In Maryland, marital property isn't always divided right down the middle. Because Maryland is an equitable distribution state, the divorce court will divide property fairly between the spouses, but not always equally. This article answers some common questions about property division in Maryland. For all of our articles on Maryland divorce law, see our Maryland Divorce and Family Law page.
Is Maryland a "community property" state?
No. Maryland is not a "community property" state. Instead, Maryland has an "equitable distribution" statute. This means the court is not necessarily obligated to divide the property equally between the spouses, as long as the division is fair. In many cases, however, each spouse gets half of the marital property.
What is marital property?
Marital property is property that belongs to the marriage -- to both spouses -- rather than to one spouse or the other as separate property. Marital property includes real property (such as a home or land) that the spouses own as tenants by the entirety, unless the spouses have a valid written agreement to the contrary. It also includes any property either or both spouses acquired during the marriage, unless only one spouse acquired it by gift or inheritance from a third party or the spouses have a valid agreement stating that the property is not marital but is instead the property of only one spouse.
Property that either spouse acquired prior to the marriage is also considered the separate property of that spouse. And, any property that is directly traceable to a separate property source remains separate property. For example, if one spouse owned a car before the couple married, then sold the car during the marriage to buy a pool table, the pool table would remain that spouse's separate property.
When is property "acquired"?
For property that isn't purchased all at once, Maryland courts have defined the term "acquired" as the ongoing process of making payments on the property. Under this definition, whether property is nonmarital or marital depends on the source of each payment. So, for example, a house that one spouse bought prior to marriage and was paying the mortgage on would start out entirely as nonmarital property. However, as mortgage payments are made out of marital funds during the marriage, the property becomes partially marital.
What does "directly traceable" mean?
"Directly traceable" doesn't just mean "attributable." When marital and nonmarital funds are combined (commingled, in legal terms), and those funds are used to buy or make payments on property, no particular payment from those funds can be directly traced to any source. Property that's acquired during the marriage and can't be traced directly to a separate source is treated as marital property.
What happens if one spouse wastes marital property?
Dissipation (the legal term for waste) happens when one spouse uses marital property for his or her own benefit for a reason unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown. If the court finds that one spouse's dissipation of assets was serious enough to constitute a fraud, it should consider the dissipated property as if it still existed when dividing the marital property. The purpose of this rule is to discourage either spouse from wasting marital assets.
Does title ownership affect whether property is marital property?
The title papers alone don't determine whether property is marital property or nonmarital property, except that real property the spouses own as tenants by the entirety is considered marital. The court may order the sale of jointly titled real or personal property, and divide 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 a court order for one spouse to pay money to the other. A court might order a monetary award to make sure that what each spouse takes from the marriage is fair under all the circumstances of the case. For example, a spouse who is awarded the family home might have to pay money to the other, especially if the home represents a large chunk of the couple's marital assets.
Is there a formula for making a monetary award or dividing property?
No. The court considers a number of factors in deciding how to divide the property and whether to make a monetary award. Those factors include:
- what each spouse contributed, both financially and otherwise, to the well-being of the family
- the economic circumstances of each spouse
- how long the marriage lasted
- the age, health, and physical and mental condition of each spouse
- how and when specific assets were acquired
- whether either spouse contributed separate property to property the couple owns as tenants by the entirety
- whether either spouse has been awarded alimony and/or possession of the family home, and
- whether either spouse committed marital misconduct that contributed to the divorce.
What is the relationship between alimony and a monetary award?
Maryland courts have said that alimony and a monetary award are "significantly interrelated and largely inseparable." A monetary award is not a substitute for alimony, but the two must be considered together in order to achieve a fair result.
What happens to nonmarital property in a divorce?
Nothing, usually. The spouse who owns the 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, which includes any nonmarital property. If one spouse is ordered to pay a monetary award, nothing prohibits the other spouse from trying to collect it by going after nonmarital property.
What is a marital debt?
A marital debt is a debt which is directly traceable to the acquisition of marital property. For example, if a married couple purchases a home together and makes the down payment and mortgage payments from a joint bank account, the mortgage is a marital debt.
Can one spouse be forced to pay the debts of the other or the marital debts?
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 interest on joint promissory notes). However, if one parent gets use and possession of a house or car, for example, the court can order the other parent to contribute to the mortgage or car payment.
Can one spouse be awarded the exclusive right to temporary use and possession of property?
A spouse with custody of the couple's minor child may be awarded use and possession of a family home, car, furniture, furnishings, and home appliances. This is called a use and possession award. In making this type of 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 (that is, the parent who doesn't get possession).
How long can a use and possession award last?
Use and possession must terminate no later than three 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 for property that is the subject of a use and possession award, such as mortgage or rent, payment of other debt on the property, and maintenance and other expenses of owning the property.