The division of property during a divorce is usually filled with a great deal of emotion and anger. Couples who spend years of working together to accumulate property oftentimes find it difficult to agree how best to divide their property in the divorce. The divorce attorneys at Brown, Goldstein & Levy help clients daily in locating marital property, valuing the property, and determining how best to resolve the division of marital property.
What Is Marital Property?
Under Maryland Law, the courts can only divide property owned by divorcing spouses that is “marital property.” Marital property is not determined by how the property is titled or which spouse’s income funded the acquisition of the property. Marital property is any property acquired by one or both of the spouses during the marriage. Marital property does not include property owned prior to the marriage, gifts from third parties, inheritance, property excluded by valid agreement, or property directly traceable to any of these sources.
Marital property can include the following:
- Non-retirement financial assets (bank checking and savings accounts, certificates of deposit (CDs), stocks and mutual funds, bonds, and other investments)
- Retirement assets (pension, 401(k), 403(b), profit sharing plan, etc.)
- Real estate (marital home, vacation home, investment properties, and timeshares);
- Stock options, retained earnings, deferred bonuses, and earned but unpaid vacation pay;
- Businesses and professional practices;
- Cash-value life insurance policies and annuities;
- Vehicles (cars, trucks, motorcycles, boats, airplanes, motorhomes, ATVs, etc.)
- Jewelry, art, antiques, collectables, and memorabilia;
- Expensive power tools, sports equipment, and musical instruments;
- Country club memberships;
- Season tickets to sporting events, concerts, or theater;
- Prepaid professional dues or insurance premiums;
- Frequent flyer and credit card points;
- Tax refunds; and
- Capital loss carryover.
What Is Separate Property?
Separate property or non-marital property is property owned by a spouse prior to the marriage, any inheritance received by a spouse, any gift given to a spouse from a third-party, or any property specifically excluded as marital property by the parties in written agreement, such as a prenuptial agreement or a post-nuptial agreement.
An example of separate property is a wife’s engagement ring. The ring was acquired by the wife prior to the marriage and is therefore separate property.
Separate property is not subject to division as part of a parties’ divorce. However, separate property may lose its protection if it is commingled with marital property or if the spouse transfers the asset as a gift and titles it in the other spouse’s name.
How Is Marital Property Divided During a Divorce?
Divorcing spouses often agree on how best to divide their marital property. If the parties cannot reach an agreement, the court will make the determination.
If the parties are unable to agree on how divide their marital property, the court will divide the property in accordance with Maryland’s Marital Property Act. Under Maryland’s Marital Property Act, the court is not required to divide marital property equally. It has the authority to divide the property based upon the principles of fairness and equity. The factors that the court is required to consider in the division of marital assets includes:
- The length of the marriage;
- The reason for the divorce;
- The financial and non-financial contributions that each spouse made to the family;
- The age of each spouse;
- The assets and income of each spouse;
- How and when the marital property was acquired;
- The mental and physical condition of each spouse; and
- Any other factor that bears on the issue of equity and fairness in the division of the marital property.
Except in limited circumstances, the court cannot transfer title of an asset from one spouse to the other. However, to address any inequity in the division of marital property as titled, the court does have the authority to make a monetary award.
Is Property Acquired During Separation Marital Property?
Property acquired during the marriage, but after the separation, is still marital property and will be part of the assets that must be divided by the parties as part of their divorce. However, if the parties decide to settle their differences rather than have the court decide the property division, the parties can choose a date other than the date of divorce as the cut-off date for property acquisitions. Choosing a date for the division of assets that is earlier than the date of divorce can make a significant difference in the value of the property to be divided. This is particularly true for retirement assets that are being funded by a spouse or the spouse’s employer during the separation.
Dividing marital property in a fair and equitable manner can be a very complex process depending on the types and values of the assets at stake. Often an attorney is needed to assist a spouse in locating the existence of all marital property. Other times, an attorney is necessary to assist in proving that certain property is a combination of marital and non-marital property and only the marital portion is eligible for distribution. Our matrimonial attorneys at Brown, Goldstein & Levy can assist you during the divorce process to ensure that your property rights are protected.