Going through a divorce can be difficult as each party tries to move on with his or her life. In addition to determining where each person is going to live, the parties may have to determine where the children are going to live, how each party is going to financially support the children or each other, and how the parties are going to divide the property that they acquired during the marriage, which is referred to as Marital Property. How do parties decipher what is considered marital and non-marital property?
What is Marital Property in Maryland?
Marital Property is any property acquired by either party during the marriage. “Acquired” means paid for using marital funds (funds earned during the marriage).
Title is not important in deciding whether or not something is Marital Property.
For example, suppose that during the marriage, a husband opens a bank account in his own name with earnings from his employment. The bank account would be marital property because it was opened with funds earned during the marriage. The fact that the husband titled the account in his own name does NOT make it non-marital property.
What is Considered Non-Marital Property in Maryland?
- Property acquired before the marriage
- Example: a vehicle that you acquired and paid for in full before the marriage.
- Property that was acquired by inheritance or from a gift from a third party
- Example: your grandmother’s ring that you inherited after her death or the $50,000 account that your grandfather left you in his will.
- Property excluded by the parties by a valid agreement
- Example: a prenuptial agreement providing that each party’s retirement account is excluded from marital property, even if either party contributes to the retirement account during the marriage.
- Property that is directly traceable to any of the sources listed above
- Example: a vehicle that you acquire during the marriage using money from an account that you owned before the marriage.
Why is it necessary to determine what is Marital Property?
In Maryland, except for pension benefits earned during the marriage; personal property acquired during the marriage (a vehicle, furniture, or household appliance) that the parties used for family purposes; or real property (land or a house) that is owned jointly by the parties and used by the parties as their principal residence; a court does not have any authority to transfer title to property from one spouse to the other.
For example, a court could not order one spouse to transfer his or her bank account to the other spouse. So, suppose that most of the marital property is titled in the name of one party, if the court is not permitted to transfer title from one party to the other, what does the court do to balance the unfairness if one spouse has more marital property titled in his or her name than the other spouse?
In Maryland, a court has four options:
1) a court may transfer an interest in pension benefits acquired during the marriage from one party to the other;
2) a court may transfer personal property acquired during the marriage (a vehicle, furniture, or household appliance) that the parties used for family purposes from one party to the other;
3) a court may transfer real property (land or a house) that is owned jointly by the parties and used by the parties as their principal residence from one to the other;
4) a court may grant a monetary award to the spouse who has less marital property titled in his or her name.
These options are commonly referred to as the Equitable Distribution of Marital Property.
What is required to make an Equitable Distribution of Marital Property?
- Courts settling matters of Maryland marital property laws follow a three-step process:
- 1) The court determines what is Marital Property;
- 2) The court values the Marital Property;
- 3) The court decides to grant a Monetary Award based on 11 factors contained in the law, including the contributions, monetary and non-monetary, by each party to the well-being of the family, the value of all property owned by each party, the reason for the breakdown of the marriage, the length of the marriage, the age of each party, the physical and mental condition of each party, how and when the marital property was acquired, any alimony award, and any other appropriate factor. In addition to making a monetary award, a court may also make one or more of the transfers discussed above.
- Maryland is not a “Community Property” State but an “Equitable Distribution” State. In a “Community Property” State, the parties are required to divide all marital property equally. In an “Equitable Distribution” State, the Court is not required to make an equal distribution of marital property.
5 Common Myths About Marital and Non-Marital Property
- Myth 1: Marital property is determined by title. Many people assume that if property is titled solely in one spouse’s name, it is non-marital property. This is incorrect. Marital property is anything acquired during the marriage that is not acquired by gift from a third party, inheritance, excluded by valid agreement, or directly traceable to any of these sources. It does not matter how the property is titled.
- Myth 2: The acquisition of marital property ends at the time parties separate. Many people assume that once they are separated, any property that he or she acquires is no longer marital. This is incorrect. Marital property is anything acquired during the marriage, which includes when the parties are living separate and apart. Marital property is acquired through the date of a divorce.
- Myth 3: Maryland courts automatically split marital property As stated above, Maryland is an equitable distribution state. Although many cases result in the court making a monetary award that gives each party half of the value of the marital property, that is not always the result. A party should not assume that marital property will automatically result in each party receiving half of the value of the marital property.
- Myth 4: Income earned during the marriage by one party is considered not marital property. Again, anything acquired during the marriage that is not acquired by gift from a third party, inheritance, excluded by valid agreement, or directly traceable to any of these sources is marital property. Therefore, the income that one party earns during the marriage is in fact marital property.
- Myth 5: The Court will automatically sell any real estate owned by the parties as tenants by entirety. Although the Court does have the authority to order a sale of real estate owned by the parties as tenants by the entirety, the Court also has the authority to transfer real property that is owned jointly by the parties and used by the parties as their principal residence from one to the other.
Divorce matters can be overwhelming. We’re here to provide you with the assistance, advice, and representation you need to help you get the fair outcome you deserve. At Meiselman Helfant & Wills, we provide trusted legal services in all areas of family law, including domestic abuse, separation agreements, alimony, division of marital assets, divorce, and all areas of child custody, visitation, and support.
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