What constitutes marital property in Maryland?
The property owned by a married couple in Maryland may be classified either as marital property or non-marital property. The general rule is that any property purchased during the existence of the marriage is considered marital property. Property that is usually classified as marital property includes marital home, automobiles, furniture, electrical appliances, bonds, investments, jewels, cash held in bank accounts, pension and retirement accounts.
One may wonder if professional degrees like medical degree will be considered marital property if obtained during the existence of the marriage, the answer to the question is in the negative. The same principle applies to driving licenses or other licenses obtained during the existence of the marriage. Merely because they have been obtained during the period of the marriage, such licenses or professional qualifications cannot be considered marital property.
What does not constitute marital property in Maryland?
If one of the parties had obtained the property before the marriage, such property is classified as the separate property of the spouse who owns the property. However, if the spouse who owns the property gifts such property to the other spouse, the property no longer remains separate property.
Similarly, if one of the parties is conferred with ownership of any property by gift or if the spouse inherits such property from any person, then such property is considered non-marital. However, this property remains non-marital only as long as it is not gifted to the other spouse.
At this point, you are probably wondering about the classification of property acquired during the time the parties were in a live-in relationship. Such property is not considered marital property and remains one’s separate property.
Also, most parties to a divorce are curious to know about how the court decides who the actual owner of the property is. If a spouse claims any property to be separate property, the said spouse should be able to prove with adequate evidence that the said property is his/her separate property.
The importance of classification of property as marital or non-marital is to ensure that the separate property of one spouse is protected from any debts incurred by the other spouse. Also, the recovery of the debts of one spouse based on property owned by the other spouse would be highly unfair. Separate property brings with itself the right of the owning spouse to sell the property according to his/her wish and to act independently as if such sale has occurred before the marriage.
A spouse intending to obtain a divorce is always tormented about being made liable for the debts of the other spouse that had been taken before the marriage. There is no need to trouble yourself with such thoughts as the debts incurred by your spouse before the marriage remains his/her liability, you will not be burdened with the debts just because you married her.
Now, you may be wondering about how jointly incurred debts may be recovered and what kind of property will be made liable for jointly incurred debts. The law is clear about this and states that jointly owned marital property is made liable for jointly incurred debts.
Partly marital and partly separate property in Maryland
There is a possibility that the assets owned by the couple may be partly marital and partly separate. One example of such a possibility is a house bought by one of the spouses before marriage and after marriage when both spouses pay the mortgage jointly, the house becomes partly joint and partly separate property.
In cases where the spouses are not able to reach an agreement as to the division of the property, the court intervenes and values the marital property to decide about the division to each spouse.
If you and your ex-spouse cannot agree on how to divide your property, the court will decide what marital property is and how much that property is worth. In this situation, the court also considers the value of marital debts when coming to a conclusion about the value of marital property.
Once the current value of marital property is finalized, the court then proceeds to value the share of each spouse in the property. The question most clients ask advocates is what factors the court considers in determining the share of each spouse. The law that provides guidance for this crucial decision is the Maryland Marital Property Act. This act clearly specifies that the monetary and non-monetary contributions of the spouse have to be taken into consideration when determining the share of each spouse.
Acts, like caring for children, preparing food for them, cleaning the home and overall taking care of the home, are classified as non-monetary contributions. Though these acts do not bring in any income, they form an important part of marital life.
In dividing property, the court does not transfer title of property from one spouse to another. Where situations demand property to be changed the name from one spouse to another, the court awards the monetary value of the share to the spouse in whose favor the property has to be transferred.
The courts also have the option of ordering a ‘buy out’ if both spouses agree to it. If the parties are unable to reach an agreement about this, then the court may also order the sale of the property and the sale amount can be divided between the spouses.
The death of either spouse brings about more complicated questions such as who is entitled to such property. Maryland law clearly states that the presence of children determines the share of the other spouse.
If the party is survived by minor children, the surviving spouse is entitled to one half of the property after deducting appropriate amounts for funeral and other expenses. In cases where there are surviving children but none are minor children, then the surviving spouse is entitled to first $15,000 and half of the rest of the property. The same rule applies to cases where the spouse has left behind his/her parent.
Only in those extremely rare cases, the surviving spouse is entitled to the whole property such as where there is surviving child or parent.
Property division when there is a Will
In some cases, the deceased spouse leaves behind a will. When there is a will, the surviving spouse is left with the option of either following the will or renouncing the will.
The term renouncing the will indicates that instead of receiving as per the will, the surviving spouse will be entitled to a fixed amount. When there are children, this fixed amount is 1/3 of the ‘net estate’ and in the absence of children, this fixed amount is ½ of the net estate. You are probably wondering what this term ‘net estate’ means.
Net Estate refers to the property that passes through the will, after deducting certain expenses. The expenses include funeral expenses, family allowances, and enforceable claims and debts against the estate. However, this amount does not include taxes.
Equitable distribution of Property under Maryland Law
In some cases the parties mutually agree about the property division, thus totally eliminating the role of the Courts in the property division. In cases, where the parties are unable to reach an agreement, the property division is done under Maryland’s Marital Property Act. Such division of property is called equitable distribution of property.
The court considers the following factors in determining the value of marital property and in deciding the share of each spouse:
- The contributions, monetary and non-monetary, of each party to the well-being of the family;
- The value of all of the property interests of each spouse;
- The economic circumstances of each spouse at the time the award is to be made;
- The circumstances and facts which contributed to the estrangement of the parties;
- The duration of the marriage;
- The age and physical and mental condition of the parties;
- How and when the specific marital property was acquired, including the effort expended by each party in accumulating the marital property;
- Any award or other provision which the court has made with respect to family use personal property or the family home, and an award of alimony;
- Such other factors as the court deem necessary or appropriate to consider in order to arrive at a fair and equitable monetary award; and
- The contribution of either party to the acquisition of the property is also considered.
- The court cannot transfer ownership of property titled to one spouse to the other. In these instances, the court will grant a monetary award to one spouse as an adjustment of the rights and equities of the parties concerning the marital property. However, the parties may agree and take steps to transfer this property on their own in and as a result of a marital agreement.
There is no mandatory requirement of transferring 50% of the property to each spouse, the court carefully considers each of the above-mentioned factors and decides the share of each spouse.
Most often, courts consider Pensions to be part of the marital property. If the court decides Pension to be marital property, the ownership of the interest in Pension may be transferred from one spouse to another or may grant a monetary award to provide for equitable distribution
When discussing the jointly owned property, parties to a divorce are also interested to know about what happens to property that is used personal property but is used by all members in the family such as automobiles, furniture, and other electrical appliances. This list also most importantly includes the marital home. In almost all cases, the family home is awarded to the party who has custody of the minor child. The main objective of the court’s decision to allow children to remain then marital home is to avoid bringing drastic changes to the children’s life given the fact that the divorce by itself is going to be life-changing for them.
Thus the best interests of the child are the basis for determining the division of separate property that is being used jointly by everyone in the family.
If you need the help of a Maryland marital property division lawyer to help you with your marital property division case in Maryland, call us at 888-437-7747. Our Maryland marital property division attorneys are here to help.