Breaking Down Maryland Property Division
February 13th, 2023
Confused about who gets what when it comes to dividing your belongings in divorce? When you and your spouse have commingled bank accounts, along with a shared car, home, and everything inside it, even the simplest property division may seem anything but clear cut. But, if you live in Maryland, I have good news. Regardless of whether you and your spouse have significant and complex assets or only a small amount of money and property, you can expect a fair division of marital property in divorce. That’s because Maryland is an equitable division state, opposed to a community property state. Meaning, the court isn’t obligated to divide property equally between spouses but instead will divide how it finds fair.
OK, that last line might give you some pause. Define fair, right? A fair property settlement sets you up for security and success in your life post-divorce; an unfair one can leave you struggling. So what do the courts deem fair? How is that determined? What is even considered property for division in divorce? Here’s my quick breakdown on Maryland property division guidelines.
Property, Marital Property, Non-marital Property – What’s the Difference?
First, what is actually considered property? The term property encompasses many things, including the obvious, like houses, cars, bank accounts, jewelry, furniture, and art. But property is more than things you can lay your hands on. It also includes intangible things, such as patents, trademarks, the value of certain investments, and goodwill in a business.
In divorce, Maryland courts will only divide property that is considered marital. Marital property is all property, however titled, acquired by one or both parties during the marriage. On the flip side, non-marital property, or separate property, is any property that was acquired before the marriage, acquired by inheritance or gift from a third party, is excluded by valid agreement, or is directly traceable to any of the foregoing sources.
To complicate matters, you’ve probably already realized that some property is partly separate and partly marital. For example, do you have a 401K that you began contributing to while single and kept contributing to during the marriage? Property can often start out as separate property, but then become marital property when commingled with marital assets. Another example would be a cash inheritance received by one party that was deposited in the couple's joint bank account. Now what?
Hire a family law attorney. If there is any doubt as to whether certain property is marital or separate, you need an attorney who can assist you, as thousands of dollars or more could be riding on the outcome of that issue alone.
Equitable Distribution in Maryland
If you and your spouse do not have an agreement in place, then Maryland’s Marital Property Act governs the Maryland property division. This means that the court evaluates and divides property in a way that is fair considering all the circumstances. And this doesn't necessarily mean a fifty-fifty division, but most property divisions do tend to be close to equal.
The court looks at a number of factors when determining Maryland property division, including:
- How much each contributed to the well-being of the family
- How much each party’s property is worth
- The economic circumstances of each of you
- Why the divorce is happening and the events leading to it
- How long you were married
- How old each of you are as well as your physical and mental condition
- When and how marital property was acquired — including each party’s effort to accumulate it
- How much each contributed to acquiring the real property, such as your home
- Other awards, such as alimony, that include use of property
Maryland also uses monetary awards to compensate a spouse who holds title to a less than equitable portion of marital property. A competent family law attorney will help gather and present evidence of the above so that the courts make the best available decision when it comes to property division during your divorce.
What if my spouse has hidden or disposed of marital property?
Dissipation is the term used when one spouse uses marital property for his or her own benefit for a purpose unrelated to the marriage, at a time where the marriage is undergoing an irreconcilable breakdown (i.e., one spouse wastes or spends marital assets). If the court finds that the property was dissipated, it will value it and treat it as if it still exists and use it as part of the property division — and to the detriment of the spouse that used it.
The most common example is if your spouse gets a significant other while you’re separated and spends marital funds on that significant other. Don’t worry, the court will not allow that money to be dissipated and will make an appropriate order for a reimbursement of it to you.
Is marital debt divided as marital property?
I get this question a lot, and for good reason. The division of marital debts can be more confusing than actual property division itself. So the simple answer is yes, the court will factor in marital debts when determining the value of the marital property. Marital debt is debt that is traceable to marital property (e.g., a shared mortgage on your home).
However, if your spouse is ordered to pay off a debt (say, a shared credit card) your name is not removed from the property, just removed from the court-ordered responsibility. In other words, your spouse not paying this debt will still affect your credit. In this case, you would need to go back to court to force them to fulfill these financial responsibilities, which is another reason you need an attorney.
Use and possession awards
There is a caveat to Maryland property division. A judge can award the spouse who has child(ren) custody the “use and possession” of marital property, such as the family home or car, if it’s in the best interests of the child. However, this family use of property terminates no later than three years post divorce.
How to Safeguard Your Property in Divorce
OK, so now that you know how property is divided during marriage, let’s talk about how to make the division of assets process smoother. A few tips:
- This one’s obvious. If you have a prenuptial agreement, you will save a lot of time and money on this property division process. A prenuptial agreement lays out how assets and debts will be divided should you divorce and can even include child support and alimony. Of course, if you’re already at the divorce stage, this advice doesn’t apply to you.
- Receiving (and keeping) inheritance can be simple if set up. You are entitled to keep inheritance if it’s been kept separate from marital assets. However, if the inheritance has been commingled in joint funds and cannot be traced, things get trickier. My advice is to place your inheritance in a separate account with only your name on it so that it is clear this is nonmarital property.
- If you're a business owner, how to keep the primary (or full) stake in your business is probably top of mind. Here, I recommend hiring an attorney. They’ll help you value the business and develop a plan to keep it.
Still have questions on Maryland property division? Check out my Maryland Property Division FAQs.
Categories: Dividing Property & Debt, Divorce, Maryland Family Courts