Laws governing division of marital property in divorce vary from state to state. Maine law requires that all marital property be divided in a way that is equitable, meaning that it's fair but not necessarily equal. Some couples are able to agree on how to divide everything on their own, while others seek the help of attorneys or a mediator to negotiate a property settlement.
Marital Property and Separate Property
The first step in the division process is deciding whether property is marital or separate. Marital property includes most of the assets and debts a couple acquires during marriage. Property is separate if a spouse owned it before marriage or acquired it during marriage by gift or inheritance. Separate property also includes items purchased with or exchanged for separate property.
The Maine rules regarding increases in the value of separate property during marriage are complicated. An increase in value is separate property if it results entirely from market forces (for example, if the value of house goes up simply because the housing market improves). An increase resulting from reinvested income or capital gains is also separate property unless one or both spouses played a substantially active role during marriage in managing, preserving or improving the property, in which case the increase would be marital. An increase in value is also marital if it results from the investment of marital funds or property (for example, payment of a mortgage with marital funds during the marriage), or the labor of one of both spouses during the marriage.
Although these rules are clearly set out in Maine law, in practice they can be very difficult to apply, especially if one spouse owns a business or other asset to which the other contributed significant amounts of labor or money during the marriage. If you have a complex property situation like this, you may need to consult an attorney for advice.
Sometimes spouses can convert separate property into marital property, or vice versa. A spouse can change separate property into marital property by changing title from individual to joint ownership. Joint ownership of an asset in Maine creates a very strong presumption that the asset is marital property, and in the case of real estate, this presumption is almost impossible to disprove. A spouse who mixes other separate property with marital property—by depositing separate funds into a joint bank account, for example—may still be able to prove that the property is separate, but only by presenting clear proof that the spouse did not intend to make a gift to the marriage. If the spouses entered into a premarital agreement, they may already have a list of which property is marital and which is separate, but if they failed to consider everything they might acquire, there may still be conflicts.
After determining which property is marital property, the couple, or the court, will generally assign a monetary value to each item. Couples who need help determining values can hire professional appraisers. Some financial assets, such as retirement accounts, can be very difficult to evaluate and may require the assistance of a financial professional, such as a C.P.A. or an actuary.
Dividing the Property
Spouses can assign certain items of property to each spouse, possibly with an equalizing payment if one spouse gets substantially more than the other. They can also sell property and divide the proceeds, either equally or unequally. Infrequently, couples will agree to continue to own property together—this isn’t a very attractive option for most people, as it requires a continued financial entanglement, but some couples agree to keep the family home until children are out of school. Others may keep investment property in hopes it will increase in value. The couple must also assign all debt accrued during the marriage, including mortgages, car loans, and credit card debts, to one of the spouses.
If spouses aren’t able to decide how to divide property and debts on their own, they will have to let a court decide. A judge in Maine has very broad discretion in dividing marital property, and will not necessarily divide such property equally, or even close to equally. For example, a court will treat a jointly titled marital home as marital property, but if the home was paid for primarily with the separate funds of one spouse, the court may award that spouse a much higher percentage of the value.
A Maine judge will consider all relevant factors in deciding what kind of property division is fair, including the following:
- the value of property set apart to each spouse,
- contributions to the acquisition, of marital property, including contributions as a homemaker, and
- each spouse’s economic circumstances, including the desirability of awarding the family home, or the right to live in it for a reasonable period of time, to the party who has physical custody of children the majority of the time.