* This is by no means intended to be a complete description of property rights in the State of Maryland. This page is intended to give a litigant an idea of the marital property distribution process. A complete description of rights can be found in the Maryland Code and the Maryland Rules. Do not rely on this page alone for guidance. Please consult with an attorney. This page does not create an attorney-client relationship.
Marital Act
The Maryland Marital Act describes the theory by which Maryland divides marital property; equitable distribution. Equitable distribution states that upon divorce, each spouse takes their separate property. The court divides the marital property on an equitable basis, not necessarily in half, but based on the needs of each party.
Marital Property
All property acquired during the marriage is presumed marital property regardless of title. Here are a few common examples: pensions- the portion of a pension acquired during a marriage is marital property. Businesses acquired during the marriage are marital property, professional practices can be considered marital property if the goodwill of the practice is an asset with separate value from the reputation of the professional. Personal injury awards during the course of the marriage is separate property for purposes of compensating the victim spouse, but is marital property to the extent that the award compensated for lack of consortium (marital relations) medical expenses paid by the marriage, as well as lost wages. Lottery winnings during marriage are marital property, but may not be if won after separation, depending on the specific facts of the case. See the below discussion for non-marital property.
Non-Marital Property
Property owned prior to marriage is non-marital property, including the appreciation such property earned during the marriage. Other non-marital assets include property, both real (land, homes) and personal (houses, boats, furnishings) that was acquired through gift, bequest, or devise. There are two caveats: (1) appreciation of property due to the active intervention and management by either spouse during the marriage is marital property. Appreciation by mere virtue of possession is non-marital property; (2) Gifts between spouses is marital property.
Commingled Property
A common fact pattern in my practice is the acquisition of property using both marital and non-marital assets. In this case, the property is deemed marital property, but the spouse contributing non-marital assets is credited for his/her contributions through the source of funds rule. The source of funds rule states that when property commingles non-marital and marital assets, the property is marital property except that percentage that can be traced to a non-marital source. A common example of this is the purchase of a house with a down payment from one spouse's inheritance plus standard mortgage payments made from a joint checking account. Important: The source of funds rule does not apply to houses titled tenancy by the entireties. Most houses held by married couples are held by this tenancy. When a house is held tenancy by the entireties, the entire property is marital property unless a prior written agreement exists. The contribution of one spouse's non-marital property will be considered by the court when determining the need and amount of a monetary award.
Debt
Debt arising out of the acquisition of marital property is considered marital debt to be deducted from the value of marital property. The value of marital property is determined on the date of divorce, not the date of separation. *Important note- debt incurred from the payment of rent, food, and other expenses associated with daily living is not considered marital debt and cannot be apportioned between spouses. Thus, the most important question in determining marital debt is whether the asset accounting for the debt is marital property.
Use and Possession
Where the parties have a child or children as a product of their marriage, the family home and other property may be awarded to the custodial spouse by a use and possession order. These orders state that the custodial parent shall have exclusive use of the property until such time as the order expires. Use and possession orders can last up to three years. The court has the power to identify family use property, and to make an award of that property for as long as three years regardless of how the property is titled. Although the award can be made regardless of title, the property must be considered family property before the award can be made.
A family home is defined as follows:
(1) the home is used as the principal residence of the family;
(2) the home is leased or owned by one party at the time of the proceeding;
(3) the home will be used as the principal residence of the custodial parent and child(ren).
A residence acquired before marriage by gift or inheritance from a third party cannot qualify as a family home, but may be a family home where the residence is re-titled in both spouse's names (i.e. a gift of one half interest in the property is made by the owner spouse to the other spouse).
Forced Sale
Maryland judges do not have the power to transfer title to property from one spouse to another. Thus, a judge cannot order a spouse to sign over his/her interest in a house to the other. If the parties cannot agree on a fair distribution of jointly held property, a judge simply orders that the property be sold and the proceeds distributed as per the judge's order. As such, it is usually in the parties' best interest to negotiate jointly titled property without forcing a sale.
Monetary Award
Monetary awards are the tool judges use to equitably distribute assets, both liquid and equity in leveraged properties. In determining the appropriateness and amount of a monetary award, a judge will consider the following factors:
(1) contributions by the spouses during the marriage to the well-being of the family, both monetary and non-monetary;
(2) the value of all property interests of each party;
(3) the economic circumstances of each party;
(4) the circumstances that contributed to the estrangement;
(5) the duration of the marriage;
(6) the age of the parties;
(7) the physical and mental conditions of the parties;
(8) how and when specific marital property was acquired;
(9) the contribution by either party of separate property that is used to acquire real property held as tenancy by the entireties;
(10) any award of alimony that a court has made;
(11) any other factor that the court considers necessary.
