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Marital Property and Divorce in Maryland

Separation and divorce have a profound impact on a family’s financial affairs. At the outset of the dissolution of the marriage  you need to understand the concept of marital property and be prepared to take steps to maximize your ability to ensure that your rights regarding the family’s assets are not compromised and that the assets are available for identification and valuation purposes.

How Property is Handled in a Divorce in Maryland

Maryland is an equitable distribution state. Simply put, the court has the authority to divide the marital property in a fashion it deems fair, based upon the factors enumerated in the Family Law Article of the Annotated Code of Maryland. Notwithstanding the apparent authority to do otherwise, judges usually divide marital property equally between the divorcing couple, and most lawyers will attempt to negotiate a 50-50 division of marital property. However, it is the duty of the diligent lawyer to ensure that all marital property is properly identified, that it is valued consistent with the client’s interests (the client that owns the asset may want its value lower to secure an advantage in the division of marital property process, while the other spouse may want such an asset overvalued) and that any assets that are not in the client’s control are not hidden, sold or reduced in value before the assets are accounted for in a negotiated agreement or at trial.

What is “Marital Property?”

Marital property includes any asset acquired during the marriage that is not traceable to pre-marriage ownership by one of the spouses, that was not acquired through inheritance or gifts from third parties, or was not excluded by a valid agreement between the parties (such as  a Pre-Nuptial Agreement). The commingling of non-marital assets with marital assets can cause the non-marital claim to be difficult to establish. Legal advice is needed to ensure non-marital assets are properly preserved as such.  Additionally, assets can be partially marital and partially non-marital, as is frequently the case with retirement benefits and deferred compensation assets.  Assets that may be non-marital (a home purchased before the marriage) may become part-marital, through the use of marital funds (paychecks during the marriage) toward the payment of a mortgage. The list is long, but funds on deposit, investments, real estate, family businesses, vehicles and personal property are the most common types of marital property. Our firm’s experience with small businesses provides us with a level of knowledge with regards to this type of asset to understand how best to provide for the protection of our clients’ rights in these situations.

The court has limited authority to change title to marital property or to identify it as property necessary for the use and benefit of minor children. Effectively, title to the property has an influence on how it will be dealt with in a divorce, but may not necessarily be controlling as to the ultimate disposition of the property. Legal advice is needed to anticipate the possible options with regards to homes, vehicles, businesses and personal property.

Legal advice is needed to ensure that… marital funds aren’t inappropriately used to reduce a spouse’s unsecured debt.

Debt is not marital property. The court has limited authority with regard to addressing debt accumulated during the marriage. The existence of purchase money liens, such as a mortgage, clearly impacts the valuation of marital property. Under certain circumstances, the court can order a parent to make the mortgage payment for a period of time. Legal advice is needed to ensure that inappropriate access to lines of credit secured by real estate does not take place or that marital funds aren’t inappropriately used to reduce a spouse’s unsecured debt.  Bankruptcy issues, by one, both or either of the spouses, need to be anticipated and our experience in this area of the law is vital to the protection of our clients’ rights.

While a divorce may bring about an equitable division of the family’s marital property, acting quickly to obtain sound legal advice regarding your individual financial issues is the most certain way of making sure the marital property in your divorce is defined and preserved fairly and equitably.