Marital Property

Is Maryland a “community property” state?

No. Maryland has an “equitable distribution” statute. Maryland courts try and do what they believe to be fair in dividing property, rather than equal. However, a majority of cases result in equal distributions of property or the value thereof.

Is each spouse entitled to half of their property?

Equal division is not required, although that is the outcome in many cases.

What is “marital property”?

Marital property is:

1. Real property held as tenants by the entirety, unless excluded by valid agreement.
2. Any property acquired by 1 or both parties during marriage, and does not include any property
   • acquired before the marriage,
   • acquired by inheritance or gift from a third party,
   • excluded by valid agreement, or
   • directly traceable to any of these sources.

What does “acquired” mean?

Maryland courts have defined the term “acquired” as the ongoing process of making payment for property. Under this definition, characterization of property as nonmarital or marital depends upon the source of each contribution as payments are made, rather than the time at which legal or equitable title to or possession of the property is obtained. So, for example, a house that had been acquired by one spouse, subject to a mortgage, prior to a marriage, is initially wholly nonmarital property; as mortgage payments are made out of marital funds during the marriage, the property becomes partially marital.

What does “directly traceable” mean?

“Directly traceable” is not synonymous with “attributable.” When marital and nonmarital funds are commingled, no specific sum of money used to acquire property or reduce an indebtedness on any property can be directly traced to any source. This inability to trace property acquired during the marriage directly to a nonmarital source simply means that all property so acquired is marital property.

Do hidden assets or wasted assets count?

Dissipation may be found where one spouse uses marital property for his or her own benefit for a purpose unrelated to the marriage at a time where the marriage is undergoing an irreconcilable breakdown. When a court finds that property was dissipated to the point of being a fraud on marital rights, it should consider the dissipated property as extant to be valued with other existing marital property.

Does title ownership affect whether property is marital property?

Characterization as marital or nonmarital property disregards title, except real property held as tenants by the entirety, which is deemed marital. The court may order the sale of jointly titled real or personal property, and division of the proceeds. But the court cannot transfer title ownership of property, except for pension, retirement, profit sharing or deferred compensation.

What is a “monetary award”?

A monetary award is an adjustment of the equities and rights of the parties concerning marital property. In other words, it is what a court orders one spouse to pay the other spouse so that what each takes from the marriage is fair under all the circumstances of the case.

How does a court make a monetary award?

Maryland courts apply a 3-step process:

1. Determine what property is marital property.
2. Determine the value of all marital property.
3. Make a monetary award as an adjustment of the equities and rights of the parties.

Is there a formula for making a monetary award or dividing property?

No.

What factors does a court consider in making a monetary award?

Maryland law lists the factors to consider:

1. contributions, both monetary and non-monetary, of each party to the well-being of the family
2. the value of all property interests of each party
3. economic circumstances of each party at time of award
4. circumstances that contributed to estrangement of parties
5. duration of marriage
6. age of each party
7. physical and mental condition of each party
8. how and when specific assets acquired, and efforts expended by each in accumulating marital property
9. alimony award and use and possession award
10. nonmarital contribution to real property held as tenants by the entirety
11. any other factor deemed necessary or appropriate.

What happens to nonmarital property?

Nothing, usually. The owner of nonmarital property keeps it. However, in considering a monetary award, and in deciding on alimony, a Maryland court must consider all of the financial circumstances and resources of each of the parties, including any nonmarital property. If a judgment is entered against someone for a monetary award, nothing prohibits the party entitled to the judgment from going after nonmarital property to collect it.

What is a marital debt?

A “marital debt” is a debt which is directly traceable to the acquisition of marital property.

Can one spouse be forced to pay the debts of the other? Can one spouse be forced to pay joint debts of the parties?

A court may not require one spouse to pay the sole obligation of the other, or to satisfy joint obligations of the parties such as mortgages and taxes on real property, or pay the interest on joint promissory notes. However, if one parent gets use and possession of a house or car, for example, the other parent can be forced to contribute to the mortgage or car payment.

Can one spouse be awarded the exclusive right to use and possession of property?

A spouse with custody of a minor child of the parties can be awarded use and possession of a family home, car, furniture, furnishings and home appliances. In making an award, the court considers the best interests of the child, the interests of each party in continued use of the property as a dwelling place or to provide income, and the hardship, if any, on the party whose interest would be infringed.

How long can a use and possession award last?

Use and possession must terminate no later than 3 years after a divorce is granted.

Can a use and possession award include an order to pay expenses?

Yes. The court can allocate financial responsibilities over property which is the subject of a use and possession award, including (1) mortgage or rent (2) indebtedness related to property (3) maintenance and other expenses of

1. mortgage or rent
2. indebtedness related to property
3. maintenance and other expenses of property.