Marital couples share their lives, including their property, and divorce brings this to an end. Instead of the issue of “ours” or “mine,” which often can be a hotly disputed topic on its own, the parties must prove the title, value and marital interest in all property and assets. Here are some basics about marital property for couples facing a divorce.
What is Marital Property?
Under Maryland family law, the presumption is that all assets acquired during a marriage are the marital property of the couple, whether in one or joint names. This includes the equity in a home, retirement assets, bank accounts and investments, and anything purchased with marital funds. While there are some exceptions, the burden is on the party claiming the non-marital nature of the property to prove that the property is not part of the marital estate.
What is Separate, Non-Marital, Property?
There are three major exceptions to the presumption of assets of either party being marital property. Gifts and inheritance received by one spouse are both non-marital property. Property owned by one party prior to marriage also is non-marital property. Since the burden is on the party claiming that property is non-marital, commingling separate property can change its character and make it all, or partially, joint. For example, if one spouse owns a house prior to marriage, and they use marital property (e.g. employment income) to pay the mortgage, then the other spouse acquires an interest in this property. Similarly, if a spouse had a retirement account prior to marriage, the other spouse is entitled to a share of the account that is funded by income or employment benefits during the marriage. Gifts from one spouse to another are marital property.
Property ownership disputes in a Maryland divorce often involve property that once was one spouse’s separate, non-marital property, but through commingling, it has led to a claim that it is marital property. In these disputes, the title of the property does not govern the issue of marital interest. For example, one spouse may receive a sum of money as an inheritance and place it into a joint bank account. This commingling creates a burden on the party that inherited the funds to prove they still exist and have not been spent, in whole or in part, while the parties had accessed the account. The receipt of an item of jewelry might be in the name of one spouse, but if it was given as a gift to the other spouse, it is marital property.
When the time comes to divide and account for the marital property in divorce proceedings in Maryland, the court uses the principle of “equitable distribution” to make sure that each party receives their fair share of the marital assets. The court can consider issues like the partial use of non-marital property for the purchase or acquisition of marital property to make its equitable ruling. The court has a wide range of factors to consider in the exercise of its authority to divide and account for marital property – equal division of marital property may be the goal of the parties, but the court is not required to make a 50/50 division of marital property. The court can grant a monetary award to one party to account for the unfairness that title of marital property brings to the outcome. This award can be payable in a lump sum or over time. It can divide pensions based upon marital shares and, in limited circumstances, transfer title to real estate, and order other actions to distribute the personal property of the marital estate. Among the various factors that will be taken into account in the Court’s ruling is the use of the property by the minor children of the family.
Equitable distribution occurs once the parties have established and the court has ruled upon, the title, value and the marital nature of all property. If you are considering a divorce, you need to consider what claims you intend to make over property and how these claims will be addressed by the court. You need to know what steps, if any, you should take in advance of the divorce to protect your assets and maximize your claim to marital property. At Barkley Kennedy, we have decades of experience working with clients to obtain their share of the assets. We have offices in Rockville and Frederick, and we are available for a virtual consultation. Contact us to discuss your ownership rights.
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