Mirviss, of Venable LLP in Rockville. “The decision restores common sense and lets married couples reach agreements informally without requiring them to run to a lawyer to find the right magic words.”

Michael McGeehan’s attorney, Allen J. Kruger, declined to comment on the court’s decision. Kruger is with the Law Offices of Allen J. Kruger P.A. in Laurel.

In a concurring opinion, Judge Joseph M. Getty stated that the court should have been “more straightforward” and “simply overturn” Falise’s call for an express declaration that the couple agrees the specific property would be non-marital.

Getty said that the agreement between the McGeehans – under which Michael agreed to “convey all his rights, title and interests” to Ann – was “a valid agreement to exclude that property as marital property under FL Section 8-201(e).”

The Court of Appeals rendered its decision in Ann McGeehan v. Michael McGeehan, No. 93 September Term 2016.

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