In the state of Maryland, property is divided in divorce through a process referred to as “equitable distribution.” The intent is that each spouse leaves the marriage with a “fair and equitable” share of the marital property, as determined based on fairness and need. It is intended to compensate a spouse who holds title to less than an equitable portion of the marital property. Other states follow a different rule, whereby marital property is split evenly. These states are referred to as community property states.
What Is “Marital Property” In Maryland and How Is It Distributed?
All property acquired by a couple during their marriage is considered marital property—regardless of whose name is on the title. This even goes as far as to extend to pensions earned by one spouse, and businesses or professional practices acquired by one spouse during the marriage. Lottery winnings are also considered marital property. One exception is personal injury awards, which are separate property, as they are intended to compensate the victim for their injury.
All marital property is divided pursuant to guidelines set forth in the Marital Property Act. The court first determines what is marital property, and what is non-marital property. Next, it values that property. Then, it may grant a monetary award as an adjustment of the equities and rights of the parties concerning the marital property, by considering the following factors:
- Contributions each spouse made to the well-being of the family
- Value of the property interests of each spouse
- Economic circumstances of each spouse at the time the award is made
- Duration of the marriage
- Age, physical, and mental health of the parties
- How the property was acquired
- The effort expended by each party in acquiring the property
- Any alimony award
- Any other factors the court deems necessary or appropriate
Any property owned by one spouse prior to marriage is considered non-marital, and is not subject to equitable distribution. Also, property acquired by one spouse through gift or inheritance is nonmarital. Property acquired during the marriage directly traceable to these sources or nonmarital property may be nonmarital as well.
When marital and nonmarital property are commingled, things can become a bit more difficult to separate and award. For example, if a spouse buys property using both marital assets (earnings of each spouse) and non-marital property (for example, a down payment made from an inheritance bequeathed prior to the marriage), the determination of the extent to which the property is nonmarital is difficult. Courts often apply the “source of funds rule,” which states that property purchased with commingled assets is marital property, except for the percentage that can be traced back to a non-marital source.
What About Debt?
The court concerns itself generally only with “marital debt.” Marital debt is a debt directly traceable to the acquisition of marital property, like a car loan. Debts incurred other than to acquire marital property, such as credit card debt incurred for routing family expenses, are generally not considered to a significant extent by the court.
If you are facing a divorce, you should seek legal help from a knowledgeable property division lawyer as soon as possible to protect your interests and get your paperwork in order. The trusted Towson property division lawyers at Huesman, Jones & Miles, LLC are committed to ensuring that our clients receive a fair settlement. Call us at 443-589-0150 or contact us online to schedule a consultation today.