Maine Divorce: Dividing Property

Find out how marital property and debts are divided in a Maine divorce case.

Updated by , Retired Judge

Laws governing the division of marital property in a 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.

Is Maine a Community Property State?

No. Maine has adopted the theory of "equitable distribution" when dividing property in a divorce. Community property states try to allocate property between spouses as evenly as possible. Equitable distribution states divide property based on a judge's determination of what's fair under the circumstances of each case.

To learn more about the difference between community property states and equitable distribution states, see the article "Property Division by State".

Maine Divorce Laws Regarding Marital Property and Separate Property

The first step in the process of dividing assets in a divorce is determining whether property is "marital" or "separate". Marital property is subject to distribution, but separate property isn't. Maine's equitable distribution statute (Maine Revised Statutes Title19-A, Chapter 29, §953), defines the types of property.

Marital property includes most of the assets a couple acquire during marriage. Even if the property is in one spouse's name alone, if that spouse took ownership during the marriage the law presumes it's marital property. Some typical examples of marital property are homes, motor vehicles, furniture, retirement accounts (like 401k's), pension plans, bank accounts, and businesses.

Separate property includes:

  • assets acquired prior to the marriage
  • assets acquired by way of a gift or inheritance
  • assets acquired in exchange for property owned before marriage or received by way of gift or inheritance (for example, you use some of your inheritance money to buy yourself a car)
  • assets acquired after a decree of legal separation
  • assets excluded by a valid agreement between the spouses, and
  • the increase in value of a spouse's separate property.

That last item on the above list is more complicated than it might appear at first blush. The complexity revolves around determining what the increase in the property's value is attributable to. The bottom line is that if the increase in value came about without any contribution of money or labor from the non-owner spouse, the increase remains separate property.

An example might be where a spouse owned a house prior to marriage, and the value of that house goes up simply because the housing market improves. But if that house increased in value because of improvements made to it using marital funds, the increase attributable to those improvements would likely be subject to equitable distribution.

Another point to take note of is that sometimes spouses can convert separate property into marital property, wittingly or unwittingly. Going back to the example of the prior-owned house, if the spouse who owns it changes the deed to include the other spouse as an owner, that house is presumably no longer separate property.

An action like changing title to a house is clearly intentional, and a spouse would be hard-pressed to claim it wasn't meant to change the character of the property from separate to marital. But there are occasions where a spouse may do something less clear cut without realizing the consequences. For example, let's say a spouse who received an inheritance deposits that money into a joint bank account. By commingling (mixing) those inheritance funds with marital funds, the spouse may have inadvertently converted the inheritance from a separate asset to a marital asset. That's not to say the spouse can't later claim it was never the intention to change the inheritance's separate-property status, but it would be incumbent on that spouse to present convincing proof to rebut the presumption that the entire account is marital property.

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 down the road, there may still be conflicts.

Because the issue of marital property versus separate property is so important to dividing assets, it might be wise to consult a family law attorney for advice.

Assessing Property Value

After determining which property is marital property, the couple or the court will need to decide what each item of property is worth. Some assets are easy to value, such as a bank account. But for others, like real estate or a business, you might need the assistance of a qualified appraiser.

Retirement accounts can be difficult to assess. This is particularly true if they're being distributed prior to their pay-out period, because in that scenario you need to determine the account's current value, which isn't necessarily the amount that's in there at the time. In all likelihood, you'll require the services of an actuary to get a correct valuation.

Dividing the Property

Spouses have the right to resolve property distribution (and any other aspect of their divorce). In fact, judges encourage taking that route. The couple can attempt to do this on their own, or choose to work through their attorneys or a qualified mediator.

If they aren't able to reach an amicable agreement on how to distribute their property, then it's up to the court to decide. A judge in Maine has broad discretion in dividing marital property, and won't necessarily allocate such property equally, or even close to equally. For example, although a jointly titled home may be marital property, if the home was paid for primarily with one spouse's separate funds, the court may award that spouse a higher percentage of the home's value.

A Maine judge will consider all relevant factors in deciding what kind of property division is fair, including the following:

  • each spouse's contribution to the acquisition of the marital property, including a spouse's contribution as homemaker
  • the value of each spouse's separate property, and
  • each spouse's economic circumstances at the time the property division is to become effective, including the desirability of awarding the family home or the right to live in the home for reasonable periods to the spouse having custody of the children.

Who Gets the House in a Maine Divorce?

Dividing the family home can be a source of friction. The easiest way to avoid an argument is for the couple to agree to sell the house and divide the proceeds. However, if only one spouse is seeking that solution, that spouse will have to ask the judge to order it, and there's no guarantee a judge will go along with that.

Where there are minor children involved, the situation can become more complicated. Often, the spouse who has primary residential custody of the children won't want to uproot them, and thus will want to stay in the marital home. There are a number of mechanisms to accomplish this. If enough joint assets are available, the spouse who wants to occupy the home can buy out the other spouse's interest. The one spouse keeps the house, and the other retains more of the remaining assets to balance the scales. Another approach is for the occupying spouse to refinance the home (if feasible), and use the proceeds of the refinance to pay the other spouse.

There's another option that you see fairly often. The couple keep the house in both names while one of them lives there, but then at a certain date they sell it and divide the proceeds. A common end date is when the youngest child enters or finishes college. The spouse who occupies the home is usually responsible for paying the costs associated with living there.

As with any other asset, if the couple can't reach an agreement on what to do, the judge will make the decision for them, based on a determination of what's most fair to all involved.

Distributing Debt in Maine Divorce

In addition to dividing property in a divorce, a judge must also address how to divide marital debt (if the couple can't agree on how to do this). The court considers debts incurred before marriage—such as a student loan, perhaps—to be separate from marital debt, and the spouse who accrued that debt will usually remain solely responsible for it.

Debts arising during the marriage are generally considered joint obligations, and both spouses will be liable for payment. Some examples would be a home mortgage, car loans, credit card bills, and medical expenses. But note that if a spouse receives a particular asset as part of the divorce, debt which is attached to that property (such as the home mortgage) will ordinarily be the responsibility of the spouse who receives that asset.

Situations can arise where a judge may determine that a debt incurred during the marriage shouldn't be deemed a joint obligation. You might see this where one of the spouses accumulated significant gambling debts during the marriage. In those cases, the court could find that the spouse who incurred the debt should be the only one responsible for paying it.

Another important point to remember regarding debts is that creditors aren't bound by the terms of your divorce. So if your divorce judgment says that your spouse is responsible for paying off a joint credit card, but it turns out payments are missing or late, the credit card company can look to you for the shortfall. You can go to court for an order compelling your ex-spouse to comply with the divorce terms, but in the meantime your credit rating could take a hit. Because of this potential problem, it's a good idea to attempt to get as much marital debt as possible paid off from assets when finalizing the divorce. At the very least, keep an eye on payment of those accounts your name is still on.

Settlement Agreements

As mentioned above, to the degree you're able, you and your spouse should try to amicably resolve the various aspects of your divorce, including property distribution.

If you can agree on terms, you can incorporate them into a written contract, usually referred to as a "separation agreement" or a "property settlement agreement." That agreement can then become part of your final divorce judgment, almost certainly saving you time, anxiety, and legal fees.

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